Tesla’s Billion-Euro Carbon Deal Crumbles As Stellantis And Toyota Flee

Tesla’s lucrative carbon credit empire is shrinking. Toyota and Stellantis have withdrawn from Tesla’s European Union CO2 pool for 2026, according to EU filings. Subaru is also absent. The exits remove some of Tesla’s biggest paying partners from a deal worth over €1 billion in 2025 alone.

Tesla’s carbon credit cash cow is losing its biggest customers as automakers go it alone.

The EU lets automakers team up in pools to meet fleet-wide CO2 targets. Companies that pollute too much can pay cleaner ones like Tesla to average down their emissions. Tesla’s cars produce zero tailpipe emissions, giving it a massive surplus to sell. Fiat-Chrysler, now part of Stellantis, signed a deal worth up to $2 billion back in 2019. Honda and Jaguar Land Rover joined later.

The 2025 pool included Toyota, Stellantis, Leapmotor, Ford, Honda, Mazda, Subaru, and Suzuki. The 2026 pool shrinks to just Tesla, Ford, Honda, Mazda, and Suzuki. Leapmotor is also gone, tied to Stellantis’s own strategy.

Both Toyota and Stellantis believe they can comply on their own. Toyota expects to hit a 96.3 g/km CO2 target thanks to its large hybrid lineup. Stellantis missed its 2025 target by 6 g/km but now produces EVs through its Leapmotor partnership. Leapmotor has rapidly expanded its European production and dealer locations, strengthening Stellantis’s ability to offset emissions independently. A key EU rule change also helps. The European Commission shifted compliance to a three-year average from 2025 to 2027, giving automakers extra time to meet targets.

The financial hit is already showing. Tesla earned a record $2.76 billion from regulatory credits globally in 2024. That fell 28% to $2 billion in 2025. The U.S. emissions credit market disappeared in 2025, costing Tesla $1.4 billion over nine months. UBS analysts estimated the EU pool alone brought in over €1 billion for Tesla. Carbon credit sales accounted for nearly 30% of Tesla’s net income in Q4 2024, underscoring how critical this revenue stream has been to the company’s bottom line.

No alternative pools have been registered for 2026. Tesla’s pool remains the only formal option. Decisions aren’t final until December 1 each year, so companies could rejoin. Still, the trend is clear. Legacy automakers are electrifying faster and relying less on Tesla. Geothermal energy, which produces 99% less carbon dioxide than fossil fuels per megawatt-hour, represents one such alternative clean energy source that automakers could invest in to further reduce their emissions footprints independently.

Elon Musk has pushed to eliminate compliance penalties entirely, which would destroy the credit market he profits from. Tesla’s zero-cost credit revenue, once a key profit driver, is fading.