Fiat Chrysler Automobiles agreed to shell out nearly $ 650 million to settle lawsuits for its use of illegal diesel engine control software on diesel vehicles that gave false emissions control results, said Wednesday two people informed about it.
The Ministry of Justice sued the company In 2017, the Environmental Protection Agency concluded that it had used illegal software to disable pollution control under certain driving conditions. E.P.A. stated that the software allowed vehicles to successfully pass emissions tests while allowing them to release higher levels of pollutants in normal driving.
The regulation, which is expected to be announced Thursday, does not provide any admission of guilt on the part of Fiat Chrysler or a representative of E.P.A. finding of wrongdoing. The company will pay $ 305 million in penalties to the federal government and the state of California, which has also filed lawsuits.
As part of this deal, Fiat Chrysler will recall that about 104,000 Ram 1500 diesel-powered trucks and Jeep Grand Cherokee sport utility vehicles dating from the 2014, 2015 and 2016 model years, said a person informed of the settlement. Reminder repair involves the installation of new software in vehicles.
No hardware changes are required and the fix will have no effect on the fuel economy of the vehicles, said this person. Once the recall is complete, Fiat Chrysler will pay the owners an average compensation of about $ 2,500, said this person. These payments could reach more than $ 260 million.
Fiat Chrysler will also pay about $ 72 million in civil penalties to settle disputes filed by various states, and $ 6 million to settle other claims, added the same person.
In October, the company set aside approximately $ 800 million to cover the cost of litigation against E.P.A's diesel emissions.
Fiat Chrysler has had a good year in North America. Although the company experienced a decline in worldwide earnings in the first nine months of 2018, the pre-tax profits of its North American division increased by 17%.
The company is benefiting from a decision made in 2015 to stop selling cars and focus on trucks and light commercial vehicles, whose profit margins are higher. In the United States, Fiat Chrysler's new vehicle sales increased 9% in 2018, while the market grew by only 1%.
The federal Fiat Chrysler investigation followed the vast scandal of diesel emissions fraud that rocked Volkswagen. However, US authorities felt that the Fiat Chrysler case was far less serious and did not accuse the company of having deliberately designed the software to deceive the emissions tests.
Volkswagen acknowledged that she had used a "defeat device" software to cheat on the emissions tests and pleaded guilty to conspiring to commit computer fraud and assault. other charges brought by the Department of Justice. The company agreed to pay $ 22 billion in settlements and fines, including $ 4.3 billion to settle a case brought by the Department of Justice. It was also necessary to buy 600,000 diesel vehicles from US consumers. Two Volkswagen executives pleaded guilty to criminal charges in the United States.
In Germany, the scandal has resulted in the ousting of the CEO of Volkswagen, his successor and about twenty other leaders. The former director of Audi's Volkswagen division was arrested last year and is awaiting trial on criminal charges.
Diesel engines were once considered a key component of automakers' strategies to increase fuel economy and reduce greenhouse gas emissions. However, the Volkswagen scandal and the diesel emissions surveys carried out by other companies have virtually extinguished the interest and demand for diesel cars and diesel vehicles. Diesel remains a popular choice for sturdy trucks and large trucks.
Instead of diesel cars, automakers are scrambling to develop a variety of battery-powered vehicles. Last year, Ford Motor had announced plans to spend $ 11 billion in order to introduce 16 battery – powered vehicles and 24 hybrid vehicles by 2022. Audi and Mercedes – Benz are planning to Add new electric models this year. Both companies had already been major promoters of "clean diesel" technology.
Volkswagen was once one of the biggest sellers of diesel cars on the US market and had built a loyal audience for the diesel versions of the Jetta and the Beetle. But sales dipped after the scandal of cheating diesel. As part of an offer to win back customers, the company plans to introduce a S.U.V. electric. in 2020, followed by an electric tailgate and possibly an electric van.