FCA Links With Tesla to Beat European Emission Fines

Fiat Chrysler Automobiles signs a deal with Tesla that will allow it to avoid paying fines for exceeding European Union carbon-dioxide emission limits from 2021, the Financial Times has reported.

FCA, whose brand portfolio includes Alfa Romeo, Chrysler, Dodge, Fiat, Jeep and Maserati, will pay for the right to count Tesla’s electric vehicles as part of its fleet under a so-called “open pool” option permitted by EU emission regulations.

Under the EU regulations, the average emissions of a company’s new-car fleet in 2021 must be 95 g/km or less – compared with the 130g/km regulation in force today.

The EU fleet averages are calculated on the number of cars sold.

While Tesla’s European sales are relatively small, its electric-powered Model 3, Model S and Model X will allow FCA to significantly lower its fleet average emissions owing to the fact that they don’t emit any CO2.

Information posted to the website of the European Commission (the executive body of the EU) reveals FCA formed an “open pool” alliance with Tesla on Feb. 25.

Neither company has commented on the terms of the deal, but the Financial Times report says FCA likely will pay Tesla “hundreds of millions of euros.”

In a statement, FCA says its “open pool” alliance with Tesla will “optimize the options for compliance that the regulation offer(s).” It adds: “FCA is committed to reducing the emissions of all our products. The purchase pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest-cost approach.”

FCA declined a Wards request for information about its fleet’s current level of CO2 emissions. But a 2018 report by the International Council on Clean Transportation said FCA's European fleet average for CO2 emissions was 120 g/km in 2017 -- about middle of the pack among mainstream producers at the time.

FCA unveiled hybrid versions of both the Jeep Renegade and Alfa Romeo Tonale concept car at the 2019 Geneva auto show in March, together with the electric-powered Fiat Centroventi concept car. It also has announced it has developed a new electric-powered version of the Fiat 500, although it is not due to go on sale in Europe until 2020.

Tesla has not immediately commented on its deal with FCA.

As it only produces electric cars that emit no CO2, Tesla is not affected by the tightening of the EU’s CO2 emission regulations.