While Tesla is experiencing a slowdown in its sales for the first time in its history, Elon Musk’s company is paradoxically preparing to generate a billion euros in revenue thanks to its European rivals.
Do you know the CAFE system? The CAFE (Corporate Average Fuel Economy) system is set to shake up the entire European automobile industry in 2025.
Just imagine: historic manufacturers like Toyota or Stellantis who suddenly have to team up with their biggest competitor, Tesla! For what ? Quite simply to avoid paying fines which could reach billions of euros.
It’s quite simple in fact: Europe has set a CO2 emissions limit that each manufacturer must respect. The magic number? 93.6 grams of CO2 per kilometer on average for all cars sold. If you exceed, the bill is steep: 95 euros fine per additional gram and per car sold.
To give you an idea, let’s take a concrete example: if a manufacturer sells a million cars and exceeds the limit of 10 grams, it will have to pay… 950 million euros in fines! It’s not a small amount, is it? Moreover, ACEA (the association of European manufacturers) estimates that total fines could reach 15 billion euros for the entire sector.
The unexpected solution: teaming up with Tesla
Faced with this challenge, Europe had an idea: authorize manufacturers to form “pools”, in other words teams. The principle? Manufacturers can join forces to calculate their average emissions together. And that’s where Tesla comes in! As Elon Musk’s company only manufactures electric cars (therefore zero emissions), it becomes the ideal partner to lower the average.
-It’s a bit like averaging your grades with the student who always gets 20/20: automatically, your average increases. For Tesla, it’s all profit: the company could earn up to 1 billion euros by “selling” its good CO2 ratings to its competitors. Moreover, since 2009, Tesla has already earned around 11 billion dollars thanks to this type of system.
Alliances are formed
Today, two large groups have been formed: on the one hand, Tesla has joined forces with Stellantis (Peugeot, Citroën, Jeep, Fiat, etc.), Toyota, Ford, Mazda and Subaru. On the other hand, Mercedes teams up with Smart, Volvo Cars and Polestar. This is all the more interesting since Stellantis, for example, recently claimed that it could respect the limits on its own.
The European Commission remains firm: there is no question of relaxing the rules before 2026, even if some manufacturers complain.
To go further
The end of a golden era for Tesla
Irony of history: this situation comes at the very time when Tesla is experiencing its first slowdown, with a 1.1% drop in its deliveries in 2024. In China, its market share even fell from 7.8% to 6 %. So sometimes your competitors can become your best allies.
