@Artful Dodger
@Fact Checking
@generalenthu
This post is an attempt to evaluate the impacts of the FCA-Tesla CO2 emission pool for 2020-2023. This analysis updates earlier work by using the latest 2018 EU emissions and fleet sales numbers along with the 2020 “Phase-In” rules.
Background:
Strict new CO2 emission limits have been imposed on new cars sold in the EU starting in 2020. Any manufacturers which sell in the EU are allowed to “pool” their fleets to reduce the pool average emissions and penalties. Fiat-Chrysler Automotive (FCA) and Tesla Inc. have formed such a pool with the implication that FCA will reimburse Tesla for participating. The details of this reimbursement are not clear, but some assumptions will be made, and the implications examined.
TL;DR:
Assuming the FCA pays Tesla 50% of the penalty-reduction value of the Tesla ZEVs sold in the EU (suggested by @Fact Checking ), Table 1 shows the payments to Tesla indicated by this assessment.
The rest of this post documents the methodology used.
Major assumptions and findings:
The FCA-Tesla Pool emission target is 92 g/km (Ref. 1)
The EU emission penalty is 95 €/(g/km)/vehicle (Ref.1)
Table 2 Column A shows the average CO2 emissions for the ICE portion of the pool (Ref. 1). These are 2018 values and are assumed to be constant through 2023, except for 2020 due to Phase-In rules (described below).
Table 2 Column B shows the number of ICE vehicles in the pool. These are 2018 FCA numbers (Ref. 1 and 4) and are assumed to be constant through 2023, except for 2020 due to Phase-In rules.
Table 2 Column C shows the Super-Credit factors. These allow a limited number of low-emission vehicles to have an exaggerated beneficial effect on emission penalty calculations (Ref. 1). The Super-Credit rules are described below.
Table 2 Column D shows the computed maximum number of ZEVs that can have Super-Credit status.
Table 2 Column E shows the computed penalty-reduction value per vehicle of the Super-Credit ZEVs.
Table 2 Column F shows the computed number of ZEVs (in addition to the Super-Credit ZEVs) needed to eliminate the entire emission penalty.
Table 2 Column G shows the computed penalty-reduction value per vehicle for the non-Super-Credit ZEVs.
Figure 1 captures the penalty situation graphically. The initial steeper slopes to the curves are due to the Super-Credit effect and the break in the slope occurs when their scope limitations occur. The downward shift of the 2020 data is due to the Phase-In rules.
Several things are immediately obvious:
1) The Super-Credit ZEVs have a very high value in penalty reduction (12,500€ - 19,500€ per vehicle), but they only apply to the first 20,000-30,000 ZEVs.
2) The non-Super-Credit ZEV’s still have 9000€/ZEV of penalty-reduction value and the total penalty is such that there is room for lots of them (180,000 to 240,000) before the penalty is completely eliminated.
Table 3 tabulates the penalty reduction values as a function of ZEVs added to the fleet.
Implications for Tesla:
There has been speculation on the structure of FCA’s payment to Tesla for the inclusion of their ZEVs into the pool, but specifics seem lacking. As an example, the value of each Tesla could be thought of as a negotiated fraction of its penalty-reduction value (a “bounty”), paid by FCA. @Fact Checking suggested 50% for this bounty, and the results of that assumption are shown in Table 1. Table 1 is simply Table 3 multiplied by the bounty; any bounty value can be applied.
This assessment assumed negligible FCA ZEV contribution (consistent with Ref. 1 2018 data). If in the 2020-2023 timeframe FCA introduces (and sells) significant ZEVs of their own, these would presumably be the first placed in the Super-Credit category. These can simply be subtracted from Table 2 Column D, with the remainder available for Tesla. That remainder multiplied by the appropriate value in Column E will give the remaining Tesla Super-Credit penalty reduction. If FCA ZEV sales exceed the maximum available Super-Credits, the remaining FCA non-Super-Credit ZEVs can be subtracted from Table 2 Column F and remainder then multiplied by the appropriate value in Column G to get the remaining Tesla non-Super-Credit penalty reduction.
Presumably, penalties would by assessed by the EU in the year following their computation (e.g., 2020 emission exceedances would be penalized in 2021). The timing of the payments from FCA to Tesla (and subsequently availability for Tesla financial reporting) is unknown. It is possible that for each ZEV sale, Tesla would receive an immediate bounty. It is also possible that the lump Tesla bounty payments would go out at the same time as the penalty payment to the EU (a year after the sales).
FCA-PSA:
It’s not clear what the merger of FCA and the PSA Group means as far as the pooling arrangement with Tesla. A similar stand-alone assessment using combined FCA and PSA EU data and assuming a theoretical FCA-PSA-Tesla pool is in works.
Details
Super-Credits (Ref. 1):
Super-credits allow manufacturers to count their initial “low-emission vehicles” (<50 g CO2/km) as “multiple vehicles”. FCA has essentially no low-emission vehicles in its fleet, so all Super-Credits go to the Teslas.
Super-credit multipliers: 2020: 2.0, 2021: 1.67, 2022: 1.33, 2023: 1.0. Super-Credits are eliminated after 2023.
Maximum scope of super-credits: 7.5 g/km CO2 of effective emission reduction
2020 Phase-In (Ref. 1):
The wording associated with the 2020 phase-in is a bit ambiguous. Ref. 1 Section 4: “…the provision allows manufacturers to base average CO2 emission values on the best-performing 95% of vehicles”. I’m interpreting this to mean the manufacturer can exclude 5% of their worst polluting vehicles from the calculation of their average CO2emissions for 2020 and also exclude them from the total fleet count.
Ref. 5 provides an extensive list of independent emissions tests. Some of the worst scores for 2018 Fiat are the petrol 500X and the petrol Panda, all in the range of 175-200 g/km CO2. According to Ref. 4, 94,960 500Xs and 168,094 Pandas were sold in Europe in 2018 (total 265,034). Although the breakdown between petrol and diesel are not provided, it is likely that al least 35,000 (5% of the fleet) of these are petrol. It is therefore assumed that 35,000 vehicles with CO2 emissions of (average) 187 g/km are excluded from the 2020 Fiat fleet. The recomputed fleet size and average emission value are shown in the first row, Column A and B of Table 2.
“Eco-Innovations” (Ref. 1):
“Eco-Innovations” were meant to be incentives to reduce ICE vehicle emissions. They include things like efficient alternators, LED lights and solar roofs and computations are used to translate them into CO2 credits. These could be used to reduce average CO2 emission values up to 7 g/km. FCA has no Eco-Innovations (Ref 3.).
References:
1) CO2 emissions from new passenger cars in the European Union: Car manufacturers’ performance in 2018 | International Council on Clean Transportation
2) European vehicle market statistics, 2018/2019 | International Council on Clean Transportation
3) Overview and evaluation of eco-innovations in European passenger car CO2 standards | International Council on Clean Transportation
4) Fiat European sales figures
5) EQUA Carbon Dioxide Index | EQUA INDEX | Independent real world driving data
@Fact Checking
@generalenthu
This post is an attempt to evaluate the impacts of the FCA-Tesla CO2 emission pool for 2020-2023. This analysis updates earlier work by using the latest 2018 EU emissions and fleet sales numbers along with the 2020 “Phase-In” rules.
Background:
Strict new CO2 emission limits have been imposed on new cars sold in the EU starting in 2020. Any manufacturers which sell in the EU are allowed to “pool” their fleets to reduce the pool average emissions and penalties. Fiat-Chrysler Automotive (FCA) and Tesla Inc. have formed such a pool with the implication that FCA will reimburse Tesla for participating. The details of this reimbursement are not clear, but some assumptions will be made, and the implications examined.
TL;DR:
Assuming the FCA pays Tesla 50% of the penalty-reduction value of the Tesla ZEVs sold in the EU (suggested by @Fact Checking ), Table 1 shows the payments to Tesla indicated by this assessment.
The rest of this post documents the methodology used.
Major assumptions and findings:
The FCA-Tesla Pool emission target is 92 g/km (Ref. 1)
The EU emission penalty is 95 €/(g/km)/vehicle (Ref.1)
Table 2 Column A shows the average CO2 emissions for the ICE portion of the pool (Ref. 1). These are 2018 values and are assumed to be constant through 2023, except for 2020 due to Phase-In rules (described below).
Table 2 Column B shows the number of ICE vehicles in the pool. These are 2018 FCA numbers (Ref. 1 and 4) and are assumed to be constant through 2023, except for 2020 due to Phase-In rules.
Table 2 Column C shows the Super-Credit factors. These allow a limited number of low-emission vehicles to have an exaggerated beneficial effect on emission penalty calculations (Ref. 1). The Super-Credit rules are described below.
Table 2 Column D shows the computed maximum number of ZEVs that can have Super-Credit status.
Table 2 Column E shows the computed penalty-reduction value per vehicle of the Super-Credit ZEVs.
Table 2 Column F shows the computed number of ZEVs (in addition to the Super-Credit ZEVs) needed to eliminate the entire emission penalty.
Table 2 Column G shows the computed penalty-reduction value per vehicle for the non-Super-Credit ZEVs.
Figure 1 captures the penalty situation graphically. The initial steeper slopes to the curves are due to the Super-Credit effect and the break in the slope occurs when their scope limitations occur. The downward shift of the 2020 data is due to the Phase-In rules.
Several things are immediately obvious:
1) The Super-Credit ZEVs have a very high value in penalty reduction (12,500€ - 19,500€ per vehicle), but they only apply to the first 20,000-30,000 ZEVs.
2) The non-Super-Credit ZEV’s still have 9000€/ZEV of penalty-reduction value and the total penalty is such that there is room for lots of them (180,000 to 240,000) before the penalty is completely eliminated.
Table 3 tabulates the penalty reduction values as a function of ZEVs added to the fleet.
Implications for Tesla:
There has been speculation on the structure of FCA’s payment to Tesla for the inclusion of their ZEVs into the pool, but specifics seem lacking. As an example, the value of each Tesla could be thought of as a negotiated fraction of its penalty-reduction value (a “bounty”), paid by FCA. @Fact Checking suggested 50% for this bounty, and the results of that assumption are shown in Table 1. Table 1 is simply Table 3 multiplied by the bounty; any bounty value can be applied.
This assessment assumed negligible FCA ZEV contribution (consistent with Ref. 1 2018 data). If in the 2020-2023 timeframe FCA introduces (and sells) significant ZEVs of their own, these would presumably be the first placed in the Super-Credit category. These can simply be subtracted from Table 2 Column D, with the remainder available for Tesla. That remainder multiplied by the appropriate value in Column E will give the remaining Tesla Super-Credit penalty reduction. If FCA ZEV sales exceed the maximum available Super-Credits, the remaining FCA non-Super-Credit ZEVs can be subtracted from Table 2 Column F and remainder then multiplied by the appropriate value in Column G to get the remaining Tesla non-Super-Credit penalty reduction.
Presumably, penalties would by assessed by the EU in the year following their computation (e.g., 2020 emission exceedances would be penalized in 2021). The timing of the payments from FCA to Tesla (and subsequently availability for Tesla financial reporting) is unknown. It is possible that for each ZEV sale, Tesla would receive an immediate bounty. It is also possible that the lump Tesla bounty payments would go out at the same time as the penalty payment to the EU (a year after the sales).
FCA-PSA:
It’s not clear what the merger of FCA and the PSA Group means as far as the pooling arrangement with Tesla. A similar stand-alone assessment using combined FCA and PSA EU data and assuming a theoretical FCA-PSA-Tesla pool is in works.
Details
Super-Credits (Ref. 1):
Super-credits allow manufacturers to count their initial “low-emission vehicles” (<50 g CO2/km) as “multiple vehicles”. FCA has essentially no low-emission vehicles in its fleet, so all Super-Credits go to the Teslas.
Super-credit multipliers: 2020: 2.0, 2021: 1.67, 2022: 1.33, 2023: 1.0. Super-Credits are eliminated after 2023.
Maximum scope of super-credits: 7.5 g/km CO2 of effective emission reduction
2020 Phase-In (Ref. 1):
The wording associated with the 2020 phase-in is a bit ambiguous. Ref. 1 Section 4: “…the provision allows manufacturers to base average CO2 emission values on the best-performing 95% of vehicles”. I’m interpreting this to mean the manufacturer can exclude 5% of their worst polluting vehicles from the calculation of their average CO2emissions for 2020 and also exclude them from the total fleet count.
Ref. 5 provides an extensive list of independent emissions tests. Some of the worst scores for 2018 Fiat are the petrol 500X and the petrol Panda, all in the range of 175-200 g/km CO2. According to Ref. 4, 94,960 500Xs and 168,094 Pandas were sold in Europe in 2018 (total 265,034). Although the breakdown between petrol and diesel are not provided, it is likely that al least 35,000 (5% of the fleet) of these are petrol. It is therefore assumed that 35,000 vehicles with CO2 emissions of (average) 187 g/km are excluded from the 2020 Fiat fleet. The recomputed fleet size and average emission value are shown in the first row, Column A and B of Table 2.
“Eco-Innovations” (Ref. 1):
“Eco-Innovations” were meant to be incentives to reduce ICE vehicle emissions. They include things like efficient alternators, LED lights and solar roofs and computations are used to translate them into CO2 credits. These could be used to reduce average CO2 emission values up to 7 g/km. FCA has no Eco-Innovations (Ref 3.).
References:
1) CO2 emissions from new passenger cars in the European Union: Car manufacturers’ performance in 2018 | International Council on Clean Transportation
2) European vehicle market statistics, 2018/2019 | International Council on Clean Transportation
3) Overview and evaluation of eco-innovations in European passenger car CO2 standards | International Council on Clean Transportation
4) Fiat European sales figures
5) EQUA Carbon Dioxide Index | EQUA INDEX | Independent real world driving data
