European automaker Stellantis (STLA) has confirmed plans to buy carbon credits from Tesla (TSLA) in 2025. This move comes even after the European Commission eased emissions compliance rules.
As part of its clean mobility plans, the EU aims to eliminate carbon emissions from all newly sold cars and vans by 2035. To ensure steady progress, the EU also set specific goals for automakers to reduce emissions step by step, starting with targets for 2025.
However, the EC recently extended the compliance period, allowing automakers to average their emissions over the 2025-2027 period instead of focusing solely on 2025.
EU Target Drives Stellantis to Tesla Deal
To meet the target, companies with lower electric vehicle (EV) sales are turning to EV giants like Tesla to buy carbon credits. Stellantis, which currently has an EV mix of 14% in its European sales, falls short of the EU’s 21% target.
This partnership with Tesla provides Stellantis with a temporary solution while it works to expand its EV lineup. The company plans to ramp up production of hybrid and electric models, such as the Fiat 500 city car, to strengthen its position in the EV market.
Trump’s Tariffs to Make Things Harder for STLA
At the same time, STLA is facing trouble in the U.S. President Trump’s 25% tariffs on imported cars and parts are expected to have a major impact on Stellantis. The company relies heavily on vehicles assembled in Canada and Mexico for its U.S. sales, and these tariffs will increase costs, making its cars less competitive in the American market.
Also, the tariffs may lead to supply chain disruptions. The financial strain could also impact Stellantis’ ability to invest in EV production.
Is STLA a Good Stock to Buy?
Turning to Wall Street, STLA stock has a Hold consensus rating based on five Buys, 11 Holds, and one Sell assigned in the last three months. At $13.93, the average Stellantis stock price target implies a 22.95% upside potential.
