Published by Global Banking & Finance Review®
Posted on October 21, 2025
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleAutomakers are partnering with EV firms to avoid EU emissions fines. These alliances help legacy automakers meet carbon targets as EV adoption grows.
MILAN (Reuters) -Automakers have formed alliances to help them avoid hefty European Union fines on carbon emissions by purchasing credits from electric vehicle companies.
Several legacy automakers face potential fines as the transition to EVs in Europe has proved slower than expected in recent years.
Here are details about the regulation and alliances for 2025, as of Tuesday:
FINES
EU fines - which automakers have said could reach up to 15 billion euros ($17.5 billion) - were initially envisaged on 2025 carbon emission levels. In March, however, the European Commission yielded to pressure from automakers and allowed compliance based on their average emissions over 2025-2027.
SCOPE
All current alliance agreements, identified by the names of their 'pool managers', will expire at the end of this year. They are expected to be renewed in coming years.
NISSAN
Japan's Nissan in October pooled with Chinese EV giant BYD.
KG MOBILITY
Another pool was formed at the end of September by South Korea's KG Mobility and Chinese EV maker Xpeng.
TESLA
In January, Tesla formed a pool with Stellantis, Toyota, Ford, Chinese EV maker Leapmotor, Mazda and Subaru. Japan's Honda and Suzuki joined the pool in March.
MERCEDES
This pool was also formed in January to include Mercedes, Volvo Car, EV maker Polestar and Smart Automobile. Volvo Car and Polestar are both backed by China's Geely. Geely's Chairman Li Shufu holds a 9.69% stake in Mercedes, making him the group's second-largest shareholder after China's BAIC Group. Smart Automobile is a joint venture between Mercedes and Geely.
EV FORECASTS
EVs made up 12% of total European light vehicle sales last year, according to consultant AlixPartners, and are expected to reach 15% this year. Their market share is forecast to increase to 24% in 2027 and to 40% by the end of the decade, according to AlixPartners.
($1 = 0.8575 euros)
(Reporting by Giulio Piovaccari and Alessandro Parodi. Editing by Tomasz Janowski and Mark Potter)
An emissions fine is a financial penalty imposed on companies that exceed the allowable limits of carbon emissions set by regulatory authorities, such as the European Union.
EVs, or electric vehicles, are automobiles that are powered by electric motors instead of internal combustion engines, contributing to reduced emissions and promoting sustainability.
Carbon credit trading is a market-based system where companies can buy or sell credits that allow them to emit a certain amount of carbon dioxide, incentivizing reductions in emissions.
Market share is the portion of a market controlled by a particular company or product, often expressed as a percentage of total sales in that market.
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