Fiat has found a novel way to avoid paying some massive corporate fines in the EU. With the 2021 deadline looming for Europe’s push to cut down carbon emissions, Fiat finds itself unprepared to hit the new targets. This sets them up to pay billions if not for a partnership with Tesla.
The new carbon emission targets are set to be a 40% reduction on 2007 levels. For each gram of C02 produced, there will be a 95 euro fine, multiplied by the number of vehicles the manufacturer sells. Market-wide penalties are expected to hit $14 billion euros, with Fiat on track to face $2 billion euros in fees.
Further complicating efforts to meet these targets, industry-wide, has been the move away from diesel engines. Though diesel produces more nitrogen oxides, there’s less C02. Unfortunately, a series of scandals has made this option an unattractive one.
The enormity of these fines shows the lack of effort on FCA’s part to develop alternative-energy engines. Though they made an all-electric 500 available, late CEO Sergio Marchionne begged people not to buy one as they lost too much money per sale.
Tesla, on the other hand, benefits from the short-sighted practice of measuring tail-pipe emissions. Since Tesla’s are battery powered, they produce no carbon while performing. There’s an argument to be made about the environmental impact of their battery development, to say nothing of the potentially dirty methods that can be used to charge a Tesla.
Instead, the San Carlos, CA company will have no problem meeting the new EU requirements. This has created an opportunity to simply buy they’re way into meeting the coming standards.
Since the EU’s goal is to bring all C02 levels down, they’re allowing for carbon-pooling. FCA is looking to capitalize on this by paying Tesla hundred of million dollars for their zero-carbon credits. And Tesla needs that cash right about now.
Whether this will motivate FCA to start developing more carbon-neutral vehicles on the future remains to be seen. In the meantime, Elon Musk has found a little room to breathe as Tesla faces slowing demand on the Model 3.