FCA deal to buy CO2 credits from Tesla going ahead

Fiat Chrysler Automotives will purchase CO2 credits from Tesla to help it hit carbon dioxide goals and avoid hefty fines in the US and Europe. The cost of this greenwashing is estimated at close to two billion euros.

The Financial Times broke news on the deal that had made it into our humorous Short Circuit category initially this April. It now appears as if FCA will indeed go ahead and buy CO2 credits worth €1.8bn from Tesla – at least in 2020.

Fiat Chrysler is struggling to keep up with tightening CO2 emission regulation. The EU had only approved stricter emission limits this April and stipulates that CO2 emissions of new passenger cars must be reduced by 37.5 per cent by 2030 compared to 2021 levels. In the interim, a reduction of 15 per cent for both vehicle classes must be achieved by 2025 reportedly.

Time is running fast for FCA, but the company says the green-buying is only an intermediate concern as it wants to meet this target without the need for credits from 2022. The FT quotes chief executive Mike Manley saying that about 80 per cent of FCA’s CO2 compliance would come from purchasing credits from Tesla in 2020, falling to around 15 per cent in 2021 as the company’s sale of battery and hybrid vehicles grew.

For said electrification, Fiat is currently outfitting its Italian production facilities. The plan is to make them fit for electric car making by 2021 with FCA ready to spend more than five billion euros reportedly. The FCA factory Mirafiori in Turin, for example, will manufacture a compact electric vehicle platform, first for the Fiat 500 in EV version. Further investments will flow into a combined vehicle architecture and a plug-in hybrid system for the Jeep, Alfa Romeo and Fiat brands.

By 2022, Jeep alone plans to offer ten plug-in hybrids and four fully electric vehicle models. Also, Maserati will phase out all diesel engines and launch eight plug-in hybrids and four full-electric cars by 2022.

FCA’s total investments in electric vehicles and hybrids over the next five years will add up to 9 billion euro, according to the electric roadmap presented in June 2018.

ft.com (pay wall)