LONDON — British carmakers are expected to put money straight into Elon Musk’s pocket under a key government climate policy — even as the world’s richest man publicly feuds with Prime Minister Keir Starmer.
How much cash exactly isn’t clear — but two senior figures from a United Kingdom automaker said the billionaire’s electric vehicle firm Tesla can expect a bumper pay day under Britain’s scheme to boost EV production.
It comes even as the adviser to President-elect Donald Trump — and Tesla and SpaceX boss — attacked Starmer on multiple fronts, posting dozens of political attacks to whip up discontent on his social media platform X.
As the feud deepens, carmakers are expected to turn even more sharply toward Musk’s Tesla as they race to meet the U.K.’s ambitious net-zero climate targets.
As one of Britain’s key green policies, the zero emission vehicle (ZEV) mandate forces carmakers to transition away from petrol and diesel vehicles faster than in any European Union country.
And pure electric vehicle carmakers like Musk’s Tesla can help them handle fines for missing targets under the mandate. Under the U.K. system, carmakers who don’t make the shift must pay fines of £15,000 per combustion car sold to make up the difference, borrow from their future production — or buy credits at a cheaper price from competitors.
Automakers owe £1.8 billion in fines from 2024, according to analysis by the Society of Motor Manufacturers and Traders. The Department for Transport insisted it “does not recognize” that figure. The U.K.’s market share for EVs reached a record 19.6 percent last year, but the industry collectively missed its 22 percent ZEV mandate sales target.
Carmakers who miss ZEV targets will need to approach “not only the Chinese manufacturers, [but] also Tesla” to buy carbon credits to help them avoid fines, said one of the two senior automotive figures, granted anonymity to speak freely.
That Starmer’s Labour government is helping enrich Musk is “a reminder of the overlap of the political and business worlds that will be intensified under President Trump,” said David Henig, director of the U.K. trade policy project at the European Centre for International Political Economy.
Lobbying drive
Tesla dominates the global carbon credit market, earning nearly half of its net profit from credit trading in the first nine months of last year. In 2024 it was also the largest seller of EVs in the U.K., which is now its biggest European market.
But Musk’s lobbyists spy an even bigger prize in Britain.
Just days after Labour swept to power last July, Tesla wrote to the new government, calling on ministers to tighten the zero emissions vehicle rules and make consumers “pay more” for combustion engine cars.
The firm also advocated for the rules to be extended to trucks, driving demand for its new vehicles while also opening up a lucrative an extra credit trading market.
“Government should begin consulting on a ZEV mandate for [heavy goods vehicles], as soon as possible,” Tesla’s letter to Labour’s future of roads minister, Lilian Greenwood, stated.
How much is it worth?
It’s not yet possible to calculate how much Musk’s firm stands to benefit from the trading scheme.
The value of credits is set by demand and “how much surplus there is and the willingness of [firms] selling credits to a settled price,” Mike Hawes, head of the U.K.’s SMMT, told reporters in a recent briefing.
The credit trading scheme’s workings aren’t transparent to the industry, Hawes said, with no view into the value of credits or which automakers are buying and selling.
But the automotive sector is “aware that some manufacturers are in discussion about potentially purchasing credits from those who have overachieved,” Hawes said.
For Henig, Musk’s carbon credits payday is a reminder that the relationship between business and politics will become increasingly entangled as Trump returns to power.
“How these interact with the U.K.-U.S. agenda on trade is unknown but they will almost certainly play a part,” he said.
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