Ford is to circumvent potential fines under EU emissions legislation by entering a pooling arrangement with Volvo.

Volvo’s fully electric XC40 Recharge model will start deliveries later this year

Similar to the agreement between Tesla and FCA, the deal will see Volvo Cars and EV offshoot Polestar in effect sell their CO2 credits to Ford, enabling the latter to avoid potentially costly fines under the 2020 targets.

The deal has been announced just days after Jato Dynamics published data showing Volvo is already meeting its assigned CO2 target for this year. Jato figures for Volvo parent Geely Group show its CO2 target for 2020 is an average of 110.3g/km, but by 31 August – four months early – its average was 103.1g/km. As Volvo accounts for 99% of Geely Group’s volume in Europe – with Polestar, LEVC and Lotus making up the remainder – the data shows how Volvo’s consistent focus on electrified vehicles is behind this achievement.

Ford has entered the arrangement after being forced to recently issue a recall on its newly launched Kuga PHEV due to a potential fire risk. This has had a knock-on effect on its average fleet CO2 emissions and affected its compliance with the EU CO2 regulations.

Volvo said that the revenue from the deal would be reinvested in new green technology projects and that its overachievement on EU emissions targets was the result of its work to phase out diesels and offer a plug-in hybrid version of every model. It’s also introducing a range of fully electric models in the coming years, starting with the XC40 Recharge Pure Electric, which starts deliveries later this year.

“For Volvo Car Group, the future is electric and we are transforming our company through concrete action,” said Håkan Samuelsson, chief executive of Volvo Car Group. “I am pleased to see that we are exceeding our CO2 reduction targets. It proves our strategy is the right one for our business and for the planet.”