The agreement allows FCA to avoid government fines, similar to a move it made in the U.S.
Fiat Chrysler Automobiles, maker of a lot of large Jeeps and heavy Maseratis, has agreed to a deal with electric-only automaker Tesla to pay millions of euros to help it meet European Union emissions standards. How so?
It's nothing new for FCA or Tesla, as the two have been engaged in a similar arrangement in the U.S. before in order to meet Corporate Average Fuel Economy standards from the federal government. FCA has also purchased emissions credits from Honda and Toyota in the U.S., according to Automotive News, to avoid fines for falling short of fuel economy targets. For Tesla, it's been a steady stream of revenue that's been drying up of late as more EVs hit the market, generating about $103 million in revenue in 2018 against almost $280 million in 2017.
While FCA has an electric future in mind and promises a number of plug-ins – based on the raft of them shown in production and concept form at this year's Geneva Motor Show – they won't start hitting the market until late this year at the earliest. And like nearly every other automaker, its smaller Fiats aren't selling well enough as more consumers flock to SUVs that push its CO2 average well past the target. For now, FCA gets to pay millions to Tesla for its EV goodwill instead of selling EVs of its own.
Source: Financial Times