Fiat-Chrysler to pay Tesla hundreds of millions for CO2 credits
Fiat-Chrysler (FCA) has made a deal with Tesla to ‘pool’, so the electric cars of the latter will be counted as CO2 credits in the FCA fleet to avoid huge EU fines in 2021. FCA, limping behind in lowering CO2 emissions, is happy to count out ‘hundreds of millions’ for this, The Financial Times (FT) writes. A bargain compared to a possible 2 billion euro fine.
From 2021, phased in from 2020, car manufacturers are forced by the European Union to bring down the average CO2 emissions of new cars in their entire fleet under 95 g per kilometre. In 2018 that average was still 120,8 g per km, according to car data specialist Jato Dynamics.
Tsunami of EVs
To get to the 95 g limit, the number of zero emission cars sold has to be at least 5 to 7% for a brand, NGO Transport and Environment calculated last year. That’s the main reason while next year a tsunami of new hybrids and full electric models is expected to be launched.
Not for Fiat-Chrysler, though, that is limping behind in the development of electric cars so far. According to analysts from investment bank Jefferies Group, FCA could face a 2 billion euro fine as it is likely to exceed the limits by 6,7 g of CO2 per km, as PA Consulting forecasts. The biggest gap of 13 carmakers the latter profiled.
Impossible without Tesla deal
Without the Tesla deal, it’s nearly impossible for FCA to meet the target. Even with dropping the most ‘CO2’-prone models from its range and betting on selling more diesel cars, that tend to have lower CO2 emissions, as CEO Micheal Manley said earlier.
Fiat itself is doing well, with 119,2 g/km according to figures from Jato. But for Alfa Romeo (128,9 g), Abarth (141,7 g) or Jeep (142,8 g) and Maserati (225,4 g) things look different.
Making pools to get the target
The European rules allow carmakers to make pools internally to take zero emission cars from one brand in the group into the equation to mitigate the CO2 results of another.
Like Volkswagen with VW, Seat and Skoda, scoring 116,7 to 118,8 g/km on average, to compensate for Porsche (163,0 g), Audi (127,6 g) or Bentley (273,2 g) and Lamborghini (323,2 g).
But the EU also allows so-called ‘open pools’ with rival companies. Something nobody had done so far. Until now. Tesla had advertised openly to sell zero emission vehicle credits in the US, where it earned 103,4 million dollar with it last year and 279,7 million the year before.
‘Open pools’ allowed too
According to the EU Commission’s website, as the FT writes, Tesla formed with FCA an open pool for Europe on February 25th and gave other carmakers the opportunity to join in until March 25th.
The same EU document shows that also Toyota and Mazda are forming an open pool. Toyota has a 5% stake in Mazda. And Toyota with its massive hybrid fleet is with the best of class so far (99,9 g) compared to Mazda (135,2 g).
Not out of the danger zone yet
It doesn’t mean the other carmakers are out of the danger zone. There is a long way to go. Only Tesla, selling pure electric cars (0,0 g CO2 counted), can sleep soundly. PSA is quite confident with Peugeot (107,7 g) and Citroen (107,9 g) and only Opel/Vauxhall (125,6 g) getting behind.
Same goes for the other French carmaker Renault (109,1 g), with partners Nissan (110,6 g), Mitsubishi (119,5 g) and Dacia (120,8 g). For German premium carmakers Mercedes (139,6 g) and BMW (128,9 g) there is still some catching up to do. British JLR with Jaguar (142,9 g) and Land Rover (166,7 g) have no other choice than speed up in electric and hybrid cars too.