Monthly Archives November 2020

Tesla has added another major automaker to its lucrative “carbon pool,” after Honda reported poor sales of its first mainstream electric vehicle, the retro-inspired Honda e.

Honda will now join FCA in accessing Tesla’s open CO2 pool to help meet strict emission reduction targets for new vehicles which will tighten in 2021 to an average of 95 grams of carbon dioxide per kilometer per vehicle sold.

Most major automakers struggle to meet this threshold, so they buy “carbon credits” from Tesla, which only sells electric vehicles and therefore has credits in abundance.

In the third quarter of 2020, Tesla announced a windfall of $ 397 million (AU $ 547 million) in revenue from the sale of these credits to competing automakers, further boosting results for its fifth consecutive profitable quarter. It will bring in nearly A $ 2 billion from the carbon credit program this fiscal year.

Honda’s decision to join FCA to gain access to Tesla’s open pool is a direct result of its weak sales of Honda e in Western Europe, according to European electric vehicle market analyst Matthias Schmidt (no link).

The Honda e, which originated from the Japanese automaker’s “Urban EV” concept and costs around € 30,000 in Europe (A49,000 converted), would always appeal to a niche market.

With its funky retro design, it’s packed with tech and is aimed at drivers looking for something a little different at a (relatively) affordable price.

But it did not hit the mark in Europe. With only 1,000 registrations according to the latest Report on European electric cars published by Schmidt, it now appears that Honda is looking to buy CO2 credits to avoid having to pay fines if it does not meet EU CO2 limits.

But Tesla’s opportunity to further consolidate profits using credit sales could be wasted if it does not increase, or at least maintain, sales volume in Europe.

Although Tesla played a small role in sales of electrified vehicles overtaking diesel vehicles in Europe in September (this was mainly due to Toyota’s hybrid sales), its sales volumes in Europe over the past 12 months have declined by 12 months. %, although we do realize this is at least partly due to a drop after an initial surge in early 2019 following the introduction of Model 3, as we saw in Australia.

Tesla sold 63,000 vehicles in Western Europe from January to September 2021 against 87,000 for the Volkswagen group and 83,000 for Renault / Nissan, bringing its market share to just 13.3% from 33.8% in the third quarter of 2019.

“In terms of 12-month rolling totals, Tesla’s volumes hit a concrete wall late last year and have fallen back below 100,000 units since the second half of this year, the 12-month period until ‘in September reaching the lowest volumes. since November 2019 with 97,600 units ”, writes Schmidt.

Schmidt points out that Tesla’s recent decision to start importing China-made Model 3s to increase availability and use the credits from increased sales to continue to increase profits.

“One food for thought is that Tesla could plan to flood the European market with increased volumes in the last quarter of the year to try to take advantage of a potentially available windfall as manufacturers fear they will miss their 2020 CO2 obligations. with a second lock. – drops on the horizon, scrambling to reach open swimming pools to avoid larger fines, ”explains Schmidt.

But as mainstream OEMs introduce more electric models in Europe, Tesla will face increasing competition – which it has always insisted it wants to foster, but which could reduce its profits unless more drivers embrace the switchover. electric transport.

And some historic OEMs are already gaining traction with the introduction of new electric models.

Volkswagen in particular saw the introduction of its ID.3 electric hatchback adopted especially in Norway, where it was the best-selling electric vehicle in September. Volkswagen is now the leading manufacturer of electric vehicles in Europe and now also sell CO2 credits to Chinese automaker MG / SAIC.