By on November 3, 2020

Fiat Chrysler Automobiles has said that it might be looking at $840 million if it wants to settle a Justice Department investigation into excess diesel emissions and threw some mild shade at regulators.

The manufacturer noted that the U.S. appeals court’s August ruling that overturned the Trump administration’s July 2019 rule that suspended a National Highway Traffic Safety Administration regulation more than doubling emissions penalties for automakers is playing a major factor in that sum. Obviously, it wishes they hadn’t.

While the company’s strategy to basically eat whatever fines it incurred so it could continue manufacturing the kind of automobiles its customers wanted (while also keeping down its own development costs) seemed mostly sound. But it’s been hit with a flurry of penalties over the last few years and they’re starting to mount up.

In 2019, FCA agreed to an $800 million settlement to resolve claims from the Justice Department, California Air Resources Board (CARB), and customers over the use of illicit software that falsified testing information on diesels. This was in conjunction with other emission-related fines and came off several years of having to pay tens-of-millions in civil penalties for failing to adhere to U.S. fuel economy requirements. While some of this has been offset via the purchasing of carbon credits in both the United States and Europe, it still represents a financial setback for FCA.

According to Reuters, FCA would like the August ruling that’s poised to jack up its current diesel emission penance appealed. Otherwise, it “may need to accrue additional amounts due to increased CAFE penalties and additional amounts owed under certain agreements for the purchase of regulatory emissions credits.”

From Reuters:

FCA in a securities filing said the amounts “accrued could be up to 500 million euros ($581 million) depending on, among other things, our ability to implement future product actions or other actions to modify the utilization of credits.”

The automaker declined to comment Monday.

In October 2019, FCA said it incurred a $79 million U.S. civil penalty for failing to meet 2017 fuel economy requirements after paying $77.3 million for 2016 requirements.

FCA’s filing said it is uncertain if “NHTSA will appeal the ruling” and unclear if the ruling will be applied retroactively to the 2019 model year.

[Image: FCA]

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8 Comments on “FCA Could Face $840 Million in New U.S. Regulatory Fees...”

  • avatar
    SCE to AUX

    I really believed that VAG was the only baddie who was diesel cheating, but it appears to be the dirty big secret among nearly all light diesel mfrs. FCA should face penalties for that.

    But the bogus carbon credit economy isn’t helping regulators achieve their utopian goals, because evidently consumers want a different mix of products. It’s nice that EV mfrs can benefit from it, and it’s nice that FCA can just pay their way out, but it’s unfair to every company because they can’t all be expected to provide the same product mix which satisfies both consumers and regulators.

    There will be a reckoning, unfortunately played out in the political arena.

    • 0 avatar
      Art Vandelay

      Most seem to have NOT been caught cheating even still. Any that have been should be hammered as well as any that come to light.

      I think the only fair answer however is that in addition to the fines, the maker has to buy the offending vehicles back. The customers get hosed due to low resale and decreased performance with the band aid fixes and the rest of us get hosed having to breathe their emissions.

      They cheated…it should be painful.

  • avatar

    This is a crazy system. Manufacturers are mandated to meet certain targets, customers prefer bigger cars that don’t meet the targets, manufacturers pay fines to so they can sell desirable cars and the gubmint takes the fines to the bank? Is that really how it works?
    No judgement here on the rightness or wrongness of this system but just to comment on its effectiveness: shouldn’t the pressure be placed on the consumer and not the manufacture, or perhaps both, to direct consumers to buying vehicles more in line with the emissions targets? I’m not talking about whether the targets themselves are justified, just the best way to achieve them. Also, targets should be reasonable and technologically achievable, otherwise this just amounts to a tax. And car manufacturers probably aren’t paying much in the way of taxes so maybe they just damn well owe it.

    • 0 avatar

      The last thing the government wants to do is put pressure on consumers to buy the kinds of vehicles regulators prefer instead of the ones consumers prefer. Doing so would generate a political backlash that would force regulators to back off from their emissions goals.

      Remember the seat belt interlock mandate from the mid 1970s? You couldn’t start your car unless you fastened your seat belt or tricked the car into thinking you had. Voters screamed bloody murder and politicians told the regulators, “Lose the interlock if you know what’s good for you.”

    • 0 avatar

      The gubmint gives the money to Elon. Maybe it’s cheaper for FCA to do that than hiring engineers to design decent EVs.

  • avatar

    Well it looks like you be paying a lot more for new FCA car. Remember corps don’t pay taxes or fines. they just pass it on to the customers.

  • avatar

    You’re damn right lawmakers want to racketeer off gas guzzler profits. If cleaner air happens, it’s a byproduct.

    CAFE struck fear into automakers in the ’70s, hence Pinto and FWD based muscle cars. The potential billions in fines were a huge deal.

    Today they’re much easier to swallow, a couple billion dollars here or there annually. The CAFE fines are still the same since the beginning, so thanks to inflation, everyone’s happy and no cares about air pollution.

  • avatar

    99% of the time they won’t go anywhere near off road. 50% of the time they’re driven by women. A poser truck if there ever was. But if you must have the only 5K lb. ‘midsize’ pickup with removable doors, roof, wallet, and don’t mind spending north of $33K just to get power windows, then go for it Karen.

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