US charges Fiat Chrysler with skirting emissions standards
The company immediately denied the charges and pledged to work with President-elect Donald Trump’s adminstration to resolve the issue “fairly.”
Fiat Chrysler (FCA) chief Sergio Marchionne said there was no intent to defraud or evade the rules, but acknowledged that the company’s disclosure could have been better.
The Italian-American auto maker has software ready to deploy that will resolve all the government’s concerns, which he called a difference of opinion over “calibration.”
But it was telling that FCA twice in its statement referred to the “new” or “incoming” administration, as Trump has pledged to reduce regulations, dismissed climate change, and praised Fiat Chrysler for new US investments as recently as Wednesday.
Trump has accused the Environmental Protection Agency (EPA) of having “destroyed millions of jobs” with anti-oil regulation.
Even so, trading of FCA shares was briefly suspended on the New York Stock Exchange, after the share price had fallen over 16 percent just after the announcement. When trading restarted it was down 14.5 percent, but recovered ground and was down eight percent around 1930 GMT.
In Milan, the share price fell nearly 15 percent before trading was halted, and closed down 16 percent.
– ‘Undisclosed software’ –
After successfully concluding an emissions cheating case just Wednesday against Volkswagen that spanned over a year, and ended with criminal charges, the EPA charged Fiat Chrysler with using software on about 104,000 trucks that allowed them to emit more nitrogen oxides (NOx) than permitted.
The software, which was not disclosed to regulators, was installed on the 2014 to 2016 models of Grand Cherokees and Dodge Ram 1500 trucks sold in the United States, the EPA said in a statement.
The EPA said “testing revealed that the FCA vehicle models in question produce increased NOx emissions under conditions that would be encountered in normal operation and use.”
The agency has found “at least eight undisclosed pieces of software that can alter how a vehicle emits air pollution.”
However, the violation notice said the agency is still investigating whether the software constitutes “defeat devices” as in the VW case.
“We continue to investigate the nature and impact of these devices,” said Cynthia Giles from EPA’s Office of Enforcement and Compliance Assurance.
“Failing to disclose software that affects emissions in a vehicle’s engine is a serious violation of the law.”
The company already is facing two class-action lawsuits claiming it uses software that allows vehicles to pass emissions tests but emit more than the allowed levels of pollutants during normal driving.
– ‘Unnecessarily maligned’ –
Marchionne said his company has been in talks with the EPA since September 2015 to resolve the agency’s concerns but was “unnecessarily maligned” by the way the EPA handled Thursday’s announcement.
“The issue could have been settled … in a more business-like manner,” he told CNBC.
And he said the software on the car “cannot be classified as defeat devices because we were trying to defeat nothing.”
Instead he said the software on the FCA vehicles has “mechanisms that prevent damage to the engine, and that operate under very specific circumstances.”
Those exceptions need to be disclosed, and he acknowledged there may have been instances “where some of those disclosures may not have been as complete as they should have been.”
However, he said the company is ready to roll out a software package that “will cure all of their concerns.”
The company said in its statement it intends to work with the “incoming administration” to resolve the matter “fairly and equitably.”
Trump in his first press conference since his election on Wednesday praised the company for its plans for new investment in the United States, which will create 2,000 new jobs.
He also has said climate change was a “hoax.”
The EPA announcement about FCA comes a day after the government announced a final settlement of the criminal case against German auto giant Volkswagen for using defeat technology in its diesel cars.
VW on Wednesday agreed to plead guilty to three criminal charges and pay $4.3 billion in civil and criminal fines for conspiracy and fraud in its emissions scandal. That was in addition to $17.5 billion paid to consumers, dealers and for environmental cleanup.
The government also charged six senior VW executives for hiding the existence of the emissions cheating software from US regulators.
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