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Fiat Chrysler Reaches $800M Deal to Settle Emissions Case

Fiat Chrysler is expected to pay about $800 million to resolve claims that it used illegal software to cheat on emissions tests on more than 104,000 Ram pickup trucks and Jeep SUVs.

(CN) – Fiat Chrysler has agreed to pay about $800 million to resolve claims that it used illegal software to cheat on emissions tests on more than 104,000 Ram pickup trucks and Jeep SUVs.

Under the terms of two related settlements with U.S. regulators in several states, Fiat Chrysler agreed on Thursday to fork over $500 million for penalties and mitigation expenses, and $300 million to compensate individual consumers.

“California’s emission standards exist to protect our residents and the environment from harmful pollution,” California Attorney General Xavier Becerra said in a statement. “Fiat Chrysler tried to evade these standards by installing software to cheat emissions testing. The company not only violated the law and our trust, but did so at the expense of our environment.”

The automaker installed undisclosed software that served as a defeat device in its 2014-2016 Jeep Grand Cherokee and Dodge Ram 1500 models, according to prosecutors.

Defeat devices such as the software allegedly installed by Fiat Chrysler interferes with emissions controls in vehicles, allowing the cars to meet government emissions requirements during laboratory testing, California Air Resources Board Chair Mary D. Nichols told reporters in a press call Thursday.

In real-world driving conditions, however, these same vehicles can far exceed the legal level of emissions, including the amount of nitrogen oxides they release.

“Sometimes, there could be an uphill drive while towing a trailer and we understand that could cause more emissions than in a lab setting,” Nichols said. “But, in this case, we think there was harm done to the environment.”

About $19 million of the $78.5 million awarded to California will be steered toward mitigating excess nitrogen oxide emitted from the affected diesel vehicles, according to Nichols.

Fiat Chrysler marketed the vehicles to consumers as having eco-friendly diesel engines, sparking another accusation of unfair competition.

The automaker will also implement a recall program to repair more than 100,000 vehicles that have the software installed.

Accentuating Becerra’s statement during the press call that it “does not pay to cheat,” the company is required to offer an extended warranty on affected vehicles, which will cost about $100 million.

The case against Fiat Chrysler began in 2017 when the Environmental Protection Agency under the Obama administration accused the company of cheating lab tests to allow its diesel vehicles to surpass the legal threshold of emissions under the Clean Air Act.

Nichols told reporters that President Donald Trump’s EPA worked alongside litigants to resolve the case, but wanted to focus primarily on barring future models from containing defeat devices.

That solution was unacceptable, she said, as the damage had already been done.

As part of the government settlement, Fiat Chrysler admitted no wrongdoing and stated it did not engage in any deliberate scheme, but Nichols told reporters the automakers’ emissions discrepancy was intentional.

The related class-action settlement filed Thursday will provide approximately $300 million in consumer relief, awarding affected individuals up to almost $4,000 for repairs.

Repairs on the vehicles will be an easy fix, said Becerra, because the automaker only needs to alter the programming.

In a similar but more costly case in 2016, Volkswagen admitted to programming millions of cars to activate emissions controls only during laboratory testing.

Nichols and Becerra told reporters the Volkswagen scandal is directly related to Thursday’s settlement, as it led to the development of more advanced emissions testing technology and practices used to uncover vehicle emissions levels outside of a laboratory setting.  

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Categories / Business, Consumers, Courts

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