American carmaker Tesla Inc. is set to lose one of its sources of regulatory-credit revenue that helped the company post profits in the recent quarters, Bloomberg reported.
- Without the sales of regulatory credits to other manufacturers, Tesla would have recorded losses in the previous quarters.
- Stellantis NV will exit a European emissions-credit agreement in Tesla as it expects to achieve carbon dioxide targets on its own, a move expected to drive earnings higher this year.
- Stellantis said it no longer needs passenger-car pooling arrangements with other automakers to meet emission targets in Europe for 2021.
- Regulatory credits are points given by the government for contributing zero pollution to the environment. Manufacturers with a surplus can sell their credits to other firms to help them comply with requirements.
- Tesla has continuously raised sales of such credits to carmakers in countries with strict standards such as China, the United States, and others in Europe.
- The door is still open for future partnerships between the two firms in the future if necessary in other regions, to comply with regulations.
TSLA:Nasdaq is up 0.42%.