Tesla will make more than $100M a year by Honda’s addition to the ZEV credits pool

-

-Advertisement-

Honda Motor Company, Inc. officially joins Fiat Chrysler in pooling the regulatory credits with Tesla in Europe. The tough European regulations now require an average of 95 grams of CO2 emissions per kilometer per car that Honda has failed to achieve.

This situation has opened another revenue stream for Tesla which is estimated to be worth hundreds of millions of dollars stretching the next few years. The financial details of the Honda-Tesla credits pooling have not been disclosed yet. The Fiat Chrysler deal alone has contributed $1.2 billion to Tesla profits this year.

Tesla is eating their competitors’ lunch, and they’re making them pay for it. That’s a pretty cool trick.

Steve Westly, early Tesla Investor and former board member.

Actually, the situation has quickly become pretty interesting in the automotive manufacturing industry. The companies that denied Elon Musk’s vision for a sustainable future — now they have to pay for it heavily.

Early Tesla investor and former board member of the company Steve Westly while talking to CNBC described the ZEV credits phenomenon as highlighted in the pull-quote above.

Tesla Model Y Accessories by EVANNEX (Sponsored Banner).
– Sponsored –

Back to Honda now:

The low number of sales of the Japanese automaker’s Honda e EV was also a factor in not meeting the greenhouse emissions responsibility set forth by the European Union.

According to a Honda USA press-release from August, the giant automotive company is aiming to reduce its overall fleet CO2 emissions to 50% by the year 2050. It further states:

As part of our goal to achieve a reduction in CO2 emissions that contribute to climate change we are targeting a 50 percent reduction in our total CO2 footprint by 2050, compared to year 2000 levels. This challenge is the foundation for our investment in the technologies we are applying to our vehicles today, and those we are developing for tomorrow.

Today, Honda holds the distinction of being America’s most fuel-efficient, low-emissions automaker, according to the U.S. EPA. That means our existing vehicles have the lowest CO2 emissions of any full-line automaker. Electrification is one of the critical technologies we are deploying to further reduce greenhouse gas emissions.

Executive Vice President American Honda Rick Schostek

How much can Tesla make from Honda buying regulatory credits?

An estimated answer to this question can be calculated by taking the case of Fiat Chrysler Automotive’s (FCA) current share of ZEV credits in Tesla’s pool. The Math on this is done by Steven Mark Ryan from the YouTube channel “Solving The Money Problem”.

Fiat Chrysler sells around 1 million vehicles in Europe each year and with almost $1 billion dollars of payment to Tesla for the regulatory credits, FCA pays around $1,000 for each vehicle sold.

So taking that into account, Honda sells more than 100,000 cars in Europe annually, multiplying that with $1,000 gives us the ballpark figure of $100M+ per year.

Honda however is ceasing the sale of its diesel-powered vehicles in Europe in 2021 as they announced last year. This might lower the number of zero-emission vehicles (ZEV) credits Honda needs to buy each year until the automaker reaches its goal of a fully electric lineup in Europe — which by the way is set for 2025.

Not to forget Tesla is already building its next-gen Gigafactory in Berlin, Germany which will crank out Tesla Model Y SUVs unlike any car manufacturing plant on the planet right now — thanks to the giant Giga Casting machines.

By 2025 Tesla Europe will be a really hard nut to crack, even for the German and Japanese automakers combined.

Stay tuned for more, follow us on: Google News | Flipboard | RSS (Feedly).

Sources: Bloomberg, Reuters.

Related:

Iqtidar Ali
Iqtidar Alihttp://www.teslaoracle.com
Iqtidar has been writing about Tesla, Elon Musk, and EVs for more than 3 years on XAutoWorld.com, many of his articles have been republished on CleanTechnica and InsideEVs, maintains a healthy relationship with the Tesla community across the Social Media sphere. You can reach him on Twitter @IqtidarAlii

Latest News

Look at the exploded view of Tesla Model Y on display at the Mall of America

Tesla puts an exploded Model Y on display at the Mall of America Tesla has started playing smart when it...

Tesla Model S and Model X get the new Lunar Silver paint option (pics, prices)

Tesla (TSLA) introduced a new premium silver paint option for its flagship Model S luxury sedan and Model X...

Tesla FSD v12.4: Autopilot Strikeouts, vision-based monitoring, conditional removal of nags (Release Notes)

Tesla (TSLA) released FSD (Supervised) v12.4 to internal employees earlier this week. This version has yet to be rolled...

Tesla intentionally leaks glimpses of its Robotaxi in ‘Vote for Elon Musk’ video

Tesla, Inc. (TSLA) has intentionally leaked glimpses of its Robotaxi vehicle in a new video. The automaker posted this...
- Advertisement -

Starship updates: New Flight 4 schedule, watch full stack test, developments at Starbase, more

SpaceX's orbital launch site in Starbase, Texas had a tough work routine this past week with multiple operations going...

SpaceX readies Flight 5 Starship with a static fire test ahead of Flight 4, Starbase updates

Elon Musk's SpaceX is preparing multiple Starships simultaneously for the upcoming orbital flight tests. Yesterday, SpaceX conducted a static fire...

Flight 4 Starship goes through 2nd static fire test, OLM gets repairs at Starbase, more

SpaceX conducted the 1st static fire test on Starship 29 (Ship 29) on Monday in preparation for the next...

Tesla Tips & Tricks

Here’s how to recalibrate your Tesla battery to regain lost miles on range

Due to some improper charging habits, a Tesla vehicle's...

Tesla Model Y/3 heat pump issue in cold weather might not be fixable with just a software update

Canada's extreme cold weather is taking a toll on...

Here’s how to open a frozen Tesla Model 3/Y door handle

Snow and rain in the extremely cold weather can...

Tesla Quarterly Reports & Eearnings

- Advertisement -

You might also likeRELATED
Recommended for You