Tesla has yet to confirm the deal and it is not clear how much it will be worth. However, the Financial Times claims that the deal is worth hundreds of millions of euros.
New tougher emissions rules for EU next year
The new rules impose an average emissions limit of 95g per kilometer. However automakers can pool models within their own company including electric vehicles to arrive at an average emissions figure per vehicle. For example, Peugeot, Citroen, and Opel vehicles are all made by the PSA Group which can pool all models. However, firms may also form open pools with other carmakers.
A recent article notes: “Beginning next year, new European Commission rules begin to phase in that require a car maker’s fleet-wide emissions to average no higher than 95g/CO2/km—a figure that works out at roughly 57mpg for gasoline vehicles, or 76mpg for diesel-powered vehicles. From 2020, 95 percent of an automaker’s new cars sold in the EU have to meet this target, with the remaining 5 percent falling under the law in 2021. And the penalties for failing are draconian: a €95 ($107) “excess emissions premium” per gram of CO2 over the target, for every single car registered in the EU that year. ”
Fiat applied to form an emissions pool with Tesla that makes only electric vehicles (EVs) in February. FCA is the first manufacturer to take up the open pool option. Given that Tesla only has EVs it will reduce the average emissions of FCA substantially. Tesla has made over $1 billion over the last three years selling emission credits to other manufacturers in the US.
FCA to reduce emissions from its cars
While FCA claims it was committed to reducing emissions from its vehicles it said that the pooling arrangement created flexibility for the company to produce products its customers wanted to buy and would manage compliance with the law at the lowest cost.
FCA to develop more EVs
FCA has been lagging behind rivals in the manufacture of EVs. However, it claimed that it would spend 9 billion euros or about $10.1 billion during the next four years to develop EV’s.
The one electric car FCA sells in the EU is the FIat 500e. It is not often that a company CEO recommends not buying one of their cars but Fiat CEO Sergio Marchionne said:”If you are considering buying a 500e, I hope you don’t buy it, because every time I sell one it costs me $14,000.”
