Benzinga | Nov 2, 2020 05:47PM EST

Honda, Fiat Pool To Pay Tesla For European CO2 Compliance: Report

Vehicle manufacturers face strict carbon emissions rules in Europe. Companies must produce a certain amount of zero emission vehicles to offset the CO2 emissions of the company's gas fleet -- or pay a hefty fine.

Honda Motor Co Ltd (NYSE:HMC) is now joining Fiat Chrysler Automobiles NV (NYSE:FCAU) in a pooled fleet with Tesla Inc (NASDAQ:TSLA) that's approved by the European Commission, according to Bloomber.

With this pooled fleet, Honda and Fiat can pay Tesla to include the company's electric vehicles in their fleet, thereby reducing the overall carbon emissions of the company's vehicles.

It is unknown how much money Honda is paying Tesla, but Tesla has made over $1.2 billion so far this year off regulatory credits from other manufacturers.

In an interview with CNBC, a former Tesla board member was quoted as saying "Tesla is eating the competitor's lunch, and having them pay for it."

Benzinga's Take: This is great news for Tesla. More credits means more profit.

Although the regulatory credits leading to record earnings have been a point of contention, the amounts keep increasing every year. Tesla already has a huge lead in electric vehicle technology, and the competition is essentially paying them to keep that lead strong. Tesla is essentially converting legacy automaker's pollution into new clean technology.

Photo courtesy of Tesla