FCA Faces $79 Million Fine Over U.S. Fuel Economy Shortfall
Fiat Chrysler Automobiles is facing a $79 million civil penalty over its inability to adhere to fuel economy requirements in 2017. Considering the automaker was already hit with a $77 million fine for 2016 model year requirements, the announcement is not unexpected. FCA’s domestic lineup is also loaded with large vehicles featuring sizable motors, a status quo it hopes to offset by buying carbon credits from Tesla.
In fact, the company appears to be taking a wait-and-see approach in regard to pursuing greener automobiles. While it continues to maintain its $10 billion commitment through 2022, aimed at delivering more hybrid and electric vehicles, the automaker’s established strategy involves eating whatever penalties it incurs via federal economy requirements or attempting to pay them off in advance.
Frankly, it might be a more cost-effective way to run the company — as it allows the automaker to continue leveraging older models (cough, Dodge). It’s not like people aren’t buying them… though perhaps not in the same numbers FCA originally claimed. The development of electric vehicles also requires quite a bit of cash, with little promise of recouping those funds through sales. Simply paying emission fines could give the company more time to fine-tune its hybrid and electric models while also minimizing the amount of money it has to invest during an uncertain period for the auto industry.
Then again, FCA could be strategizing itself into obsolescence by not pursuing electrification quite so aggressively as some of its rivals. However, plenty of them are also buying emission credits and taking it easier with electrification.
The Department of Transportation’s report came out on Tuesday, noting that Fiat Chrysler had failed to meet the standards set for 2017. While the report has since been taken down (likely temporarily), FCA confirmed it was notified, adding that it has 60 days to respond.
[Image: FCA]
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I see the trolls who love to identify with the world's worst people and companies have latched on to FCA. It's laughable because there's no strategy or politics to this situation. Chrysler is exactly the same company it has always been, generation after generation: the also-ran of the Detroit Three, milking obsolete platforms for the last penny, balancing its reputation for cheap interiors and poor reliability with a knack for carving out a niche with fun colors and cheap horsepower, often having good ideas but rarely having the money to develop them properly (behold the brilliant but unreliable Pacifica Hybrid, with its habit of becoming engulfed in flames), and somehow managing to come back from the brink every time through pluck or luck (K-cars, the SUV craze). No strategy here other than making it to next quarter in one piece, long term be damned.
This is simply a $79 million tax.