Tesla’s plummeting sales risk its lucrative emissions credit earnings

BRUSSELS — Elon Musk’s political meddling in Europe is cratering Tesla’s sales — and that’s putting at risk its revenue from selling credits to other automakers looking to avoid paying penalties for not meeting European Union emissions targets.

European automakers face fines should they fail to meet this year’s carbon dioxide reduction goals, but those selling too many CO2-emitting cars can dodge the fee by pooling with a company doing better than the EU demands. That’s been a lucrative earner for all-electric Tesla.

Since its founding, the electric vehicle company has brought in billions from such schemes. In 2024, it made $2.76 billion on emissions deals, a 54 percent year-over-year increase, its annual financial earnings report shows.

That revenue stream is now in jeopardy as consumers across Europe shun the brand after Musk, a key adviser to United States President Donald Trump, threw his support behind far-right parties and made incendiary remarks about Germany letting go of its Nazi past.

Stellantis, Toyota and Ford joined a pool with Tesla this year, opting to pay the American carmaker for its credits.

“If things go bad for Tesla and they don’t sell enough cars this year, they might not have enough credits for what they promised Stellantis and the others,” said Peter Mock, managing director of the International Council on Clean Transportation. “Tesla is under pressure.”

Tesla’s pool is already not meeting the 2025 emissions targets, according to an analysis from the ICCT, despite January EV sales increasing 34 percent in Europe.

Tesla under attack

Tesla dealerships across the continent and the U.S. have been the object of protests and vandalism; consumers are also expressing their displeasure with their pocket books. The company’s sales in Europe declined 50 percent in January year-over-year, data from car lobby ACEA shows.

Musk sparked outrage in Germany — and Poland’s transport minister to call for a boycott of the brand — after speaking at a rally for the Alternative for Germany party ahead of the Feb. 23 election. While overall EV sales in Germany surged more than 50 percent year-over-year in January, Tesla sales crashed by 60 percent.

A similar trend is happening in Norway and France, where Tesla sales fell 38 percent and 63 percent, respectively.

It’s not just new Teslas taking a beating.

A third of Tesla owners surveyed by Dutch outlet EenVandaag said they have either sold their Tesla or are planning to do so in reaction to Musk’s remarks. “If I had known how he is now, I would never have taken a Tesla,” one of the respondents said.

Many of those still driving Teslas are buying bumper stickers saying: “I bought this before Elon Musk went crazy.”

But Tesla’s troubles aren’t entirely due to Musk becoming the frontman for global right-wing populists. The company has also languished in recent years, stuck with aging models while rivals in China and Europe come up with more attractive cars.

“The much bigger impact on Tesla is the fact that the models are outdated,” said Lukasz Pajak, co-founder of German used car platform Cardino. “And then you have the pricing element where new players on the market are much more affordable.”

Tesla will start producing an updated Model Y for the European market later this year.

Tesla did not respond to a request for comment.