Fiat Chrysler to pay Tesla hundreds of millions to avoid EU emission fines - Sensationalist Headlines

(Reuters) - Italian carmaker Fiat Chrysler Automobiles NV (FCA) has agreed to pay electric carmaker Tesla Inc 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 the Italian carmaker offset carbon dioxide emissions from its cars against Tesla’s, by bringing down its average figure to a permissible level, the FT said. The report did not mention further financial details of the specific amount that Fiat Chrysler has agreed to pay Tesla. The Italian carmaker formed an open pool with Tesla on Feb. 25, the report added, citing a declaration with the European Commission. https://uk.reuters.com/article/us-fiat-chrysler-tesla-eu/fiat-chrysler-to-pay-tesla-hundreds-of-millions-of-euros-to-pool-fleet-ft-idUKKCN1RJ03I Seems like it's gaming the system a bit...

Hahahaha what

Isn't this kinda the same thing as ZEV credits in California?

Yeah pretty much, but I don't think the EU intended it to be used as such.

Wow that must hurt. Should hurt even more, and the pain should be spread through more.

Apparently they did. Under EU rules, carmakers can join with rival companies to form so-called open pools but none have done so until now. ... Toyota and Mazda have also applied to the EU to form an emissions pool, as have Citroen, Peugeot, and Opel. https://www.bbc.co.uk/news/business-47845971

its not as bad as it seems though because this is still forcing car makers to lower their emissions, this way by subsidizing electric cars in this case, but as long as say...a new government gives waivers for these very programs there's still the fine for polluting.

The price has been announced now. FCA will pay Tesla 1.8bn Euros for this. Fiat Chrysler Automobiles has said it will pay electric carmaker Tesla close to €2bn to help it meet tough new emissions targets and has reported a 29 per cent drop in first-quarter profits. The company will purchase credits from Tesla to help it hit carbon dioxide goals and avoid large fines in the US and Europe, at an estimated cost of €1.8bn. Carmakers across Europe are striving to meet a 2020 EU target of average car CO2 emissions of 95g per kilometre. In 2018, average emissions were 120.5g per kilometre, according to data supplier Jato Dynamics. Fiat Chrysler aimed to meet this target without the need for credits from 2022, banking on a strategy of making its own cleaner vehicles, as well as hybrid and pure electric models, said chief executive Mike Manley. About 80 per cent of FCA’s CO2 compliance would come from purchasing credits from Tesla in 2020, falling to around 15 per cent in 2021 as the company’s sale of battery and hybrid vehicles grew, he said. https://www.ft.com/content/fd8d205e-6d6b-11e9-80c7-60ee53e6681d

Man. that is just unethical and diabolical as fuck tbh. It's a cute exploitation of technicalities, but it still doesn't change the fact that they're just gaming the system in order to not violate it on a technicality, while still unapologetically violating the core sentiment and point of those rules and constraints. It's like that one fucking neighbor who is watering his fucking lawn during a drought, because everyone else in the neighborhood is vacationing abroad, so he figures he just gets to use up all of their water quota as well. It's cuntish and it negates any benefit there could have been from not just "playing it close to the edge" but actually securely making strides past it into safer territory. What a fucking cunt company!

Going with that neighbour analogy, the cap on water consumption tends to decrease every year. So as credits become more scarce/allow for less consumption, that neighbour who is watering their lawn will most likely have to pay their neighbours more and more to buy up their excess credits, which is a financial incentive to use less water. And of course, the cap on consumption/emissions decreases over time, so that necessarily brings the overall consumption/emissions down. Same deal with Fiat Chrysler. If they don’t update their product range, the credits will cost them more and more to buy up. It’s an incentive for FA to build cars with lower emissions, and is exactly what FA is wanting to do by 2022 so that they will not have to pay €1.8 billion in excess credits from others.

Just because the premise makes armchair economists ejaculate without physical contact, doesn't mean it's not deplorable as fuck. like, jesus christ. It's like stubbornly over-eating every single day because you're prejudiced against the idea of eating left-overs, because only poor people and bums do that and you refuse to just prepare less food because that'd mean not reaching the ceiling on your monthly food budget. It absolutely IS diabolical and it's also fairly idiotic, because it also puts them in a position where they just won't be adapting to requirements in the short term and, as you point out, slower in the long term. "we'll get there eventually" will turn into bankruptcy anyway. It's absolutely short-sighted and very uncool. there's nothing positive about this trick. It's technically legal, but i have no idea how you arrive at it somehow not being unethical and shitty. It is.

I’m not even going to humour that ‘over-eating’ analogy because it seems so far detached from what is actually the case here. The point of cap-and-trade systems is to look at the market as a whole rather than the individual entities. If the cap-and-trade system reduces an externality in the entire market by 30% over a period of time, is that really so bad and so different and so ‘unethical’ from mandating a 30% reduction from each and every individual entity over that same period? The outcome in terms of emissions is the same. Except the latter has more red tape and compliance costs than the former.

The point of the cap-and-trade system is to lower emissions across the board AND individually per company. That's the idea. That everyone chips in. Now somebody is not even remotely chipping in and you think that's just dandy? I don't know why it's so hard for you to fathom why i have a problem with this. You know this is gonna end with them in 2022 not even remotely being ready to follow through with emission cuts either. Then they're gonna keep buying into tesla's cut until they finally just can't afford it. At which point (and this is why i think this isn't ok. Because it's gonna end up being like this, rather than them catching up.) they'll just kneel and cry before big momma EU for a bit of leeway, which they then get and they'll rubber-band that leeway and not be able to comply, only to get more leeway. Companies gaming the system to avoid complying never ends in them eventually complying. That's not how businesses work. They'll never do their fucking part until their arm gets twisted and i just don't see that happening if the foot isn't put down already here. You know it's gonna go that way too. It's always what happens. Just look at any bigger international enterprises where the (local or global) government tries to reign them in. It always ends in them stalling and being difficult to the point of pissing on the paper the law was originally written on.

You accuse Fiat Chrysler of ‘not even remotely chipping in’ and ‘never do their fucking part’ but Fiat Chrysler aimed to meet this target without the need for credits from 2022, banking on a strategy of making its own cleaner vehicles, as well as hybrid and pure electric models, said chief executive Mike Manley. About 80 per cent of FCA’s CO2 compliance would come from purchasing credits from Tesla in 2020, falling to around 15 per cent in 2021 as the company’s sale of battery and hybrid vehicles grew, he said. What more should they do? Close up shop?

Could you read a bit more of the entire post you ignored to post this epic zinger?

I think it would be problematic if the EU grant them leeway on the matter, but this isn't the US so I'm hopeful that won't happen. On the positive side it's sending money to companies that are investing in EVs.

It's ok to be hopeful and it's ok to see the positives in this. I just responded with my cynical take, because that's what i honestly expect will happen and i do think that it's firmly on unethical territory due to the circumstances that made the law necessary. Having seen the EU behave very ignorantly when legislating these past 10 years, i see it as rather probably that Chrysler will be trying to jerk them around and that the EU will cowtow to money, rather than send a harsh message In the eventuality that Chrysler isn't where they need to be in 2022 or beyond. That is all. I get you. I really do.

This is exactly what I would expect out fiat/Chrysler, because they rather game the system than fix their shit-assed cars. Poor emissions is the least of their problems. Fix It Again, Tony.

It’s not gaming the system. It’s exactly how the system is intended to function. This would be a perfect textbook example of how cap-and-trade works. Companies which do not produce as many polluting cars, eg Tesla, are financially rewarded by being able to sell their surplus credits for pollution allowance. Whereas companies which do produce too many cars with too much pollution, eg Fiat Chrysler, are forced to buy the surplus credits from other companies (Tesla) or else risk massive fines for exceeding their allowance. And then the overall cap on allowances is reduced regularly, so even Fiat Chrysler will have to (and already are) change their operations to suit.