General Motors and Fiat Chrysler have admitted to buying emission certificates from Tesla in order to avoid fines for excessive CO2 emissions. The exact sums involved have not been released.
Regulations on CO2 emissions in the US and the EU are increasingly challenging carmakers. Those who have not adapted their model range in time are faced with high fines, but Fiat Chrysler Automobiles found a loophole: This year Fiat Chrysler is to spend €1.8bn on emission certificates from Tesla. According to a Reuters report from 2015, Fiat Chrysler was already buying credits back in 2015 from Tesla, Toyota and Honda to comply with US environmental regulations.
It now appears that the US industry giant General Motors have also resorted to this trick. As the news agency Bloomberg reports with reference to documents submitted in the US state of Delaware, not only FCA but also GM acquired emission rights from Tesla on a large scale. Now the two car manufacturers have confirmed the deals. Fiat Chrysler told Bloomberg that the purchase of such certificates was an effective tool as long as US environmental regulations were not in line with the demand for electric cars.
The Financial Times recently reported that FCA alone wants to pay around 1.8 billion euros to Tesla to meet CO2 targets and avoid high fines in the US and Europe. In the EU it is supposed to be “hundreds of millions of euros”, but these figures are not confirmed.
From 2020, new cars in the EU will not be allowed to emit more than 95 grams of CO2 per kilometre – not per vehicle, however, but on average of all vehicles of a manufacturer. Models with higher CO2 emissions can therefore be legally offset against electric cars, which are estimated at zero grams of CO2. It is said that manufacturers are also holding back their electric cars in order to manipulate CO2 fleet emissions, according to frequent criticism from potential buyers.
Without dramatic changes to the fleet that would have reduced profits, Fiat Chrysler would probably have had to pay a fine of around 390 million euros, said CEO Mike Manley. “The path we have taken has drastically reduced this figure and we will achieve compliance,” he said.
Car manufacturers around the world increasingly need to sell more electric and other environmentally friendly vehicles in order to meet quotas or limits. If manufacturers don’t sell enough of them in countries like the USA, the European Union or even China, they have to buy credit from competitors like Tesla to make up the difference.