Department of Justice investigating Ford emissions testing
Three months after levying an $800 million fine against Fiat Chrysler for alleged emissions cheating in a bid to send a message to "bad actors," the U.S. Department of Justice has opened a criminal investigation into Ford Motor Co.'s U.S. emissions certifications process.
Ford reported the investigation Friday in a regulatory filing with the U.S. Securities and Exchange Commission. The automaker wrote that the "potential concern does not involve the use of defeat devices" such as those at the center of the Volkswagen AG emissions scandal, which resulted in a $2.8 billion criminal penalty.
The Department of Justice declined to comment.
Ford in February said it was investigating if incorrect computer modeling caused it to misstate fuel economy and emissions for some vehicles. The automaker hired an outside firm to investigate the vehicle "road load" specifications used in the company's testing and applications for emissions and fuel economy standards. Ford notified the Environmental Protection Agency at the time.
The automaker characterized the Department of Justice investigation as "still in the preliminary stages," but said "we cannot predict the outcome, and we cannot provide assurance that it will not have a material adverse effect on us." It said it is cooperating with all government agencies in the investigation.
Brett Smith, director of propulsion technologies and energy infrastructure for the Center for Automotive Research, said Ford's fate with regulators could hinge on a determination of whether there was intent to cheat U.S. emissions standards.
"They self-reported after a quote, 'whistleblower' raised some issues," he said. "If there's intent, it's a different story. If they can show it was a honest mistake with good intent, then it's not a story."
Smith noted Ford has had problems with emission testing before. The Dearborn company was forced to lower the fuel economy ratings of six models and pay compensation to drivers in 2014.
"We've been here before with other companies in other ways, but more so, we've been here with Ford," he said. "In 2014, they had problems. How could it happen again in 2019, when we understand from other companies how bad it can end up?"
Ford officials were alerted to the possible issue by "a handful of employees" through its internal Speak Up channel, according to the company statement. The main concern is whether it miscalculated "road load" during testing.
Road load is essentially the force put on a vehicle while driving at a constant speed over a level surface. A lighter load in the mathematical equation could result in a better fuel economy than stated. The first vehicle being re-evaluate is the 2019 Ranger, which currently boasts a best-in-class EPA-estimated 23-miles-per-gallon combined fuel economy.
Wall Street shrugged off news of the investigation. Ford reported late Thursday that profits beat analyst expectations, and that it expects its full-year 2019 results to be better than in 2018. Company stock ended Friday trading up 10.7% to $10.41, and for the first time in more than a year its market capitalization surpassed Tesla Inc.
Emissions-tests cheating has been an issue for large automakers in recent years, most notably Volkswagen AG.
Last May, former Volkswagen AG CEO Martin Winterkorn was indicted on federal conspiracy charges to defraud the United States, to commit wire fraud and to violate the Clean Air Act for his alleged role in "Dieselgate," in which Volkswagen cheated U.S. diesel emissions tests by using defeat devices. Those devices caused pollution-control systems to work properly when being tested on dynamometers, but turned off those systems on the open road.
In January, Fiat Chrysler Automobiles was required to pay about $800 million to settle allegations from federal regulators that the company used software on about 104,000 diesel-powered pickups and SUVs that's similar to “defeat devices” used by VW to cheat U.S. emissions-testing.
The government said then the stiff penalties were intended as a warning to other "bad actors" that might be tempted to violate laws protecting the environment and health. Fiat Chrysler was not required to admit wrongdoing as part of the settlement.