A Tesla car in London.
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Fiat Chrysler said in a winning call on Wednesday that it had spent 300 million euros (362 million US dollars) on regulatory loans last year in Europe alone – most of which it bought from Tesla.
The manufacturer is now part of Stellantis, formed in January by a merger of Peugeot, PSA Groupe and Fiat Chrysler. Stellantis chief financial officer Richard Palmer said on appeal that the company expects to spend just under € 300 million in 2021 on loans to avoid fines for CO2 emissions.
“We had credit costs in Europe of about 300 million for Europe, most of them Tesla,” he said, adding that spending will be lower “but not significantly” this year. (Palmer was previously the chief financial officer of Fiat Chrysler.)
In 2019, the FCA is committed to spending approximately $ 2 billion on environmental regulatory credits by the end of 2021.
Automakers struggling to meet strict CO2 emission standards in Europe can buy loans from less polluting car companies to meet the new emission limits or reduce their penalties if they do not meet the standards.
The sale of these regulatory credits was an increasingly important part of Tesla’s business, as the carmaker moved towards sustained profitability. In 2020, Tesla generated revenue of $ 1.58 billion from sales of regulatory credits, nearly tripling the 2019 figure of $ 594 million. This is higher than the company’s profit of $ 721 million reported in 2020, which was its first profitable year.
Fiat Chrysler is not the only carmaker to buy these loans from Tesla. For example, Honda pledged to buy loans late last year, according to Schmidt Automotive Research.
As more automakers produce and deliver their own and larger electric vehicles, fewer should rely on Tesla credits to meet environmental standards, even in strict states like California or regions like Europe. However, these standards may become even stricter.
In its recent call for earnings in the fourth quarter of 2020, analysts asked Tesla executives for guidance on sales of regulatory loans in 2021. Chief Financial Officer Zachary Kirkhorn said virtually that sales were too unpredictable to give shareholders any expectations. concrete.
“This is always an extremely difficult area for us to forecast. 2020 credit sales have become higher than our expectations and it is difficult to provide guidance in this regard,” Kirkhorn said. “What I said before is that, in the long run, regulating credit sales will not be an important part of the business and we do not plan the business around it. It is possible that for a handful of extra quarters it remains strong. That may not be the case. “
He noted that most of Tesla’s regulatory credit revenues in the last quarter of 2020 “were not aligned before the beginning of the quarter.” Revenue from credit sales came from “discrete transactions that were completed during the quarter”.
A Stellantis spokesman declined to comment on Wednesday, when CNBC asked for more details. A financial record is expected from the company soon.