Carbon Tracker analysis finds widespread under-reporting of automaker emissions creating hidden transition risks for investors

LONDON, 2 June, 2026 

New research from financial think tank Carbon Tracker shows that several legacy automakers carry climate-related financial risks comparable to traditional oil and gas producers. The findings are particularly relevant for Japanese OEMs ahead of the country’s AGM season, given their continued reliance on hybrid vehicles and their outsized role in global vehicle production.

The research, from financial think tank Carbon Tracker, finds that major automakers are systematically understating the emissions linked to their vehicles. Across a sample of 17 of the world’s largest OEMs, representing 80% of passenger vehicle sales, Carbon Tracker found an average discrepancy of 33% between reported and real-world emissions from vehicle use.

This “Carbon Gap” stems from widespread use of unrealistic lifetime mileage assumptions, optimistic plug-in hybrid vehicle (PHEV) usage estimates, and the exclusion of upstream fuel-production emissions.

Using a standardised methodology designed to reflect real-world vehicle usage, Carbon Tracker found that several automakers exhibit carbon intensity levels higher than major oil and gas companies when measured on the basis of emissions as a proportion of enterprise value (tCO₂e/EVIC).

Ben Scott, Head of Energy Demand at Carbon Tracker and co-author of the report, said: 

“Automakers are the gatekeepers of future oil consumption. Passenger vehicles are the largest source (27%) of global oil demand and every ICE or hybrid vehicle sold today locks in 10-20 years of additional consumption.  

Automakers’ flawed emissions reporting masks the reality that a dollar invested in legacy automotive firms is in many cases just as carbon intensive as a dollar invested in oil and gas.” 

Leaders and laggards 

The analysis identifies major differences both in transition strategy and emissions disclosure practices across the automotive sector, with some automakers aligning more closely with electrification trends and transparent reporting than others.

Renault and Stellantis emerged as relative leaders on emissions transparency, with reported Scope 3 emissions closely aligned with Carbon Tracker’s estimates, while companies such as BYD and BMW demonstrated substantially higher BEV sales shares than hybrid-heavy peers.

These issues are particularly relevant to Toyota, whose AGM falls on June 17. As the world’s largest automotive manufacturer by volume, with more than 10 million annual vehicle sales, Toyota maintains a hybrid-heavy strategy, selling approximately 27 hybrids for every battery electric vehicle in 2024.

Michael Wells CFA, Analyst at Carbon Tracker and co-author of the report, said: 

“Toyota’s hybrid emissions are an outlier in the sector, exceeding the total emissions of entire manufacturing groups such as BMW. Its hybrid-heavy resource allocation indicates a commitment to technology that faces obsolescence. As major markets move toward outright bans on internal combustion components, Toyota’s hybrid-heavy portfolio risks becoming a fleet of stranded assets.” 

Ken Maeda, Founder of Undertones Consulting, said:  

“Toyota’s heavy reliance on hybrids has delivered short-term sales success but carries significant long-term financial and market risks for both Toyota and the wider Japanese automotive industry. By locking in long-term oil consumption, this strategy heightens stranded asset risks at a time when global peers are accelerating electrification.”  

Mazda and Mitsubishi display the highest emissions intensities, of 10.2 and 9.9 tCO₂e/EVIC, respectively, compared with 4.0 for Shell, the highest intensity oil and gas firm featured in the report.

General Motors exhibits the sector’s largest absolute emissions gap, driven by a high-intensity product mix heavily weighted toward trucks and SUVs in the North American market, combined with the most significant disclosure deficit in the peer group. 

Subaru showed the largest relative reporting gap, with emissions potentially understated by more than 200% due to reporting assumptions that fail to reflect the high-mileage reality of its predominantly US-based fleet. 

Geopolitical Uncertainty and Consumer Lock-in

The financial risks of delaying the EV transition are being compounded by global energy shocks. The ongoing crisis in the Strait of Hormuz underscores the extreme vulnerability of the legacy automotive business model. Automakers persisting with ICE and hybrid technology are effectively locking consumers into highly volatile, inflated fuel costs for decades to come.

This exposure is particularly acute for the Japanese automotive sector. Japan is overwhelmingly dependent on foreign energy, importing more than 90% of its oil, largely from the Middle East through vulnerable chokepoints like Hormuz. By continuing to build vehicles that rely entirely on liquid fossil fuels, domestic giants like Toyota expose both their global consumer base and their home economy to structural macroeconomic instability.

Scott added: “The crisis in the Strait of Hormuz is a stark reminder that the real-world cost of driving a legacy vehicle isn’t static. When an OEM sells a hybrid or an ICE vehicle today, they aren’t just selling hardware – they are anchoring a consumer to the oil tap for the next fifteen years. In an era of acute geopolitical supply shocks, failing to decouple transport from crude oil is no longer just an environmental misstep; it is active destruction of consumer value and an unhedged risk for investors.”

Investor implications  

Carbon Tracker argues that that inconsistent and potentially understated emissions reporting creates material challenges for investors attempting to assess automaker transition risk and carbon exposure accurately.

The report finds that differing assumptions around vehicle lifetime mileage, hybrid usage and fuel-cycle emissions can materially distort reported Scope 3 Category 11 emissions, reducing comparability across issuers and potentially leading to the mispricing of carbon-intensive business models.  

Giuseppe (Joseph) Jacobelli, Managing Partner at Bourne Impact Capital Ltd and Founder of actE, said: 

“As for many other industries, carmakers failing to transition from carbon-intensive legacy assets to bankable ones face significant financial liabilities. Institutional portfolios must navigate this ‘bumpy flight’ by prioritising the economic inevitability of the green shift to prevent systemic capital erosion and asset stranding.” 

Carbon Tracker said that investors should move beyond headline emissions disclosures and scrutinise the assumptions underpinning automaker climate reporting, particularly ahead of key shareholder votes and transition-related engagements, such as Toyota’s AGM on 17 June. 

In particular it urges investors to focus on BEV Sales Share as the core transition KPI and incorporate carbon intensity (tCO₂e/EVIC) into corporate valuation models to avoid mispricing high-emission business models. 

 

Notes to editors  

The report, Oil Companies in Disguise, can be downloaded free of charge from here. 

 To arrange an interview please contact:   

Conor Quinn conor.quinn@greenhouse.agency  +44 7444 696 214 

Greenhouse Communications  TrackerGroup@greenhouse.agency