The Environmental Protection Agency (EPA) of the United States has alleged that Fiat Chrysler Automobiles (FCA) violated the Clean Air act. The FCA was accused of increased nitrogen oxide emission from its Ram 1500 EcoDiesel and Jeep grand Cherokee SUVs 2014-16 due to the installation of undisclosed software. The assistant administrator of EPA, Cynthia Giles said that FCA is causing illegal pollution by violating the Clear Air act. The devices make the vehicle perform differently on road and during testing.
The stocks of FCA quickly dropped after the allegations by the EPA. FCA stocks lost about 10% and closed at $9.95 per share. The FCA may be asked to pay $44, 539 per vehicle for a clear violation of the Clean Air act. The CEO of FCA, Sergio Marchionne has disputed the alleged charges. He commented that FCA would be compared to Volkswagen in an unfair way and people may draw unjustified conclusions. In the press conference, he called the allegations to be absolute nonsense and he said that it is impossible to compare FCA with Volkswagen.
The German automobile manufacturer Volkswagen admitted that the vehicles are equipped with software that is exclusively designed to cheat on the government emissions testing for diesel vehicles. The company is ordered to pay $2.8 billion as criminal fine and $1.5 billion as civil penalties. The company was found at fault for meddling with the software and intentionally lying about the conspiracy to the US investigators. The case is not over yet as the settlement is waiting for approval from Detroit federal judge. Volkswagen also agreed to bear the civil settlements that can cause $1.7 billion loss for the company to help the car owners and dealers affected by the scandal. The manufacturer has agreed to authorize buybacks of the associated vehicles and offer free fixes.
FCA is worried about being compared to Volkswagen as FCA hasn’t involved in a deceptive act. Many experts said that FCA may be at fault in not disclosing the software, but it can’t be charged with deception like the Volkswagen. It is very common in the automobile industry to use a software to adjust engine emissions. However, FCA has failed to disclose information about this software and this is the reason for the allegations of EPA. Analysts commented that there is no evidence that FCA purposefully cheated.
The FCA vehicles don’t meet the standards with the included software, but it can’t be compared to the deliberate and deceptive act of Volkswagen. Marchionne said that he was disappointed by EPA’s public move when they are discussing the acceptance level of calibration. He also questioned the possible political motive. The disagreement associated with engine calibration is not similar to the defeat devices found in Volkswagen. EPA rebutted to this statement saying that EPA along with CARB committed to enhanced testing when the Volkswagen was found guilty. Marchionne also said that he believes that the EPA has requested the support of the US Justice Department to continue with the investigation.