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Tesla (TSLA) partners with Honda to pool sales in Europe and avoid emission fines for the latter

Tesla (TSLA) and Honda have confirmed that they are partnering to pool their sales in Europe in order for the latter to avoid emission fines due to its lack of electric vehicles.

Europe has put in place new regulations to reduce fleet emissions from automakers.

Each automaker has to sell more electric vehicles in order to get their average emissions down and avoid large fines.

Automakers who are lagging behind with electric vehicles are allowed to pool their sales in Europe with automakers who are already beating their emission requirements in order to avoid those fines.

Last year, we learned that FCA had reached a deal with Tesla to pay the California automaker $2 billion to pool their sales in Europe.

Now Bloomberg is reporting Honda is also joining Tesla’s pool:

“Honda Motor Co. has joined Fiat Chrysler Automobiles NV in pooling its fleet with Tesla Inc.’s to comply with Europe’s tougher emissions standards for passenger cars this year.”

They didn’t disclose how much Honda is paying Tesla to be part of the pool.

Honda has recently launched a new electric vehicle, the Honda E, and it made it only available in Europe — leading us to believe that it is a compliance electric car aimed at meeting the standard.

However, the Honda E is a small city car with a short range and Honda is not expected to sell enough of them to meet the fleet requirements.

Sales of regulatory credits is currently an important part of Tesla’s business.

Last quarter, it contributed around $400 million to Tesla’s income, but the automaker is aiming to be profitable without any credit long-term.

Tesla is not the only automaker benefiting from the new regulations in Europe.

Volvo recently announced that it will beat the fleet requirements and it has made a deal with Ford to pool sales in Europe for an undisclosed amount.

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