MILAN (Reuters) – Carmakers have formed alliances to help them avoid hefty European Union fines for carbon emissions by buying credits from electric vehicle companies.
Several traditional automakers face possible fines as the transition to electric vehicles in Europe has proven slower than expected in recent years.
Here details about the regulation and alliances for 2025, as of Tuesday:
FINES
The EU fines, which automakers say could reach up to €15 billion ($17.5 billion), were initially based on 2025 carbon emissions levels. However, in March, the European Commission bowed to pressure from automakers and allowed compliance based on their average emissions over the period 2025-2027.
SCOPE
All current alliance agreements, identified by the names of their ‘pool managers’, will expire at the end of this year. They are expected to be renewed in the coming years.
NISSAN
In October, Japan’s Nissan joined Chinese electric vehicle giant BYD.
MOBILITY KG
At the end of September another group was formed between the South Korean KG Mobility and the Chinese electric vehicle manufacturer Xpeng.
TESLA
In January, Tesla formed a group with Stellantis, Toyota, Ford, Chinese electric vehicle maker Leapmotor, Mazda and Subaru. Japan’s Honda and Suzuki joined the group in March.
mercedes
This group was also formed in January to include Mercedes, Volvo Car, electric vehicle maker Polestar and Smart Automobile. Volvo Car and Polestar have the support of the Chinese Geely. Geely Chairman Li Shufu owns a 9.69% stake in Mercedes, making him the group’s second-largest shareholder after China’s BAIC Group. Smart Automobile is a joint venture between Mercedes and Geely.
VEHICLE PREDICTIONS VEHICLES
Electric vehicles accounted for 12% of total light vehicle sales in Europe last year, according to consultancy AlixPartners, and are expected to reach 15% this year. Its market share is expected to increase to 24% in 2027 and 40% by the end of the decade, according to AlixPartners.
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(Reporting by Giulio Piovaccari and Alessandro Parodi. Editing by Tomasz Janowski and Mark Potter)