FCA sentenced to pay $300M in diesel emissions cheating case
Detroit — A federal judge on Monday sentenced the U.S. division of Stellantis NV to pay $300 million in penalties and forfeitures for cheating on government emissions testing on “clean EcoDiesel” Jeep Grand Cherokee SUVs and Ram 1500 pickup trucks.
FCA US LLC pleaded guilty to the criminal conspiracy charge in June. It was the second guilty plea for federal criminal conduct by the company in as many years for actions taken prior to parent Fiat Chrysler Automobiles NV's merger with French automaker Groupe PSA that created Stellantis last year.
As federal emissions standards have become more stringent, automakers face the pressure of reducing emissions of internal combustion engine vehicles that today is fueling the transition to zero-emission vehicles or else pay millions of dollars in fines or for credits from competitors like electric-vehicle maker Tesla Inc. Stellantis in the first half of 2022 paid $678 million in penalties following an adjustment to Corporate Average Fuel Economy regulations earlier this year.
FCA’s settlement for the emissions cheating includes a nearly $204 million forfeiture from the models sold on which it had cheated on the tests and an additional penalty of more than $96 million. The company also is subject to three years of probation and is required to cooperate in the government's further investigation into the matter.
“The company accepts responsibility and regrets the conduct that resulted in this plea agreement,” Christopher Pardi, general counsel and corporate secretary for FCA in North America, said on behalf of the company during the brief hearing before Judge Nancy Edmunds.
Stellantis previously said it had accrued approximately $301 million to cover the settlement of the charge of one count of conspiracy to defraud the United States in violation of the Clean Air Act and to commit wire fraud. The statute maximum penalty is $500,000 or two times the gross gain or loss from the offense.
The accusations stemmed from a pending 2019 case against diesel senior manager Emanuele Palma and two Italian nationals, Sergio Pasini and Gianluca Sabbioni, who worked for FCA Italy SpA, the Italian subsidiary of Stellantis. Prosecutors accused the officials of conspiring to cheat federal emissions tests and deceiving consumers about the fuel efficiency of more than 100,000 diesel Jeep Grand Cherokee SUVs and Ram 1500 pickup trucks spanning model years 2014 to 2016.
FCA wasn't alone in emissions testing cheating. Its settlement comes five years after Volkswagen AG pleaded guilty to criminal charges to resolve emissions cheating allegations affecting nearly 600,000 vehicles. The scandal known as "Dieselgate" resulted in VW paying a $2.8 billion criminal fine, though total penalties, civil damages and restitution have neared $35 billion, the automaker said in 2020.
Like in VW's case, FCA's settlement doesn't include restitution. The automaker has paid $183 million to 63,000 customers through civil litigation. The company also paid $9.5 million in 2020 to settle a U.S. Securities and Exchange Commission case related to the topic. In a civil settlement involving the U.S. Justice Department and customers, FCA paid almost $800 million.
The automaker, federal regulators have said, didn't disclose at least eight auxiliary emission control devices on its Jeeps and pickups. Automakers legally can deactivate a vehicle’s emission control system under certain conditions, but regulators require they disclose them when applying for certificates that are needed to sell cars in the U.S.
Because of the use of the defeat devices, the Jeeps and trucks released more nitrogen oxides during customer use than during government testing. In the outdoor air, they can create ozone, and elevated levels of nitrogen dioxide can damage the human respiratory tract, according to the Centers for Disease Control and Prevention.
In January 2021, FCA settled for $30 million a years-long criminal investigation into auto executives breaking federal labor laws and paying $3.5 million in bribes to United Auto Workers officials.
The industry today is shifting to EVs to cut emissions. Stellantis is investing $35.5 billion into electrification and software by 2025 and says more than half of U.S. sales will be all-electric by the end of the decade.