Fiat Chrysler’s in the Cross Hairs of the EPA Over Emissions

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Automotive, Public Policy

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Well we all knew that the Volkswagen admissions scandal was the story that was going to run and run, so it should come as no surprise that the media is full of the latest allegations being made against Fiat Chrysler by the Environmental Protection Agency.

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The Washington Post, the Economist and the Financial Times all report the EPA’s announcement that they are in discussions with the automaker over software which they say, might be illegal. The EPA has held back from calling the technology a “defeat device” in the terms used in last year’s cases against VW.

But in broad terms the operation of the software appears to work in a similar way to that of VW’s in that it also has the characteristics of the emissions controls under certain circumstances. Contrary to what many others believed, in fact, emission control equipment is allowed some pretty wide parameters of operation.

Diesel’s Easier… To Pollute With

In Europe where the rules are less rigorous, the testing regime allows diesel cars up to 14 times more noxious gases on the road under test conditions. According to the Economist, they are allowed to shut down their emission controls on the grounds that not doing so might damage engines when the ambient temperature is low. But in some cases this ambient threshold could be as high as 17 degrees, a temperature not reached for months in many Northern European countries.

Fortunately for Fiat Chrysler, the number of vehicles involved is, relative to VW anyway, quite small. The VW scandal affected some half a million vehicles whereas in the case of FCA it is just the 3 L diesel engine fitted between 2014 and 2016 to the Dodge Ram 1500 pickup truck and Jeep Grand Cherokee. Roughly 104,000 vehicles according to the EPA.

Even so, it caused FCA’s share price to drop 18% last week on the news before recovering slightly.  Extrapolating the near $20 billion of fines that VW have incurred onto the situation at Fiat Chrysler could mean the group incurs fines of some $4 billion. FCA is not as profitable as VW, though, so the consequences of such a fine could be severe, as it would add to the groups already heavily indebted position.

Cities Plan Bans

Diesel engines have never been as popular for cars in America as they are in Europe whether uptake has been encouraged on the grounds of better fuel economy or not. Still, the benefits of fuel economy were promoted by conveniently ignoring the levels of nitrogen oxide and emissions of particulate matter. Now, that’s exactly the concern that is creating a backlash against the diesel engine across Europe.

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Paris, Madrid and Athens all pledged in December to ban diesel vehicles from the streets by 2025, a commitment that so far London has avoided but there still seems to be considerable support for such a ban here. The Norwegian capital, Oslo, has banned the use of diesel cars in the city between 6 AM and 10 PM until the air pollution has cleared. These kinds of steps only add to the growing negative image around diesel technology and to improve the acceptability of petrol, hybrid and electric alternatives.

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