Tesla Inc. is confronting the potential loss of a highly profitable revenue stream. Starting in 2026, the electric vehicle manufacturer will see a significant financial contribution disappear as automotive giants Toyota and Stellantis exit the European CO2 emissions pool it leads. This development comes alongside operational scrutiny, as executives at Tesla’s German Gigafactory have publicly contested media reports regarding production figures.
Operational Defense Amid Financial Pressure
Beyond the financial concerns, Tesla’s management is actively defending its operational performance in Europe. Andre Thierig, the head of the Gigafactory Berlin-Brandenburg in Grünheide, has publicly refuted a report by the German publication Handelsblatt. The newspaper had stated that only 149,000 Model Y vehicles were produced at the site in 2025. Thierig corrected that figure, asserting production exceeded 200,000 units.
The plant manager emphasized that this volume was achieved despite a necessary production halt in the first quarter for a model changeover. Since commencing operations in 2022, total output from the German facility has surpassed 700,000 vehicles. This clarification is viewed as crucial to dispelling doubts about both demand and the efficiency of the multi-billion euro investment, which totals over five billion euros.
The End of a Lucrative Regulatory Arrangement
The financial impact stems from the decision by Toyota and Stellantis to leave Tesla’s European emissions pool after 2025. This alliance has been exceptionally profitable for Tesla, as the sale of regulatory carbon credits to other automakers carries a margin approaching 100 percent. The European pool alone is estimated to have generated approximately one billion euros for the company in 2025.
The reasons for the departures are operational. Toyota anticipates it will independently meet its 2025 emissions target, aided by a high proportion of hybrid vehicle sales. Stellantis, meanwhile, intends to form its own pool with its subsidiary, Leapmotor. Following these exits, the Tesla-led pool will, for now, retain smaller partners such as Ford, Honda, Mazda, and Suzuki. Globally, Tesla’s revenue from such regulatory credits already declined by roughly 28 percent in 2025.
Market Reaction and Divergent Analyst Views
Tesla’s share price has shown a muted response to the mixed news, currently trading at 337.50 euros. On a year-to-date basis, the stock is down nearly 10 percent. Fundamentally, the situation in Sweden adds pressure, where new vehicle registrations fell by 10 percent in February 2026, allowing competitor Polestar to move ahead of Tesla.
Analyst opinions on the stock’s trajectory are divided, reflected in a wide range of price targets. While the consensus rating predominantly sits at “Hold,” the analysis firm Stifel Nicolaus recently reaffirmed its bullish stance with a target price significantly above current trading levels.
For investors, the focus now shifts to how Tesla will compensate for the disappearing carbon credit income. With the composition of EU emissions pools required to be finalized by December 1, 2026, management has limited time to either secure new pool partners or substantially enhance the profitability of its core automotive business to offset the lost earnings contribution.
