In an interview with the French newspaper Point, Tavares said PSA’s technology would allow Stellantis to meet all CO2 targets in the European Union as early as this year. With this, the FCA arm of the company will not have to pool itself with Tesla or any other automaker to comply with environmental regulations.
According to Automotive news, FCA spent about $ 2.4 billion to buy Tesla’s environmental credits from 2019 to 2021, a specific period in which the company reported profits. According to Tesla’s quarterly reports, the company earned $ 2.365 billion in the same period from “regulatory credits.”
Summing up all the positive GAAP revenue results from Q3 2019 to Q1 2021, Tesla made $ 1.407 billion, which means it consumed another $ 1 billion of those credits covering the company’s expenses. This is why Sebastian Blanco wrote to Car and driver that Tesla “continues to lose money to earn and sell vehicles”.
A spokesperson for Stellantis said the company is discussing with Tesla the financial implications of no longer purchasing those credits. There is no deal information that the automakers have about them. However, an article by Automotive news April 17, 2019, said the FCA had a multi-year deal with Tesla at the time for them. That said, Stellantis could discuss a way out of such a deal if he ties it to buy credits whether he needs it or not.
Tesla could have more than one way out. According to Dan Levy, analyst at Credit Suisse, demand for CO2 credits will increase in 2021. Tesla could sell them to other companies. The question is whether the demand will be as high as that of FCA.
Another option is to focus on profitable cars and reduce investment in new factories and expansion of production. Tesla is currently building two gigafactories: one in Austin, Texas, and one in Grünheide, Germany. The German unit was due to start production in July, but may have to postpone it due to Tesla’s issues with German bureaucracy and the lack of a production version of the 4,680 cells.
Ironically, the same Point published an article in March 2020 in which Tavares said Tesla investors were taking “considerable and massive risk” with the valuation of the company at the time. He also said he wasn’t able to give them any advice just by being an employee of PSA, but he probably had already seen what was going to happen and his role in it.