Published on April 7th, 2019 | by Zachary Shahan0
Tesla & Fiat Dance An Interesting Tango
April 7th, 2019 by Zachary Shahan
We occasionally joke about people who have claimed for the past 11 years that Tesla will die any day. The truth is, though, it’s nearly unbelievable that Tesla has indeed survived, and how quickly it has grown to become so big and influential.
Fiat has been on the flip side of the electrification story, generally eager to avoid it, deny it, defer it, and complain about it.
One of the things that has been a bit of help to Tesla over the years has been California clean transport policies, policies which have required automakers to go electric … or buy credits from an automaker that has sold more electric vehicles than required. The automaker selling those? Tesla, of course. Selling those credits has provided a decent little revenue stream for Tesla over the years.
“There’s a new game in town. Europe has been increasing its clean vehicle requirements. Yet again, some major automakers aren’t prepared to meet them. The news today is that Fiat has essentially thrown up a white flag and partnered with Tesla in order to minimize its costs,” the Financial Times reports (h/t Alter Viggo).
“Fiat Chrysler Automobiles has agreed to pay Tesla hundreds of millions of euros so the electric carmaker’s vehicles are counted in its fleet in order to avoid large fines for breaking tough new EU emissions rules. The move will allow FCA to offset CO2 emissions from its cars against Tesla’s, lowering its average figure to a permissible level. From next year, the EU’s target for average CO2 emissions from cars is 95g per kilometre. In 2018, average emissions were 120.5g per kilometre, according to data supplier Jato Dynamics. FCA averaged 123g last year, according to UBS, which said the carmaker had the “highest risk of not meeting the target”.”
Some see this as a bad move — enabling Fiat’s foot dragging is seen as a harmful move. Fiat should be forced to pay the fines or get its electric act together, critics say.
The flip side of the argument could be that boosting Tesla financially is more worthwhile at the moment. Tesla, no doubt about it, has been pushing the auto industry to electrification much faster than it would have gotten there on its own. In fact, it’s possible the European regulations forcing Fiat to pay fines or buy credits from Tesla wouldn’t be nearly as strong as they are if it wasn’t for Tesla proving that consumers do indeed want competitive electric cars, and that they can be produced.
Giving Tesla hundreds of millions of euros could help keep the young company in a financially secure form, could speed up its development, and could even speed up the construction of a Tesla Gigafactory in Europe. In the end, is the financial boost for Tesla worth more than Fiat meeting the minimum emissions requirements? Or is Tesla fine and dandy and it would be better to force Fiat to electrify quicker, close down shop, or go on the market itself? That’s a complicated calculus to make.
What seems clear, though, is that Europe is getting more serious about electric transport, and Tesla is again poised to capitalize on that while it continues to push for cleaner air and a stable climate as strongly as it possibly can.
Any other thoughts on this tango between Tesla and Fiat? Any guesses about other automakers Tesla may bail out (and profit off of) in Europe’s brave new world?