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

• 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.

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.

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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.