Fiat Will Pay Tesla to Help Overcome Tough EU Emissions Regulations


Tesla entered deal with Fiat Chrysler Automobiles (FCA) in order to help FCA meet European Union emissions targets.

"The purchase pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest cost approach", FCA said in a statement.

According to PA Consulting, FCA's average fleet emissions were 120g/km past year and, prior to this announcement, was expected to be 6.7g/km over the target in 2021.

Anyhow, the terms of the deal between Tesla and FCA have not been disclosed however nearly every industry media website reports that hundreds of millions have been paid out by FCA to Tesla.

Tesla and FCA become the first auto manufacturers to join forces in order to "get around" the emissions rules, although Mazda and Toyota have announced they will do the same. Compared to other automakers, it has shown slow adoption of hybrid and electric cars.

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"FCA is committed to reducing the emissions of all our products", said FCA in a statement about the deal.

The statement from the Italian-US firm confirmed a report in the Financial Times that FCA was paying Tesla, whose electric cars have no Carbon dioxide emissions. In the year prior to that, it earned approximately $279.7 million in a similar deal. Deals such as the one with FCA are anticipated to bode well for Tesla's bottom line. While the firm is not facing a crisis, it probably would not mind an influx of cash while it attempts to improve sales and prepare for future cars such as the Model Y. This is only allowed between manufacturing groups, and internal buddying is not permitted - so Volkswagen wouldn't be able to offset Skoda's emissions against Audi's, for example.

In 2018 FCA's average fleet emissions were 120.5g/km.

The European Union has set a target for average carbon dioxide emissions of 95 grams per kilometre for each new vehicle, to be achieved by 2021. However, this, along with a deal between Toyota and Mazda, is the first time that two wholly separate vehicle firms have agreed to pool their emissions in Europe.