Tesla has added Honda to its Fiat Chrysler Automobiles (FCA) pooling agreement, which allows the Japanese automaker to meet the European Union’s average emissions regulations, noted Bloomberg in a recent report. The addition of Honda to Tesla’s Fiat Chrysler pooling agreement could lead to skyrocketing future profits for the EV automaker.
Honda will lump its fleet of vehicles with Telsa along with Fiat Chrysler in Europe to avoid EU fines of 95 euros (~ $ 110) per C02 emissions per km. Penalties will be imposed on automakers that exceed fleet average CO2 emissions of 95 g / km, reported Wards Auto.
Tesla investor and YouTube management company @stevenmarkryan gave figures about Honda̵7;s inclusion in the Tesla / Fiat pooling deal. According to investor TSLA’s preliminary estimates, the EV automaker could earn $ 100 million in legal credit from the Japanese carmaker, which would be a significant contributor to the revenue stream. by Tesla.
The partnership between Tesla and FCA has proven to be a murderous combination in Europe. By April 2020, the International Council for Clean Transport (ICCT) reported that these two companies account for 39% of all electric vehicle registrations in Europe. ICCT has reported that Tesla sales have increased, especially in the UK, where there are “10 times more deliveries”.
Automotive researcher Matthias Schmidt said that the number of Tesla registrations in Europe could increase in the fourth quarter as Model 3 vehicles are being shipped from Shanghai Gigafactory. The combined supply of Tesla vehicles to Europe in Q4 will probably be enough to cover the CO2 emissions of Fiat and Honda.
In January 2020, Baird analyst Ben Kallo estimated that FCA’s pooled deal with Tesla could cost OEMs $ 1.8 billion through 2023, or about $ 150-200 million per quarter. Fiat and Tesla’s deal proved successful after the automaker EV reported $ 354 million in revenue from regulatory credits. The regulatory credits generated Tesla in revenue of $ 428 million in the second quarter and $ 397 in the third quarter. Altogether, Tesla’s Fiat Chrysler pooled deal brought the company in revenue around 1.2 billion USD so far and exceeded Kallo’s initial estimate.
Many TSLA bears have argued that the recent reports of Tesla profits could be attributed to revenue from regulated credits. However, TSLA speculators like Ryan have a different view. “These credits, the ability to attract cash from thin air, are the same according to the product Tesla is doing is it done. They are not creating the means to obtain credits. They are creating vehicles because they are creating vehicles, ”explained the investor in his recent video.
See Ryan executed Tesla’s recent deal with Honda in the video below.