We will soon see how OEMs performed against their 2020 target. Some OEMs have communicated in their Q3 results that they are reserving hundreds of millions of euros in anticipation of missing their target. Some OEMs have adopted a different strategy to avoid potential CO₂ fines and negative publicity by creating CO₂ pools with another OEM. The most recent example was between Ford and Volvo.
CO₂ pools reward an OEM who is able to sell CO₂ credits for over-achieving its CO₂ target to another OEM who would otherwise fall short of their targets. The value of these credits should not be underestimated. For example, Elon Musk recently acknowledged that TESLA’s sustained run of profitability is attributed to TESLA successfully selling CO₂ credits to other OEMs.
In my opinion, CO₂ pooling represents more than a mechanism for OEMs to manage their CO₂ targets. I see CO₂ pooling as a signal of the collaboration and consolidation trends which we have started to witness across the automotive industry. Why? OEMs can't absorb the extensive and expensive list of investment costs of developing new fuel technologies, new platforms and autonomous driving technologies on their own. The creation of Stellantis (PSA and FCA merger) is heavily motivated by sharing/ reducing development costs across the multiple brands. In 2021/22 we will start to see the first products coming from the Ford and Volkswagen partnership. In 2021 we will also start to see new business models; Fisker will outsource production to Magna Steyr and buy platforms from Volkswagen.