Stellantis Signs MoU for CAFE III Hybrids, Leaves Tesla EU Carbon Pool
Stellantis and Tata Motors signed an MoU to develop CAFE Phase III–compliant engines, hybrid powertrains and lightweight engineering for implementation from FY27 using the Ranjangaon plant’s capacity. Stellantis withdrew from Tesla’s EU CO2 credit pool for 2026 and plans to join an independent emissions pooling arrangement with Leapmotor.
1. MoU Expansion for Hybrid Powertrains and Lightweight Engineering
Stellantis and Tata Motors extended their partnership through a new MoU focused on developing engines compliant with CAFE Phase III norms, hybrid powertrain systems and lightweight battery and engine components. The agreement leverages the Ranjangaon facility, which has produced over 1.37 million vehicles since 2007 and serves both domestic and export markets.
2. CAFE Phase III Regulations and Timeline
India’s CAFE Phase III standards, effective FY27, will impose weight-based fleet-wide CO₂ efficiency targets, driving the need for electrified and hybrid powertrains as well as emissions pooling and vehicle lightweighting. Manufacturers must meet tighter CO₂ benchmarks or collaborate through pooling arrangements to comply.
3. Exit from Tesla EU CO₂ Pool and New Emissions Strategy
Stellantis and Toyota have withdrawn from Tesla’s European Union CO₂ credit pool for 2026, aiming instead to form an independent emissions pooling group with Leapmotor. This strategic shift could reshape Stellantis’s compliance costs and revenue from credit sales while aligning its regulatory and technological roadmap.