Fiat Chrysler Automobiles Will Pay Tesla $500m+ To Avoid EU Emissions Fines

Fiat Chrysler Automobiles has agreed to pay Tesla hundreds of millions of dollars to allow Tesla vehicles to be counted in its fleet to avoid fines for violating new European Union emission rules.

This arrangement is the first of its kind and is estimated by one Wall Street firm to equate to $500+ million dollars worth of credits to Tesla from Fiat Chrysler over the next 2-3 years. The electric automaker has made over $1 billion in the last three years by selling emissions credits in the United States.

Beginning in 2020, 95% of automotive fleet emissions in the EU must average under 95g of CO2 per kilometer i.e. must have a fuel efficiency of about 57 mpg for internal combustion vehicles.

In 2021, full fleets must be compliant, and the penalties could add up to financial ruin for companies unable to meet the strict standards.

The EU rules allows different auto companies and divisions to come together to form an expanded fleet, in order to average out emissions across larger numbers of vehicles.

Companies with existing higher emissions like Fiat Chrysler can combine with low or zero emissions divisions like electric automaker Tesla to meet the standards.

Tesla offered its “open pool” deal to other auto manufacturers according to Teslarati, but Fiat Chrysler Automobiles was the only one with an arrangement by Tesla’s March 25th deadline.

Volkswagen has invested heavily in hybrid or electric vehicle technology. The German automaker is well positioned to meet the new EU standards.