A deal cut last month between Tesla Italian-American multinational carmaker Fiat-Chrysler (FCA) to pool carbon emissions may see the Californian EV maker receive €2 billion ($A3.2 billion) from the legacy automaker that has been slow to shift to low emission cars.
It has now been learned that the deal, which is intended to save Fiat massive fines for exceeding the European Commission’s limits on carbon emissions and which was previously thought to be worth in the vicinity of millions to Tesla, will be worth billions.
It will be a valuable cash injection for Tesla, which recently went to market to add $3 billion in a placement of shares and convertible notes, as it completes its transition to fully fledged EV manufacturer, builds another two “gigafactories” and expands further into new markets.
A number of vehicle manufacturers have been under the watchful eye of the European Union, which reduced its previous CO2 emissions limit of 118.5 grams average emissions for carmakers in 2017 to just 95 grams on average by 2021.
Automakers including Renault-Nissan, Volvo, Fiat Chrysler, Hyundai, BMW, Daimler AG, Ford, Volkswagen, Honda and Jaguar are at risk of huge fines if they do not achieve the average emissions target by 2021.
But under the bloc’s regulations, carmakers may pool their average vehicle emissions within their own group – or with another automaker.
The deal made by Fiat to pool its emissions with Tesla was filed in February, and now, according to Financial Times, it will actually cost the Italian-American carmaker billions of euros, as it tries to catch up with the task of reducing carbon emissions of its vehicles:
“Fiat Chrysler Automobiles has said it will pay electric carmaker Tesla close to €2bn to help it meet tough new emissions targets and has reported a 29 per cent drop in first-quarter profits.”
Indeed, Fiat-Chrysler announced just this week that its high performance sportscar brand, Maserati, will outright disregard the shift to electromobility, claiming that its distinctive sportscars absolutely need fossil fuels to remain true to the brand’s spirit.
With Maserati’s deliveries down 41% and revenue down 38% in the first quarter of 2019, Fiat’s boss Michael Manley told investors last Friday (US time) that the Maserati brand needs to return to its roots.
US boss Al Gardner took it one step further: “This is a brand that needs combustion engines. It needs that raw emotion,” Gardner said.
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She specialises in writing about new technology and has been writing about electric vehicles for two years. She has a keen interest in the role that zero emissions transport has to play in sustainability and is co-organiser of the Northern Rivers Electric Vehicle Forum.