In an attempt to avoid fines for violating new European Union emission rules, Italian-US carmaker Fiat Chrysler Automobiles NV (FCA) has agreed to pay millions of dollars to Tesla in order to include the latter’s vehicles in its fleet.

Financial Times reported that the step will let the Italian carmaker offset CO2 emission from its cars against Tesla’s bringing down its average emission of greenhouse gases to a permissible level. However, both the companies have been tight-lipped about the conversation and the amount of money involved.

Both the companies have been tight-lipped about the conversation and the amount of money involved.

Tesla’s annual report, submitted to the US Securities and Exchange Commission, showed that the company made over $1 billion in the last three years by selling emissions credits in the United States. Manufacturers with zero-emission vehicles such as Tesla benefit from regulations which allows them to earn credits and sell the excess of it to other manufacturers.

In the past, such credits have buoyed the Palo Alto company’s earning, allowing it to post quarterly profits when otherwise it would have posted a loss. Tesla recently began deliveries of its linchpin Model 3 into international markets in China and Europe. However, following major delays in transit, it reported a 31 per cent drop in deliveries for the first quarter.

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Tesla recently began deliveries of its linchpin Model 3 into international markets in China and Europe.

Meanwhile, citing a declaration with the European Commission, Financial Times reported that FCA had formed an open pool with Tesla on February 25. In a statement, Fiat Chrysler did not directly address the amount that it would pay but added it would “optimize the options for compliance that the regulations offer.”

“FCA is committed to reducing the emissions of all our products…The purchasing pool provides flexibility to deliver products our customers are willing to buy while managing compliance with the lowest cost approach,” FCA added in its statement.