Photographer: Qilai Shen/Bloomberg

The FCA group (FIAT-Chrysler) agreed with Tesla to include its average emissions in the total computation of the Italian-American conglomerate. With this movement, FCA intended to avoid the significant fines planned for those manufacturers that did not comply with the new emission regulations of the European Union.

This deal had a cost: FCA will have to pay Tesla about 1.8 billion euros until 2023. That means that the company will enroll a very high amount of cash each quarter, which will increase the profit margins of Tesla. In practice, the deal between FCA and Tesla will allow the automaker to finance the construction of the Gigafactory 4 in Berlin, which will produce models such as the Model 3 and Model Y for the European market, in addition to battery cells (probably development own) and “new vehicles.”

Although this spring FCA will launch the second generation FIAT 500e, an electric urban that will allow the automakers to reduce their average emissions, the truth is the group will depend on Tesla for a few years to comply with European regulations.

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