Tesla has reached a deal reportedly worth hundreds of millions of dollars with Fiat Chrysler to pool their fleet together in Europe for the purpose of the latter avoiding emission requirement fines.
The European Commission is putting in place an average CO2 emissions requirement of 95g per kilometer in automakers’ fleets next year.
It means that, on average, the vehicles sold by an automaker throughout the year needs to be no more than 95g per kilometer or they expose themselves to significant fines.
Of course, adding zero-emission vehicles, like all-electric vehicles, to the mix, can help bring the average down significantly, but Fiat Chrysler is seen as a lagger in the industry when it comes to bringing all-electric vehicles to market.
Like with the ZEV mandate in California, where automakers falling behind in electric vehicle sales can purchase credits from other automakers with a surplus, the EU allows automakers to pool their fleet together to avoid the fines.
Tesla sent out an invite to automakers who could use its important zero-emission fleet in Europe and according to an update on the European Commission’s website, Fiat Chrysler took them up on the offer.
Neither company disclosed the financials of the deal, but it is estimated to be worth hundreds of millions of euros by the FT.
Tesla’s sales of emission credits have been extremely useful to help boost its financials over the years, but the impact has been somewhat limited by the availability of the credits and only a few markets implementing them.
Now this new system in Europe, which is a big market for Tesla, should have a bigger impact.
It also comes at a great time as Tesla is believed to be under a significant cash crunch following a lackluster first quarter in 2019.
That said, Tesla shouldn’t expect it to last for too long because automakers don’t like to send money to their competitors.
Even though they have definitely fallen behind the rest of the industry, Fiat Chrysler is planning its own lineup of electric vehicles and they likely will not need Tesla’s fleet in a few years.
But that’s exactly the goal of those regulations. The more EVs the better.
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