CO2 objective: is Fiat’s combination with Tesla legal?

The car group Fiat-Chrysler has signed an agreement with Tesla in the run-up to the 2021 CO2 targets. It is a question of avoiding fines that promise to be astronomical. However, the legality of the assembly raises questions, and all eyes are turned to the European Commission …

Get flashed at 150 on the highway, and ask a third party to lose his points in his place … Legal? Immoral? For Fiat Chrysler Automobile, it will above all be a matter of life and death! Not the loss of points on the license of Mike Manley, its CEO, but the fact of recovering the rights to pollute from Tesla for the entry into force of the new regulation of CO2 targets in 2021.

According to information from the Financial Times published Monday, April 8, the Italian-American group has signed an agreement with the Californian Tesla, specialist in 100% electric cars, in order to buy its CO2 bonuses. The two companies would thus have developed an ingenious arrangement based on legal loopholes in the regulation on European CO2 targets and thus avoid the heavy penalties provided for.

Legal vagueness

For Hubert Biard, lawyer specializing in company law at Cornet Vincent Ségurel, the answer lies in the text: “there is a very important concept in the regulation which is” community reception “. With this concept, it suffices to Fiat to import a Tesla into European territory, without even registering it, so that it can be counted.

In other words, Fiat will not need to build the vehicle, or even market it, just import and store it. This semantic trick thus makes it legal and Fiat does not hide it. “We will make the most of the options offered by the regulations to meet the standards,” said FCA in a statement to AFP. That’s not all. On the very nature of the contractors, the Commission is also broad-minded:

"Brussels has consented to the creation of" pools ", that is to say conglomerates, including in an informal form, that is to say without capital ties," observes Hubert Biard. According to the lawyer, "the Commission does not even have the right to review the contractual provisions which bind the protagonists since it is a relationship between persons of private law, and therefore confidential. On the other hand, it can either legislate before the regulation comes into force, or initiate an investigation on the grounds of an abuse of rights. "

In other words, if the Commission wants to neutralize this device fitted by Fiat, it could perfectly. For Hubert Biard, nothing is less certain: “it is not excluded that FCA and Tesla obtained an unofficial approval of the Commission. There are obviously major economic stakes, and the automobile industry undoubtedly exerted of the lobbying so that Brussels does not further lock the CO2 regulation “.

Stratospheric fines

As a reminder, the new CO2 regulations which will come into force from 2021 will impose a target of 95 grams of CO2 emissions per car. 100% electric cars will offer a double gain in terms of CO2 savings, when calculating this average. Manufacturers will be penalized with a fine of 95 euros per car and per gram excess …

For manufacturers, CO2 targets have been elevated to the top priority. Some have even established elite task forces, as at PSA, to be on time. And for good reason, the fines promise to be astronomical. Recently, the JATO institute projected the 2018 commercial results on this regulation, which, of course, will only be applicable in 2021, that is to say only two years later (a tiny time horizon on the scale of the automotive industry where the development of a range takes four to five years). This dummy projection makes it possible to gauge the way to go … And the results are barely believable … Thus, the Volkswagen group, which has a gap of 26.6 grams to be absorbed by 2021, would have been fined over 9 billion euros. PSA is said to have paid € 5.4 billion in penalties for its 23-gram spread. The Fiat group, it would have paid 3.24 billion euros in fines.

But unlike Fiat, Volkswagen and PSA are about to roll out a range of electric and electrified cars (hybrids). The Italian-American group has certainly invested 9 billion euros in electrification, but the first models will not arrive before 2020. In addition, it will not be enough to have an electrified range, it will also be necessary that – this represents a sufficient share of sales. We can cite the Renault group as an example, which is, however, one of the most advanced manufacturers in terms of electric cars with a specific range ranging from city cars (Zoé, Twizy) to utility vehicles (Master, Kangoo). Even with this range, the French manufacturer would have paid a fine of 3.6 billion euros in 2018, according to the JATO calculation method.

Mazda to rely on Toyota

Consequently, the manufacturers try to thwart the predictions of JATO. The Fiat-Tesla partnership could be emulated. Mazda has already announced that it will rely on Toyota to reduce its exposure to CO2 standards through a similar scheme. If the Commission chooses to spare the builders with the concern of preserving employment stakes, the governments could be more moved by the method.

The day after the announcement of an FCA-Tesla partnership, the Secretary of State for the Energy Transition expressed her perplexity. Asked during the question period to the government in the National Assembly, Brune Poirson, replied that this alliance “questions the sincerity of the process. It is clearly a deviation from the spirit of the rule which is good that all manufacturers engage in in-depth clean transport. “

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