FCA Turns to Tesla to Meet EU Emission Targets

Fiat Chrysler Automobile NV has agreed to pay a hefty fee to pool electric cars sold by Tesla Inc. with its own vehicles to meet carbon dioxide emission limits in Europe.

The option has been employed among a given carmaker’s own brands but never before between rival carmakers, the Financial Times says.

The so-called “open pool” scheme is similar to the U.S. system that enables carmakers that don’t meet emission limits to buy “credits” from others that do. Analysts say the maneuver will help FCA avoid as much as €2 billion ($2.2 billion) in regulatory fines over the next two years.

That’s because the EU will slash allowable CO₂ emissions in 2020 to 95 g/km from the current 130 g/km. Last year, FCA’s CO₂ average was about 123 g/km.

Analysts say FCA, which has been slow to adopt electrification, is more likely than any other major carmaker to miss the 2020 target. Companies that fall short face a fine of €95 per gram of excess emissions, multiplied by the number of noncompliant vehicles sold in the EU.

FT notes that estimates predict that FCA will exceed next year’s CO₂ limit by nearly 7 g/km.