Tesla profits potentially in jeopardy as big revenue source dries up this year
Stellantis will no longer buy regulatory credits from Tesla, a big chunk of its income over the last couple years.
There could be trouble on the horizon for Tesla's balance sheet as Stellantis announced it will stop buying regulatory credits from the electric carmaker. Tesla has used the sale of credits to help boost its bottom line since 2019, and it helped the company's profit streak for nearly the last two years.
Bloomberg first reported Wednesday on the consequences Tesla faces as Stellantis exits the agreement, signed back in 2019, which covers European regulations. Stellantis, previously Fiat Chrysler Automobiles, then needed to buy the credits from the EV- maker to ensure compliance with European emissions standards, costing it $2.2 billion over three years. The automaker's CEO Carlos Tavares told French publication Le Point on Monday the company will meet European requirements without Tesla's help going forward.
Tesla does not operate a public relations department to field such requests. A Stellantis spokesperson said in a statement, "As a result of the combination of Groupe PSA and FCA, Stellantis will be in a position to achieve CO2 targets in Europe for 2021 without open passenger car pooling arrangements with other automakers. Stellantis is committed to develop state of the art technologies to support its electrification shift worldwide."
Bloomberg points out Tesla's sale of regulatory credits has brought in more revenue than the income it makes from selling cars, which threatens the carmaker's run of profitable quarters as Stellantis walks away. Although Tesla still sells credits to other automakers to meet various regulations in other countries, the end of the massive Stellantis deal is sure to have an impact.
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