Honda is the latest automobile brand to join Tesla's European Emissions pool to avoid fines due to new regulations.
According to Not a Tesla App, Corporate Average Fuel Economy (CAFE) standards mandate that automakers reduce polluting gases across their vehicles or face fines.
The Emissions Pool is a tool that allows carmakers with high toxic gas pollution to partner with brands that have low or zero pollution.
Automakers that have low or zero pollution earn credits, and Tesla has a surplus of them.
The car makers can buy emission credits to lower their overall emissions total.
Tesla has made a hefty profit from these partnerships. For instance, Tesla made $692 million from these types of credits in the final quarter of 2024, per Not a Tesla App. That totaled 30% of its quarterly income.
Tesla's current partners include Ford, Toyota, Mazda, Subaru, and Stellantis.
Honda represents a significant new revenue stream for the company's European operations.
According to the Washington Post, Tesla's earnings dropped by 71% in the first quarter of 2025. While a poor earnings report was expected, that makes emission pooling profits vital for the company.
According to Jones Day, the CAFE standard took effect on January 1, 2025. It dictates the standards for new cars and the amount of polluting gases they're allowed to release. The goal is to reduce toxic gases by 55% from 1990 levels by 2030.
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Elon is the man 🥰 Insequence, a car manufacturing software provider, noted that car brands find transitioning to low-emission vehicles challenging, so the Emission Pool is there to help them along the way. By utilizing the emission pool, "car companies can navigate the regulatory landscape more effectively while continuing to innovate in the field of electric and low-emission vehicles."
When there are more options for consumers, prices tend to decrease, making electric vehicles more affordable to purchase. Switching to an EV can save you $1,500 a year on gas and maintenance.
Driving an EV also improves air quality by reducing asthma-causing air pollution. A University of Southern California study found that for every additional electric vehicle on the road per 1,000 people, asthma-related emergency visits were reduced by 3.2%.
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