Tesla Could Earn €1 Billion from EU Emissions Partnerships

Tesla is positioned to earn over €1 billion (approximately $1.03 billion) this year by pooling its electric vehicle fleet with rival automakers like Toyota, Stellantis, and Ford to help them meet the EU's stringent carbon emission regulations. Analysts note that this arrangement allows companies struggling to average their fleet emissions to avoid hefty fines, as exceeding the limits can incur costs of $105 per gram of excess emissions. While Tesla’s stock has faced volatility, closing below $400 for the second time this year, it has nonetheless seen a significant price increase of over 64% in 2024. Concerns linger among retail investors regarding missed delivery targets and regulatory scrutiny. As automakers grapple with the EU's shifting regulations and the prospect of an EV-only future by 2035, the necessity for partnerships like Tesla's becomes increasingly urgent. The outlook for Tesla's gross margins remains critical as the company aims to reduce costs and enhance profitability amid these market challenges.