AMSTERDAM -- Fiat Chrysler Automobiles may transfer emissions through its Chinese partner in a bid to lower its fleet emissions in the world's biggest car market.

The plan follows FCA's strategy in Europe to pay Tesla so that the Tesla vehicles are counted in its fleet to avoid fines for violating upcoming European Union CO2 reduction targets.

FCA is working closely with its Chinese partner Guangzhou Automobile (GAC) to balance its fleet to comply with emissions regulations in the market, CEO Mike Manley told shareholders at the company's annual meeting here on April 12.

FCA has the possibility to transfer emissions through GAC and is looking into that option, Manley said

This kind of transfer is possible through a related parent company. GAC is considered a parent company to the FCA-GAC Chinese joint venture.

Manley confirmed that FCA has signed a "multi-year deal" on emissions with Tesla in Europe. FCA has agreed to pay Tesla hundreds of millions of euros for a pool to offset CO2 emissions from its cars against Tesla's electric cars in Europe and avoid EU fines.



Manley did not confirm the figure because it is "competitive information."

FCA's CO2 emissions in Europe will fall to 98.5 grams per km by 2021 from 120 g/km now, analysts firm PA Consulting predicts, meaning that the company will miss its target of 91.8 g/km. This leaves FCA at risk of a 700 million-euro penalty, PA Consulting said in a report. The pool with Tesla significantly reduces this risk.

Electrified vehicles will account for 6.5 percent of FCA's European sales in 2021, PA Consulting forecasts. In comparison Renault-Nissan's new-car fleet will be made up of about 11 percent EVs and plug-in hybrids, enabling the alliance to avoid fines, PA Consulting said.

FCA Chairman John Elkann said the automaker had advanced emissions-reducing technology that puts it at the industry's "leading edge" but was not obliged to use it. "Just because you have the ability, you do not necessarily have to build products that will not be profitable," he said.

FCA plans to invest 9 billion euros by 2022 in hybrid and electric technology and launch 35 EVs and plug-in cars globally, according to its latest business plan.

In the United States, FCA has purchased emissions credits from Tesla, Toyota and Honda.



Manley said that FCA spent 350 million euros on buying emissions credits in the U.S. in 2018.

In China, the FCA-GAC joint venture, which builds Jeeps, last year missed its fleet emissions target of 6.7 liters per 100 km, coming in at 7.67 l/100 km, according to data released by the Chinese government and shown in a report by Bernstein Research.

The Bernstein Research report quoted GAC as saying that in 2019 "intra-group transfers of EV credits would help offset the lack of EV credit generation at their most problematic joint ventures."

Manley said for emissions calculation purposes FCA is willing to pool its Chinese production with GAC. He said the FCA will launch this year in China a plug-in version of the Jeep Grand Commander large SUV, which is built by the FCA-GAC.

FCA is working with GAC on the possible production of full-electric vehicles, Manley said.

The EVs will most likely be different versions of those built by GAC for other joint venture partners Toyota, Honda and Mitsubishi, research firm IHS Markit said.

EDITOR'S NOTE: This article was amended to clarify FCA's CO2 strategy in China.