A Volkswagen joint venture in China has reportedly agreed to buy green car credits from Tesla to help comply with local environmental rules. In any case, this is what three people familiar with the matter say.
Volkswagen facing a technological revolution
The deal, the first of its kind to be reported between the two companies in China, highlights the scale of the task Volkswagen must face to transform its massive combustion-engine car production company into a capable electric vehicle leader. to compete with Tesla.
Shares of Volkswagen, the world’s second-largest automaker, have skyrocketed this year as investors cheered its intention to go electric massively. But in China and elsewhere, the German automaker is still heavily dependent on combustion engine vehicles.
China: credit system to “green” the automotive sector
China, the world’s largest auto market where more than 25 million vehicles were sold last year, runs a credit scheme that encourages car makers to work towards a cleaner future, for example by improving fuel efficiency or by making more electric cars.
Manufacturers receive green credits which can be offset by negative credits for the production of more polluting vehicles. They can also buy green credits to ensure that overall targets are met. The trade is generally done between affiliated companies, strongly involved in the energy balance.
FAW-Volkswagen reportedly bought credits from Tesla
To help meet increasingly difficult goals, Volkswagen’s joint venture with Chinese automaker FAW – FAW-Volkswagen – reportedly bought credits from Tesla, according to the sources.
Volkswagen declined to comment on the deal. He said in a statement that he was “strategically aiming to comply” with the rules in China, but that if necessary, he would buy credits. Tesla did not respond to requests for comment.
FAW-Volkswagen very far from being “green”
FAW-Volkswagen sold 2.16 million cars last year. The company and another Volkswagen company in China – along with SAIC Motor – were among the country’s worst-performing automakers for green credit in 2019, according to data from China’s Ministry of Industry and Technology. ‘information.
The joint-venture’s gasoline sedans and SUVs have so far proven to be much more popular in China than its electric vehicles.
Tesla / Volkswagen: intimate enemies?
The deal sees Volkswagen, China’s largest foreign automaker, subsidizing a rival as the German group ramps up production of electric vehicles. Its companies in China plan to roll out five electric models of the ID series this year.
In the United States, where regulators also set environmental requirements, Tesla has sold regulatory credits to rivals such as Fiat Chrysler, now part of Stellantis, but it has so far reported no deals in China, country where it started production at the end of 2019.
Tesla’s revenue from the sale of regulatory credits totaled $ 1.58 billion in 2020, according to a regulatory filing.
Our opinion, by leblogauto.com
Some might see this rapprochement between two rivals, against a backdrop of ecological credits, as a first towards an alliance on a larger scale. Unless it is quite simply a win / win operation allowing VW to comply with Chinese law, Tesla being able to rake in very useful cash in the current period.
Sources : Reuters