Global automakers face the risk of fines from the European Union for failing to meet the new, tougher emission standards. This pushes them into a race for carbon credits from Tesla (NASDAQ: TSLA). Now, the Japanese automotive juggernaut, Honda, is joining Fiat Chrysler Automobiles (FCA) in merging its fleet with Tesla.

Honda is joining the open European CO2 pool to help itself achieve EU compliance by 2020 and avoid fines. Honda has now decided to join the FCA open pool, according to a study by Schmidt Automotive Research derived from official data from the European Commission.

Honda has registered just 1,000 Honda E BEVs in Western Europe this year, accounting for just 2% of the total regional registrations. This underscores the importance of how badly the company needs CO2 credits from Tesla.

At the end of October, it became known that FCA was locked with Tesla on carbon credits with a multi-year agreement. FCA has agreed to pay Tesla hundreds of millions of euros so that the electric vehicle manufacturer's cars are now counted in its fleet, in order to avoid heavy fines for violating tough new EU emission regulations.

FCA Locked with Tesla ( $TSLA ) on Carbon Credits with Multi-Year Agreementhttps://t.co/O0nWGVQOcf

— Tesmanian.com (@Tesmanian_com) October 28, 2020

This means that Tesla will continue to benefit financially from these deals. This, in turn, will have a positive effect on the financial situation of the company, which is now building factories on three continents and strives to continue its robust expansion.

EU rules allow competing companies to form so-called open pools. The Tesla-FCA deal for Europe marks the first time entirely separate producers have pooled their emissions together as a commercially viable regulatory compliance strategy. The deal with Honda is yet another example of similar collaboration.

Tesla generates significant revenues by selling zero-emission vehicle credits. Thus, the more electric vehicles Tesla produces, the more carbon credits it can sell, which in turn will have a positive effect on the company's revenue.

H/T @ArmandVervaeck/Twitter

© 2020, Eva Fox. All rights reserved.

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Article edited by @SmokeyShorts, you can follow him on Twitter

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