An agreement has been reportedly reached between Fiat Chrysler Automobiles and Tesla to combine their carbon emissions ratings, enabling the former to evade penalties in European markets.
By collaborating with Tesla to collectively calculate their carbon emissions, FCA can benefit from the advantage of offsetting its emissions with Tesla’s zero-emission vehicles, as per a report by the Financial Times. The report mentions that in 2018, FCA’s average carbon dioxide emissions stood at 123 grams per kilogram driven (g/k), significantly exceeding the EU’s impending limit of 95g/k set to take effect in 2020.
A forecast by PA Consulting in 2018 indicated that FCA was falling short of the 95g/k target by 6.7g/k. Jefferies, a multinational investment firm, warned that this gap could lead to fines exceeding €2 billion ($2.2 billion) for FCA. To align with the emission regulations, FCA has partnered with Tesla, allegedly involving a significant financial contribution to the electric vehicle manufacturer, estimated to be hundreds of millions of euros.
Collaborative emission pooling is permissible within the EU. While major corporations like FCA and Volkswagen Auto Group have previously pooled their brands under a single entity, this alliance between competitors marks a novel approach in carbon pooling. It can be likened to how Tesla trades carbon credits with other automakers, a practice that has reportedly bolstered Tesla’s finances by $383.1 million over the past two years.
With Tesla facing financial uncertainties and witnessing key financial figures departing in recent times, doubts have been cast on the company’s future. Mike Guy, Editor in Chief of The Drive, has suggested that Tesla may succumb to financial pressures this year, a speculation that will be put to the test in the coming months.