FCA will pool Tesla emissions with its own to help meet CO2 targets

08 April 2019

FCA will pool Tesla emissions with its own to help meet CO2 targets

8 April 2019

Fiat Chrysler Automobiles (FCA) is paying US electric vehicle (EV) manufacturer Tesla to pool its emissions figures in Europe.

The move would bring FCA’s average CO2 emissions down by offsetting the company’s petrol and diesel vehicles from Fiat, Jeep, Alfa Romeo and Maserati against the zero-emission outputs of Tesla’s EVs. This would help the manufacturer avoid a large penalty under 2021 CO2 targets.

A report in the Financial Times quoted UBS analysis that FCA’s average CO2 output from its cars was 123g/km in 2018, much more than the 95g/km figure required under 2021 legislation. Analysts at Jefferies forecast that the Italian firm could face fines in excess of €2 billion when the new targets become law.

Under EU rules, carmakers can pool emissions internally, a move that allows Volkswagen Group to use its SEAT and Skoda brands to help mitigate the large CO2 figures from Audi and Porsche. The rules also permit rival companies to form ‘open pools’, yet before FCA’s proposal, none had decided to take this route.

‘For Europe, this is the first time that completely separate manufacturers have pooled their emissions together as a commercially viable compliance strategy,’ Julia Poliscanova, a senior director at Transport & Environment, a green-energy lobby and research group, told the newspaper. ‘Once you’ve set up a pool, it is valid for several years.’

Carmakers are struggling to meet emissions limits for 2021, with many open to the fact they will encounter severe fines for going over the 95g/km limit. The collapse of the diesel market has severely hindered those that were pinning their hopes on the technology, forcing them into the expensive development of EVs.

The introduction of WLTP, in the wake of the Dieselgate scandal, has only helped to increase average CO2 levels due to the stricter nature of the emissions test. Daimler, for example, reported in February that its average emissions had grown 7% in Europe in 2018 - to 135g/km from 125 grams in 2017.

FCA is planning to sell hybrid and electric vehicles in the future, with a range of wild and production-ready concepts on show in Geneva. Yet the carmaker is regarded as lagging behind the competition with its development and a late showing and low sales would make meeting EU targets near impossible without the Tesla deal.

Chief executive Mike Manley has previously said the company would use all options available to meet the targets, including dropping the most polluting cars from its range and continuing to sell diesel vehicles that produce less CO2 than petrol models.

FCA formed its open pool with Tesla on 25 February, according to a document on the European Commission website. The US carmaker would, therefore, be counted amongst its fleet brands. The declaration also shows Toyota and Mazda planning to pool their emissions figures together. Toyota has often been considered the most likely to be near EU targets, due to its leading position in the hybrid market. The large Japanese manufacturer owns a 5% stake in Mazda and the pool would help offset any financial penalties the business may incur.