Chinese auto giant BYD is in talks to supply carbon credits to its European counterparts to help them offset their 2025 emissions and avoid hefty fines.
“We’re in talks, we are well underway,” BYD’s special adviser for Europe Alfredo Altavilla said during a car presentation in Italy without offering further details.
If talks are successful, BYD will form a pool with other European automakers and then sell on its surplus carbon credits.
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Automakers in Europe are facing tougher emissions rules this year, with the bloc drastically lowering its cap on automotive carbon dioxide emissions from January 1. Most car companies in the region with need electric vehicles to account for at least one-fifth of all their sales to avoid hefty fines, which could cumulatively amount to $15.6 billion.
So far, EU carmakers have been well short on those targets, with sales of EVs in 2024 remaining just 13% of the total.
Companies with lower EV sales can pool their emissions with EV market leaders by purchasing emissions credits from them to lower their overall emission averages.
Automakers have to notify the European Commission of pooling agreements by December 31 of each year. Brussels can request extra information about the agreements, but not assess their commercial terms.
Last month, as slew of automakers announced plans to pool their emissions with EV-makers Tesla and Polestar – whose sales are 100% fully electric – by buying the EV makers surplus carbon credits.
Stellantis, Toyota, Ford, Mazda and Subaru are planning to pool carbon emissions with U.S. electric vehicle maker Tesla to comply with the EU’s 2025 rules, an EU filing showed.
Another pool is forming around Germany’s Mercedes, with Polestar, Volvo Cars, and Smart, the same document showed.
For Tesla, carbon credit sales accounted for almost 3% of its $72 billion total revenue in the first nine months of last year.
- Reuters, with additional editing and inputs from Vishakha Saxena
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