Fiat Chrysler joins with Tesla to avoid carbon emissions fines

The Fiat Chrysler Alliance will reportedly pay Tesla ‘hundreds of millions of euros’ to allow the two manufacturers to ‘pool’ their fleets together, in order to avoid punitive fines for exceeding European Union carbon dioxide targets.

The move will allow FCA to offset its comparably high average CO2 figure from across its fleet against Tesla’s. As a manufacturer of pure electric vehicles, Tesla’s fleet average CO2 figure is zero.

From 2020, the EU’s target for average CO2 emissions is 95g/km – a way below FCA’s average last year of 123g/km. This could put the brand in line for fines of up to two billion Euros (£1.72bn) by 2021, when the limits will be enforced. It’s been suggested FCA is the most likely major brand to exceed these targets.

FCA operates seven brands in Europe – Abarth, Alfa Romeo, Fiat, Fiat Professional, Jeep, Lancia and Maserati. Currently, the entire fleet runs on pure petrol or diesel engines – FCA doesn’t offer any hybrid or pure electric models, though it has promised an all-electric version of its next Fiat 500, as well as plug-in hybrid models of the Jeep Renegade and Compass.

EU rules allow companies to pool their emissions together, offsetting one brand’s emissions against another. This is only allowed between manufacturing groups, and internal buddying is not permitted – so Volkswagen wouldn’t be able to offset Skoda’s emissions against Audi’s, for example.

FCA joined Tesla’s so-called open pool on February 25, and according to a senior director at the Transport & Environment lobbying group the partnership will be valid for ‘several years’. Toyota and Mazda also created a similar pool on the same day, but those two brands are already closely aligned – Toyota owns a small stake in Mazda.

The two brands have also committed to produce EVs together at a new facility in the United States.

FCA and Tesla did not disclose financial details of their deal.