According to a new report, Tesla will be adding Jaguar Land Rover (JLR) to its EU CO2 pool.
As part of Tesla’s EU CO2 pool, Jaguar Land Rover can circumvent the fines associated with its inability to meet CO2 compliance targets.
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Paying the price for producing non-EVs
In Europe, automakers must make sure that the average CO2 emissions of their vehicle lineups don’t exceed a certain limit. All newly registered vehicles per calendar year are taken into account.
For cars, the current limit is about 95 grams of CO2 per kilometer. For light commercial vehicles, the current limit sits at around 147 grams of CO2 per kilometer.
If the average CO2 emissions of an automaker’s vehicle lineup surpasses these limits, the European Union will fine them. The current penalty sits at €95 for each gram of CO2 per kilometer past the limit, multiplied by the number of vehicles the manufacturer registered that year.
For those unwilling to do the math, this could easily equate to hundreds of millions of euros.
A different kind of car-pooling
A company like JLR—which is beyond that CO2 target—can “pool” up with a company like Tesla to meet those requirements.
“According to latest exclusive Schmidt Automotive Research and European Commission data, Tesla have found a new partner to join its EU CO2 pool for 2021. British-based and Tata owned Jaguar Land Rover intend to form a CO2 pool with the Elon Musk-run company for 2021, alongside Honda that were part of Tesla’s pool last year.”
Of course, this doesn’t come free. Jaguar Land Rover already paid £35 million in fines last year, and the company will have to pay Tesla to join its EU CO2 pool.
Honda joined Tesla’s EU CO2 pool last year, in November 2020. The Japanese automaker has continued to pool its sales in Europe with Tesla to avoid fines.
The price JLR pays to join the Tesla pool will be much less than the European Union’s penalty fee.