FCA deal could fund German Gigafactory 4

Fiat Chrysler Automobile’s agreement with Tesla may provide enough to fund Tesla’s Gigafactory 4 in Germany.

That’s according to a Robert W Baird & Co. analyst Ben Kallo, who says FCA’s payments on an estimated US$2 billion payment to Tesla through to 2023 will augment Tesla’s profit margins and should be enough to pay for the purchase and initial construction of Gigafactory 4.

Tesla and FCA earlier formed an alliance so Fiat could attain the European Union’s CO2 requirement of 95g per kilometre in 2020 without risking penalties, the FCA also announcing a US$10.5b plan to include electric vehicles – recently revealing an electric Fiat 500 and Jeep plug-in hybrids (PHEVs), Teslarati reports.

“While we acknowledge investors may want to strip out credits in evaluating operational execution, we do note the credits effectively fund Tesla’s European factory,” Kallo wrote in a report, Automotive News Europe says.

Tesla chief executive Elon Musk announced in November Tesla’s plan to build a plant outside Berlin where it will build several models starting with the Model 3 and Model Y crossover.

Gigafactory 4 construction is expected to start this month, EVtalk

has reported.