Fiat Chrysler to pay Tesla hundreds of millions for European emissions credits

Fiat Chrysler (FCA) has reached a deal with Tesla to count the California carmaker’s EVs as part of the FCA fleet in order to avoid paying fines for violating new European Union emissions rules. The Financial Times reported that the deal is worth “hundreds of millions of euros.”

More stringent emissions standards will take effect next year in the EU, reducing the average emissions limit to 95 grams of CO2 per kilometer. Automakers whose vehicles don’t meet the target (which will probably be all of them, with the possible exception of Renault/Nissan) are permitted to form “open pools” with other companies to reduce their fleet-wide average figures. The arrangement is similar to the system of trading ZEV credits used in California. Tesla has made over $1 billion in the last three years by selling excess emissions credits in the US.

“FCA is committed to reducing the emissions of all our products,” said FCA. “The purchase pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest cost approach.”

FCA has long been at the rear of the pack in the electrification race, and like all the legacy automakers, it’s caught between European governments’ goal of reducing emissions and European drivers’ growing appetite for gas-guzzling SUVs. The company is obviously calculating that paying to “manage compliance” is cheaper than bringing its own EVs to market (and as always, talking about reducing emissions is free).

Electrek’s Fred Lambert noted that the deal is a well-timed windfall for Tesla, which appears to be going through a cash crunch, but that the extra income may not last for more than a few years. To its credit, Fiat Chrysler does have its own electrified vehicles in the pipeline – last year the company announced plans to invest 9 billion euros ($10.1 billion) in electrification over four years.

 

Source: Reuters, BBC, Electrek
Image: 
Jakob Härter (CC BY-SA 2.0)