It's not the first time this trick has been done.
We recently reported about Fiat Chrysler’s lack of all-electric vehicles and the problems that created. Not only is the automaker losing out on potential sales for this growing segment, but it’s also subject to fines, especially in Europe. Fortunately, a certain EV automaker is here to help. The Financial Times, via Reuters, reports that FCA has agreed to pay Tesla hundreds of millions of euros to enable sales of Teslas to count towards its own sales.
This will allow FCA to offset carbon dioxide emissions from its cars against Tesla’s, thus lowering its average greenhouse gas emissions to a level permitted by the European Union. The report did not specifically state how much FCA will pay Tesla, but the latter has so far earned over $1 billion over the past three years selling emissions credits in the US alone.
This has worked out nicely for Tesla in the past because it generated easy profits when it otherwise would have reported losses. And it could use the money again. Tesla was expected to announce a first quarter loss as it’s continued to be dogged down by international shipments of its Model 3. Tesla refused to comment on this latest report, but FCA stated the following: "FCA is committed to reducing the emissions of all our products. The purchase pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest cost approach.”
This isn’t the first time FCA has purchased emissions credits from an automaker, aside from Tesla. Past sellers include Toyota and Honda. This arrangement may work in the short term for FCA but the only realistic long-term solution is to launch more electrified vehicles of its own.
Rumor has it FCA is currently holding talks with Europe’s PSA, the parent company of Peugeot and Citroen, about a possible joint venture EV platform. In the meantime, FCA needed to find a way of avoiding paying hefty fines while Tesla needed the cash.