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Dodge Is Setting Itself Up For Failure

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Too many regulations and not enough done to meet them could spell dark days for Dodge.

Despite rumblings about the potential revival of the Fiat Chrysler and Renault merger, the deal is dead for now. And it's terrible news for FCA since the Italian-American automaker is severely lacking in the technology it needs to make its lineup more fuel efficient. The fact it builds too many V8s has already forced FCA to shell out $77 million to US regulators after failing to meet 2016 fuel economy requirements.

If the company doesn't start producing more efficient vehicles soon, the European penalties will be much stiffer, claims Automotive News Europe. But FCA isn't alone in this, because a new study has found that Volkswagen stands to receive a much larger fine if it fails to meet the EU's emissions targets by 2021.

The study, conducted by the consulting firm AlixPartners, found that Volkswagen could be forced to pay up to €1.83 billion ($2.08 billion at today's rates) in fines to the EU if 2021 comes by and the carmaker's fleet emissions average isn't below 95 grams of CO2 per kilometer. The study also found that FCA could be forced to pay more than 10 times its US fine, around €746 million ($848 million at today's rates), if it doesn't meet the same target in 2021.

Though FCA's fine is smaller, it's also a much smaller automaker compared to Volkswagen and is already under a huge amount of financial stress, potentially making the fallout worse than it will be for Volkswagen. What's more, Volkswagen is already well on its way to having a heavily electrified lineup, a claim FCA can't make. The only bright side is that the two automakers have a lot of company, with the study finding that only Toyota and Volvo are on track to meet the EU's 2021 emissions targets.

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FCA has said that it will try to meet regulations using the cheapest means possible, which could include paying the fines. That could be because the AlixPartners study also found that designing and building platforms compatible with both combustion engines and full-EV powertrains costs car companies $2.3 billion per platform per year.

Making matters worse for the industry as a whole is the fact that the need for investments into new powertrain technologies is coming at a time when sales are on the decline, meaning there is less money sitting around in carmakers' bank accounts. Hopefully FCA will soon figure out how to dig itself out of this mess.