Fiat Chrysler Automobiles NV (NYSE:FCAU) found itself in stock market purgatory after plunging on allegations from the Environmental Protection Agency accusing the automaker of cheating diesel emissions tests in 104,000 vehicles.
The news, first reported by Reuters, sent FCAU stock in tailspin, losing 18% of its value before the New York Stock Exchange halted trading.
According to Reuters‘ David Shepardson, the EPA and California Air Resources Board deemed Fiat’s undeclared auxiliary emissions control software an unlawful violation. The software in question is believed to increase the emissions of nitrogen oxides.
EPA official Cynthia Giles chided Fiat for the “serious violation” of “failing to disclose software that affects emissions.” According to the regulators, FCAU failed to disclose the emissions control software in 104,000 U.S. vehicles, including 2014 to 2016 Jeep Grand Cherokees and Dodge Ram 1500 3.0 trucks.
Fiat could face civil penalties if the EPA indeed determines if the software is a “defeat device.”
FCAU issued a prompt response, claiming to be “disappointed” by the EPA’s findings and that the company will work with President-elect Donald Trump’s administration to fairly present its case:
“FCA US has spent months providing voluminous information in response to requests from EPA and other governmental authorities and has sought to explain its emissions control technology to EPA representatives. FCA US has proposed a number of actions to address EPA’s concerns, including developing extensive software changes to our emissions control strategies that could be implemented in these vehicles immediately to further improve emissions performance.”
The news didn’t exactly come out of left field, as the EPA has declined to certify Fiat’s 2017 diesel vehicles for sale in the U.S. in wake of Volkswagen AG (ADR) (OTCMKTS:VLKAY) cheating diesel emissions tests in more than half a million vehicles.
And just like the steep penalty levied on Volkswagen, Fiat Chrysler could take a huge hit if found in violation, with potential penalties in the range of $44,000 per vehicle.
“FCA US looks forward to the opportunity to meet with the EPA’s enforcement division and representatives of the new administration … to demonstrate that FCA US’s emissions control strategies are properly justified and thus are not ‘defeat devices’ under applicable regulations and to resolve this matter expeditiously,” Fiat said in a statement.
FCAU stock has since resumed trading, down 12.7% as of this writing.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
