Fiat Chrysler Automobiles NV has signed an agreement with Tesla to comply with the new European Union standard on carbon-dioxide emissions.
The financial terms of the deal were not disclosed, according to the Financial Times. UBS analysts warned that Fiat will find it challenging to meet the target because of its “under-investment in electrification.”
“The whole point of a CO2 credit market is to leverage the most cost-effective ways to reduce overall greenhouse gas emissions in the market,” Fiat said in a statement. “The purchase pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest cost approach.”
The European Commission believes the target is realistic. According to arstechnica, the penalties for automakers who fail to meet the target is $107 per gram of carbon emissions over the set limit. This condition will be applicable to every single car registered in the European Union.