The move will prompt the Italian automaker to offset carbon dioxide emissions from its cars against teslas and reduce its average greenhouse gas emissions to an authorized level, as reported by the Financial Times, which first reported the deal. Last spring, FCA reached a deal with Tesla that could cost FCA $1.8 billion by 2023. According to Ben Kallo, an analyst at Robert W. Baird and Co. GM and Fiat Chrysler Automobiles, the State of Delaware announced earlier this year that they had entered into agreements to purchase federal greenhouse gas loans from electric carmaker Tesla. The notifications did not contain details of GM or FCA`s agreements with Tesla. But the deal shows the growing challenge automakers face in meeting U.S. fuel efficiency requirements. FCA plans to sell hybrid and electric vehicles in the future, but it is considered to be behind most other automakers in this part of the market. Weak sales of electric cars make it almost impossible to achieve EU targets without the Tesla agreement. Last August, we reported on an agreement between Fiat Chrysler Automobiles (FCA) and Tesla, which allowed the two companies to legally aggregate their CO2 emissions.
The agreement will help the ACF avoid the large fines imposed by the European Union on the car manufacturer due to the introduction of stricter pollution rules. Tesla also does not receive a crude agreement on the deal, since we now learn that FCA`s payments are effectively financing the construction of its much-anticipated new gigafactory outside Berlin. The agreement for FCA is that pooling essentially “dilutes” the company`s emissions by integrating Tesla vehicles into the count. This allows CO2 exposure to be distributed across more vehicles, reducing the total emissions footprint, at least on paper. According to FCA, Tesla`s vehicles, along with the planned introduction of an electric Fiat 500 and plug-in hybrid versions of the Jeep Compass, Wrangler and Renegade, should help the company comply with emissions requirements in a timely manner. Although this is a bit of creative accounting for FCA, the agreement will circumvent a fine of 700 million euros for failing to achieve emission targets by 2021. FCA plans to launch a new electric version of its Fiat 500 mini sports car in Europe this year, as well as plug-in hybrid versions of its Jeep Compass, Renegade and Wrangler models. With Tesla loans, the company should comply with European emissions rules, CEO Mike Manley told analysts in July. CEO Mike Manley had previously said the company would use all available options to achieve the goals, including removing the most polluting cars from the range and continuing to sell diesel vehicles that produce less CO2 than gasoline models. The ACF and Tesla have agreed to consolidate their European fleets into a pool that the EU considers a single model for determining the average emissions of their new fleet of vehicles. FCA actually buys the right to use Tesla`s electric vehicles to reduce its average CO2 emissions.
Tesla generates significant sales by selling emission-free auto credits in the United States. Last year, it gained 103.4 million $US, up from 279.7 million $US the previous year. Sales can vary considerably depending on when the contracts are executed, the company said in an administrative notification in February. As a result, fiat and Tesla`s most recent sales figures will be improved compared to 2007.