Fiat pairs up with Tesla to avoid EU emission fines

Fiat Chrysler Automobiles to pay Tesla “hundreds of millions” of euros to share fleet CO2 emissions and meet tough EU targets

Fiat 500e

Fiat Chrysler Automobiles (FCA) is to pay Tesla “hundreds of millions” of euros to enable Tesla’s electric cars to count as part of FCA’s “pool” of vehicles for the purpose of CO2 emission measurement, thereby allowing FCA to meet stringent EU emission targets. 

Under the deal, first reported by the Financial Times, the Tesla Model 3, S and X will become part of FCA’s vehicle fleet for the purposes of counting carbon dioxide emissions, enabling FCA to more easily meet EU targets.

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European Union rules will require carmakers to post average CO2 emissions of 95g/km across all the cars they sell by 2020 and 2021. Cars from FCA, which owns Fiat and Alfa Romeo, as well as Ferrari, Maserati and Jeep, emitted 123g/km of CO2 on average last year, according to data cited by the Financial Times, meaning the 95g/km target is likely to be hard to hit within a year or two.

Carmakers who do not meet the fleet average targets will have to pay fines of €95 (roughly £82) for every g/km of CO2 over the 95g/km target each car they sell emits. Analysts cited by the Financial Times claim FCA could face fines of more than €2 billion by 2021 if the company’s fleet CO2 emissions aren’t reduced.

EU rules permit companies to “pool” their emissions with internal brands, meaning Volkswagen can share fleet-average emissions with SEAT, Skoda and Audi, and PSA brands (Peugeot, Citroen and Vauxhall) can do similarly. But external pools – where one company teams up with another – are also permitted, and the FCA-Tesla deal is believed to be the first of its kind.

A statement from FCA said the company is “committed to reducing the emissions of all our products” and that it intends to “optimize the options for compliance that the regulations offer”. FCA stressed that “the whole point of a CO2 credit market is to leverage the most cost-effective ways to reduce overall GHG [greenhouse gas] emissions in the market” and that a CO2 “purchase pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest-cost approach.”

What do you think of Fiat pairing with Tesla to combat CO2 emissions? Let us know in the comments below...

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