Unlike Volkswagen, FCA doesn’t have a cushy number one spot to insulate it from the damages.
It’s one thing to get caught with a blow to the face when you’re at the top of your game, but it’s something else entirely when you get kicked while on the ground. When Volkswagen was caught cheating and was faced with a barrage of self-imposed sanctions, the automaker was at the top, standing at the number one position amongst the rest of the automakers. On the other hand, FCA is already billions of dollars in the red when just today, the metaphorical kick came from the EPA and CARB.
In a statement released by the regulatory boards, FCA is being accused of cheating on the emissions of its diesel engines in a scandal that is quickly becoming known as Dieselgate 2.0. In a statement released earlier today, the EPA claimed to have found software in 104,000 Ram 1500 and Jeep Grand Cherokee vehicles made from 2014-2016 equipped with 3.0-liter EcoDiesel V6 engines. If the EPA’s claims are true, then the software, which was apparently undisclosed to regulators, allows the engine to emit higher levels of harmful nitrogen oxides into the atmosphere than allowed. The unit is known as an auxiliary device and is put in place to allow the engine to alter how it burns fuel in certain conditions in order to improve engine longevity.
Various automakers, including FCA, have been accused of cheating in the past by using these devices. The devices are allowed by regulators in the EU and the US, but they m,ust be disclosed. The EPA is claiming that that's what FCA failed to do. “Failing to disclose software that affects emissions in a vehicle’s engine is a serious violation of the law, which can result in harmful pollution in the air we breathe,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “We continue to investigate the nature and impact of these devices. All automakers must play by the same rules, and we will continue to hold companies accountable that gain an unfair and illegal competitive advantage.”
FCA fired back with its own statement, acknowledging that these devices are in its vehicles but that they adhere to the law because they appropriately balance out the EPA’s demands with the necessary increase in emissions needed to keep the engine from being harmed. FCA has been collaborating with the EPA for the last few months on the matter, providing it information on the devices in question. While it’s still too early to tell, initial impression tells us that, unlike Volkswagen, the dispute does not seem to be a result of malicious intent on the part of FCA. Rather, it appears that there is grey area in the regulations surrounding auxiliary devices, enabling misinterpretations like these to happen.
Regardless, these devices must be announced to regulators and if FCA decided to skirt the law to save some cash, the move could come back to haunt it. For now, the automaker seems to be awaiting for January 20th when President-elect Donald Trump becomes President, which means that by the time the case goes to court, FCA could be dealing with an administration that’s much more forgiving to these types of violations. The most apparent worst case scenario is that FCA gets hit with the full penalty of the law, which allows for a fine of $44,539 per vehicle totaling a crippling $4.6 billion. Even without fines, the damage has been done with the 7th largest automaker’s stock price falling 10% in a single day.
We’ll have to wait and see how the news develops, but hopefully this won’t turn into a long and drawn-out process like the Volkswagen lawsuit. We’ve reached out to FCA for comment and will keep you updated as more news rolls out.