Fiat Chrysler spent 300 million euros on green loans, mainly from Tesla


A Tesla car in London.

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Fiat Chrysler said on Wednesday in an earnings call that it spent EUR 300 million (US $ 362 million) on regulatory credits last year in Europe alone, most of which it bought from Tesla.

The automaker is now part of Stellantis, formed in January by the merger of Peugeot parent PSA Groupe and Fiat Chrysler. Stellantis CFO Richard Palmer said in the call that the company expects to spend just under € 300 million in 2021 on credits to avoid penalties for CO2 emissions.

“We had credit costs in 2020 of around $ 300 million for Europe, most of which was Tesla,” he said, adding that spending will be lower “but not significantly” this year. (Palmer was previously Fiat Chrysler’s chief financial officer.)

In 2019, FCA committed to spending around $ 2 billion in environmental regulatory credits through the end of 2021.

Automakers struggling to meet stringent CO2 emission standards in Europe can buy credits from cleaner auto companies to meet new emissions limits or to reduce their fines if they don’t stay within the standards.

Selling these regulatory credits has been an increasingly important part of Tesla’s business as the automaker has moved toward sustained profitability. In 2020, Tesla generated $ 1.58 billion in regulatory loan sales revenue, nearly tripling its 2019 figure of $ 594 million. That’s higher than the company’s reported earnings of $ 721 million in 2020, which was its first profitable year.

Fiat Chrysler is not the only automaker to buy these credits from Tesla. For example, Honda committed to buying loans late last year, according to Schmidt Automotive Research.

As more and more automakers make and deliver their own electric vehicles, fewer should rely on Tesla credits to meet environmental standards, even in strict states like California or regions like Europe. However, those standards can also become stricter.

In their recent Q4 2020 earnings call, analysts asked Tesla executives for guidance on regulatory credit sales in 2021. CFO Zachary Kirkhorn said the sales were basically too unpredictable to offer shareholders. concrete expectations.

“This is always an area that is extremely difficult for us to forecast. Regulatory credit sales in 2020 ended up being higher than our expectations, and it is difficult to give guidance on that,” Kirkhorn said. “What I have said before is that in the long term, regulatory credit sales will not be a material part of the business and we do not plan the business around that. It may remain strong for a handful of additional quarters. It is also strong. it may not be. “

He noted that the majority of Tesla’s regulatory credit revenue for the final quarter of 2020 “was not aligned before the beginning of the quarter.” Revenue from credit sales came from “discrete deals that were finalized during the quarter.”

A spokesperson for Stellantis declined to comment Wednesday when CNBC requested more details. A financial presentation from the company is expected soon.

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