One of Tesla’s biggest emissions credit buyers doesn’t need them any more, threatening a key profit source for Elon Musk

Tesla Model 3
Stellantis won’t need Tesla’s help anymore to meet European environmental regulations.

  • Tesla is losing one of its biggest buyers of emissions credits.
  • Stellantis, formerly FCA, said it would meet European emissions rules in 2021 without help from Tesla.
  • Sales of regulatory credits have propelled Tesla to profitability in the last two years.
  • See more stories on Insider’s business page.

Sales of regulatory credits have largely driven Tesla’s profitability for seven consecutive quarters following years in the red, but Elon Musk’s automaker is about to lose one of its biggest customers.

Stellantis, the company created by a merger between Italy’s Fiat Chrysler and France’s PSA Group in 2020, will be able to comply with European emissions standards this year without buying credits from Tesla or another manufacturer, it said Wednesday.

“As a result of the combination of Groupe PSA and FCA, Stellantis will be in a position to achieve CO2 targets in Europe for 2021 without open passenger car pooling arrangements with other automakers,” a company spokesperson said in an emailed statement.

Read more: Slow charge times are driving away potential electric car buyers. These 5 startups are creating the fast charging batteries that could win them over.

Automakers buy regulatory credits when they aren’t able to produce enough low-emission or zero-emission vehicles on their own to satisfy environmental regulations around the globe. As a producer of exclusively electric vehicles, Tesla earns a huge amount of these credits – and selling them to other companies has been a massive boon for the EV maker, which struggled for years to turn a profit.

Fiat Chrysler agreed to purchase roughly $2.4 billion worth of emissions credits from Tesla from 2019 through 2021, according to Reuters, but that was before the company merged with PSA Group. The merger appears to have given Stellantis the product lineup and sales it needs to satisfy European regulators on its own.

Tesla has gradually increased the revenue it brings in from credit sales over the years. In the first three months of 2021, Tesla made $518 million from credit sales, which more than accounted for the company’s record $438 million profit during the quarter. The company does not disclose any details about what companies purchase the credits.

Tesla did not immediately return Insider’s request for comment.

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Stellantis to delay production of its Ram 1500 Classic pickup trucks due to global chip shortage

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  • Production at Stellantis assembly plants in Michigan and Mexico will be impacted, the statement said.
  • The pandemic caused a disruption in the supply chain of semiconductor chips used in cars and electronics.
  • The computer chips make up around 40% of a new car’s cost, according to a report by Deloitte.
  • See more stories on Insider’s business page.

Stellantis will delay the production of its Ram 1500 Classic pickup trucks due to the global chip shortage.

The company is currently building the trucks but delaying the completing production for a “number of weeks” at the Warren Truck Assembly Plant in Michigan and the Saltillo Truck Assembly Plant in Mexico, a company spokesperson said in a statement to Insider.

The truck will be completed when the chips become available, the statement added.

“We continue working closely with our suppliers to mitigate the manufacturing impacts caused by the various supply chain issues facing our industry,” the statement said.

Earlier in March, Stellantis CEO Carlos Tavares said that problems caused by the chip shortage may not be fully resolved by the second half of 2021, Reuters reported.

Stellantis is the world’s fourth-largest automaker created by the merger of Fiat Chrysler Automobiles and PSA Group.

The pandemic caused a disruption in the supply chain of semiconductor chips used in the manufacturing of cars and electronics. The chips are used in vehicles’ navigation systems, Bluetooth, and collision-detection systems and make up around 40% of a new vehicle’s cost, according to a report by Deloitte.

Due to the global computer chip shortage, a production slowdown in the auto industry surfaced earlier this year as some car companies changed their manufacturing plans while others searched for new suppliers.

On Thursday, Ford said in a statement that it will build F-150 trucks and Edge SUVs in North America without specific parts including some electronic modules that contain semiconductors.

The impact extends to other carmakers such as Volvo that decided to adjust its production plans temporarily for some periods in March while General Motors said it will lengthen its production cuts at three North American plants.

Automakers could lose as much as $61 billion in revenue due to the chip shortage, Bloomberg reported citing estimates from Alix Partners.

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Jeep unveiled its first new Grand Wagoneer in 30 years. The Escalade competitor could run you well over $100,000.

2022 Wagoneer and Grand Wagoneer.
The 2022 Wagoneer, left, and Grand Wagoneer.

  • The 2022 Jeep Wagoneer and Grand Wagoneer have arrived.
  • The massive luxury SUVs take aim at land yachts like the Cadillac Escalade and BMW X7.
  • The Wagoneer starts at just under $60,000 while the Grand Wagoneer starts at nearly $90,000.
  • See more stories on Insider’s business page.

Jeep, a brand once known for utilitarian off-roaders like the Wrangler, is going full-bore into luxury SUVs.

The company on Thursday unveiled two new high-end family-haulers – the 2022 Wagoneer and Grand Wagoneer – that take direct aim at premium three-row SUVs like the Cadillac Escalade, Lincoln Navigator, GMC Yukon, and BMW X7.

Jeep, now under the Stellantis umbrella of brands, introduced its first three-row SUV, the Cherokee L, in January.

2022 Wagoneer.
2022 Wagoneer.

The Wagoneer starts at $57,995, while its more expensive sibling, the Grand Wagoneer, starts at $86,995, making it by far the most expensive vehicle in Jeep’s lineup. Extras like additional screens for rear passengers, bigger wheels, quilted-leather seats, and an upgraded speaker system, can bring the Grand Wagoneer’s price tag to well over $100,000.

The Grand Wagoneer and Wagoneer are essentially the same vehicle, with some key differences that account for the roughly $30,000 discrepancy in price. Inside, the Grand Wagoneer comes with more luxurious finishes and second-row captain’s chairs as standard.

2022 Grand Wagoneer.
2022 Grand Wagoneer.

Outside, the pricier model gets more chrome accents, different LED lighting, more pronounced fender flares, electronic side steps, and a black roof.

There are also some key mechanical differences. The Wagoneer is powered by a 4.7-liter V8 that puts out 392 horsepower and 404 lb-ft of torque, while the Grand Wagoneer comes equipped with a 6.4-liter V8 that generates 471 horsepower and 455 lb-ft of torque, according to Jeep. They’re capable of towing up to 10,000 lbs.

2022 Wagoneer.
2022 Wagoneer.

Despite the foray into luxury SUVs, Jeep hasn’t completely shed its off-roading roots. Four-wheel drive and air suspension come standard on the Grand Wagoneer and are available for the Wagoneer. Jeep also says that the Wagoneers get up to 10 inches of ground clearance and can ford water that’s 24 inches deep.

Read more: The 16 leaders of Stellantis, the $52 billion empire formed from 2 of the biggest names of the auto industry

In reviving the Wagoneer and Grand Wagoneer names after three decades off the market, Jeep is just the latest automaker to capitalize on nostalgia for old models. The new Ford Bronco, Toyota Supra, Land Rover Defender, Jeep Gladiator, and GMC Hummer EV are all throwbacks to long-discontinued vehicles.

2022 Grand Wagoneer.
2022 Grand Wagoneer.

The 2022 Wagoneer and Grand Wagoneer are scheduled to hit dealerships in the second half of 2021. They’re available to preorder now with a $500 deposit.

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