Fiat Chrysler Automobiles has agreed to pay Tesla hundreds of millions of euros so that the vehicles of Tesla are counted in its fleet to avoid fines for violating new European Union emission rules, the Financial Times reported on Sunday.
The step will let Fiat Chrysler offset carbon dioxide emissions from its cars against Tesla's electric cars, by bringing down its average figure to a permissible level, the newspaper said.
The report did not mention further financial details of the specific amount that Fiat Chrysler has agreed to pay Tesla.
Fiat Chrysler formed an open pool with Tesla on Feb. 25, the report added, citing a declaration with the European Commission.
Tesla did not immediately respond to a request for comment on Sunday. Fiat Chrysler did not directly address the amount that it would pay but added it would "optimize the options for compliance that the regulations offer."
"FCA is committed to reducing the emissions of all our products...The purchase pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest cost approach," FCA added in a statement.
The fleet CO2 target for Europe, which starts to take effect next year, is 95 grams per kilometer.
Dave Leggett, who is automotive editor at analytics company GlobalData, said in a note Monday: "As the time horizon to 95 grams per kilometer shortens, other companies are sure to consider pooling as a strategy for avoiding large fines. The sum FCA may be paying Tesla for the pooling privilege has not been disclosed. It is not surprising that zero-emissions Tesla is alert to the revenue raising pooling opportunity emerging in Europe. It has also made money trading zero-emission credits in the US in the past."
In 2018, Fiat brand’s CO2 emissions were 119.2g/km, according to JATO, therefore analyst firm Evercore ISI calculates that the brand would need to reduce emissions to less than 89g/km to comply with the targets. Assuming the 30g/km gap and applying the 95 euro fine for noncompliance, the potential fine at current levels would be roughly 3 billion euros, Evercore ISI estimates.