Tesla is killing its golden carbon-egg-laying hen

Tesla is facing a critical situation due to the drop in its sales, which threatens a key source of revenue, carbon credits.

The largest automakers, including Toyota and Stellantis, are collaborating with Tesla to meet the stringent emissions targets of the European Union. This practice allows conventional vehicle manufacturers to offset their excesses through credits accumulated by electric vehicle makers, whose emissions are zero.

No doubt, these partnerships benefit everyone. Tesla generated nearly $3 billion in revenue in 2024 from these agreements. However, this windfall could dry up as early as 2025. One major reason lies in the controversial actions of Elon Musk, including highly publicized incidents that fueled a wave of rejection in Europe. Tesla’s sales in this market have collapsed, posting a 26% decline in France in February 2025 compared to the previous year.

The carbon credit is no longer Tesla’s “golden egg pool”

These poor performances jeopardize carbon credit pooling agreements, as Tesla risks not generating enough credits to fulfill its commitments to partners, such as Stellantis. According to the International Council on Clean Transportation (ITCC), despite a global increase of 34% in EV sales in Europe, Tesla appears to be lagging behind. This underperformance could question its business model.

In addition to Musk’s related problems, Tesla faces increased competition, particularly from Chinese brands, and its catalog is starting to age despite successive facelifts. The company also has to contend with protests and acts of vandalism at its dealerships, signs of growing discontent towards its CEO.

With sales plummeting and increased pressure on its non-vehicle revenues, Tesla must not only improve its commercial results but also restore its reputation to remain a key player in the electric vehicle market.

ALSO READ: Confirmed arrival date for the new Tesla Model X and S!