Washington — Fiat Chrysler Automobiles NV will pay nearly $800 million to settle allegations from federal regulators that the company used software on about 104,000 diesel-powered pickups and SUVs that is similar to “defeat devices” that were used by Volkswagen AG to cheat U.S. emissions-testing, a person familiar with the terms of the settlement told The Detroit News on Wednesday.
The settlement requires the Italian-American carmaker to pay $280 million to compensate drivers of Jeep Grand Cherokees and Dodge Ram 1500 pickups from the 2014-16 model years with 3-liter V-6 diesel engines.
The company also will pay $305 million in civil penalties to the U.S. Department of Justice, Environmental Protection Agency and California Air Resources Board and at least $72 million to states whose attorneys general had sued over the alleged cheating.
The automaker is likely to face additional payouts to other federal agencies and states that filed separate lawsuits, bringing total payments to as much as almost $800 million, according to the source.
Drivers of the affected models could receive as much as $2,800 each under the settlement.
FCA will not be required to admit any wrongdoing as part of the settlement and the company is not going to required to buy back any of the affected vehicles.
The EPA and DOJ did not immediately respond to requests for comment Wednesday night from The Detroit News.
Federal regulators have alleged that FCA did not disclose at least eight auxiliary emission control devices on the Jeeps and pickups covered under the settlement. Automakers can legally deactivate a vehicle’s emission control system under certain conditions, but regulators require the disclosures when companies apply for certificates that are required to sell cars in the U.S.
FCA has contended that its vehicles were fully in compliance with regulations, even as it worked toward a settlement.
FCA took pains to note the differences between its case and that of Volkswagen AG.
Six of the German automaker’s present and former executives were indicted, and VW itself was charged with three criminal felony counts for what regulators called a 10-year conspiracy to rig hundreds of thousands of diesel cars to evade U.S. emission standards.
Volkswagen was forced to pay $2.8 billion in criminal fines and $1.5 billion in civil penalties related to the fraud.
That’s in addition to a $14.7 billion settlement the company reached last year with the EPA that calls for Volkswagen to spend $10 billion to either buy back or repair about 475,000 2-liter diesel cars sold between 2009 and 2015; the company also was required to contribute $4.7 billion to federal efforts to reduce pollution.
FCA has noted that its affected vehicles require only a software fix, unlike Volkswagen, which had to provide new hardware to satisfy federal regulators.
FCA warned investors in the third quarter of 2018 of a possible $810 million (700-million euros) charge related to the diesel investigation. The company initially feared it could face fines of up to $4.6 billion.
Source: Detroit News