Fiat Chrysler share value drops sharply after EPA Claims

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Shares of Fiat Chrysler Automobiles N.V (NYSE: FCAU) fell sharply as the U.S. Environmental Protection Agency has claimed the automaker has been using software that allowed excess diesel emission in about 104,000 vehicles. The stock halted briefly after the EPA had announced it.

The EPA has accused the company of violating the Clean Air Act by installing and not disclosing “engine management software in light-duty model year 2014, 2015 and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0 liter diesel engines sold in the United States.” The undisclosed results had increased nitrogen oxide emissions from the vehicles, the EPA stated.

Fiat Chrysler is vulnerable to injunctive relief and civil penalties for the alleged violations. The auxiliary emission control devices are being investigated to see if they are “defeat devices.” A defeat device is any apparatus that unduly reduces the effectiveness of emissions control systems under conditions a vehicle may reasonably be expected to experience which is illegal.

The automaker has claimed that they are “disappointed” that these violations are being pursued as the engines are “equipped with state-of-the-art emission control systems hardware.” “FCA US intends to work with the incoming administration to present its case and resolve this matter fairly and equitably and to assure the EPA and FCA US customers that the company’s diesel-powered vehicles meet all applicable regulatory requirements,” in the statement that automaker made after these allegations arose. “FCA US looks forwards 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.”

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