Fiat Chrysler Settles Emissions Cheating Case for $800 Million

Deal resolves cases with federal, state officials, vehicle owners.

by on Jan.10, 2019

Fiat Chrysler agreed to an $800 million settlement to resolve charges of cheating on emissions tests.

Fiat Chrysler reached an $800 million settlement with federal and state government agencies as well making good with the owners of vehicles affected by alleged cheating on emissions tests.

The automaker agreed on Thursday to a deal with the Justice Department and the Environmental Protection Agency, to pay nearly $300 million to the U.S. government and $19 million to California for installing a cheat device to beat emissions tests.

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It’ll pay another $280 million to recall and repair the more than 104,000 out-of-compliance Jeep SUVs and Ram pickup trucks, including payouts to owners of the vehicles of about $2,800 each.

The vehicles included in the settlement include 2014-16 Ram 1500 and Jeep Grand Cherokee diesels, the Justice Department said. Regulators said Fiat Chrysler used “defeat devices” to cheat emissions tests in real-world driving.

(Fiat Chrysler’s Q3 profits dinged by diesel emissions charges. Click Here for the story.)

“By concealing this software, Fiat Chrysler deceived regulators and violated environmental law,” said Associate Attorney General Jesse Panuccio in a statement. “Fiat Chrysler’s conduct was serious and egregious. Its deception robbed the public of the clean air we work hard to protect and put law-abiding competitors at a disadvantage.”

The 2014 Ram 1500 EcoDiesel is part of the group of vehicles that allegedly used a cheat device to beat emissions tests.

Fiat Chrysler continues to maintain that it didn’t deliberately try to cheat emissions tests and didn’t admit wrongdoing as part of the settlement.

“We acknowledge that this has created uncertainty for our customers, and we believe this resolution will maintain their trust in us,” said Mark Chernoby, Fiat Chrysler’s head of North American safety and regulatory compliance, in a statement.

(Click Here for more about FCA’s settlement talks with DOJ and CARB.)

The company was prepared for the settlement, taking an $810 million charge in the third quarter of last year to handle the aforementioned costs. The costs could rise if FCA cannot complete the repairs on at least 85% of the affected vehicles within two years.

Fiat Chrysler isn’t the only automaker dealing with this issue. In fact, it’s paying a fraction of what Volkswagen AG paid for its emissions cheating scandal.

In 2016, VW agreed to pay a $2.8 billion penalty to settle government lawsuits, agreed to buy back some vehicles while it repaired others. Volkswagen also had to pay to offset any harm to the environment and settle other owner lawsuits. All of that cost the German automaker more than $30 billion. About 500,000 VW vehicles were involved in the U.S. cheating scandal.

(EPA suspected Fiat Chrysler of diesel emissions cheating in 2015. Click Here for the story.)

Other automakers have been suspected of similar offenses, but haven’t been brought up on charges as of yet. The scandal essentially killed the rise of diesel sales in the United States and forced VW to dump its diesel vehicles and switch developing battery-electrics.

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