09 May, 2019

Update: FCA to pay Tesla €1.8bn for emissions credits

Fiat Chrysler Automobiles (FCA) will pay Tesla a total of €1.8 billion to help it meet stringent new emissions targets. Tesla could contribute up to 80% of FCA’s CO2 compliance credits.

The carmaker is buying emissions credits from Tesla in order to avoid large fines from both the EU and the US. Analysts at Jefferies forecast that the US-Italian carmaker could face fines in excess of €2 billion when the new targets become law.

‘For Europe, this is the first time that completely separate manufacturers have pooled their emissions together as a commercially viable compliance strategy.’

Julia Poliscanova, a senior director at Transport & Environment, a green-energy lobby and research group

From 2020, Tesla will contribute 80% of FCA’s CO2 compliance credits, lowering to 15% in 2021. The carmaker aims to conform to emissions regulations on its own by 2022.

FCA aims to meet these regulations in the next three years by expanding its use of hybrid and electric vehicles as well as making existing models cleaner, according to Chief Executive Mike Manley.

First of its kind

The pool between the two manufacturers was announced in early April 2019, but was arranged behind closed doors in late February.

‘For Europe, this is the first time that completely separate manufacturers have pooled their emissions together as a commercially viable compliance strategy,’ Julia Poliscanova, a senior director at Transport & Environment, a green-energy lobby and research group told the Financial Times.

Many carmakers are struggling to meet the 2020 target of 95g of CO2 emissions per kilometre, with the average standing at 120.5g per kilometre in 2018.