Fiat cuts deal with Tesla to use EV credits and avoid EU emissions fines

Fiat Chrysler Automobiles (FCA) has formulated a deal with Californian electric carmaker Tesla that will help it dodge fines for high emissions that could be charged by the European Union under its strict emissions regulations.

The deal would see the Italian/American carmaker pool its vehicles with Tesla’s in order to achieve an overall lower emissions figure, avoiding a penalty for exceeding the new stringent EU emissions rules that demand a maximum emissions of 95gm/km of CO2 by 2021.

It could also be a significant boost to Tesla’s finances, pulling in a major fee for allowing its vehicles to be used to help meet one of its great rivals meet its production targets.

It will effectively sell the credits from its zero emissions vehicles to other car makers who have been slow to respond to the new standards. The Financial Times, which revealed the deal with Fiat Chrysler, said it could be worth hundreds of millions of Euros.

Ratings agency Moody’s has reported that many carmakers in the EU are having trouble meeting the emissions standards, and face hefty fines should they not bring their overall emissions in line with the new regulations by 2021.

Moody’s estimates that carmakers exceeding the regulations – a list that includes Renault-Nissan, FCA, Hyundai, BMW, Daimler AG, Ford, Volkswagen AG, Honda and Jaguar – could face fines to the tune of €2.4-11.2 billion euros ($A3.8-17.7 billion).

To meet the strict emissions standards, the rules allow carmakers to pool models within their own groups, or form “open pools” with other carmakers.

FCA is the first carmaker to do so, having filed an application to pool with Tesla in February.

As reported by the FT, the deal with Tesla “provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest cost approach.”

Fiat Chrysler has been relatively quiet in the race to develop electric vehicles compared to other legacy carmakers, such as Volkswagen, which has stated it plans 70 electric vehicle models by 2030 and is committing €30 billion ($A48 billion) to do so.

Last year the Italian/American carmaker committed said it planned to spend €9 billion ($A14.23 billion) over the next four years to develop electric cars.

At the 2019 Geneva Motor Show it put on show its first electric concept car, the Fiat Concept Centoventi which once in production would be allow customisation of interiors and accessories, and with a choice of four bumpers, four roofs, 4 wheel covers and 4 wraps.