German Tesla factory: thank you, FCA and 95g

Or: how FCA's legal 'greenwashing' actually leads to investment in e-mobility.

The late Sergio Marchionne never saw a business model in electrified Fiats. Developing a hybrid or even an all-electric powertrain would cost a fortune and therefore make a 500, Panda or Tipo unsellable to their customer base. Moreover, Alfa Romeo did not have the volumes to justify a large-scale investment in the development of a plug-in hybrid powertrain.

FCA’s former CEO was desperately looking for a partner to share the electrification R&D costs for Fiat and Alfa with, but did not succeed. The only solution left to comply with the 95 g/km CO2 target (weighted fleet average of all cars sold in 2020) was a regulatory credit deal with Tesla. Indeed, the Californian EV maker will be pooling part of its vehicles with FCA’s to lower the latter’s average.

FCA agreed to pay an estimated 1.8 billion euros for these CO2 credits through 2023. That’s about 150 million euros per quarter – money Tesla desperately needs to keep its business going. Still, Ben Kallo, an analyst from Robert W. Baird & Co, found that these credits effectively fund Tesla’s European factory, Automotive News writes.

That European plant  - dubbed Tesla’s fourth Gigafactory - will be erected near Berlin, Germany, where Tesla is expected to build the Model 3 and the future Model Y. Tesla already has a site in Tilburg, the Netherlands, but this is not an actual factory. It is a place where Tesla basically unites bodyshells with battery-packs - which are shipped separately from the States to avoid import taxes.

Picture credit: Wikimedia commons, 2020