The clock is ticking the other way for Fiat Chrysler Automobiles (NYSE:FCAU) now, just a day after Donald Trump praised the automaker for investing $1 billion in their plants in Ohio and Michigan. Environmental Protection Agency (EPA) of the United States has accused the carmaker of installing cheating software on their trucks and cars to fix the emissions test. CARB or the California Air Resources Board is also a party in this.
According to the accusations, Fiat Chrysler did much the same thing as Volkswagen (ETR:VOW3), which resulted in the biggest scandal in the automobile sector in many decades. The agencies are saying this cheating software has been installed in more than 100,000 diesel-powered Fiat Chrysler automobiles.
A notice has been served to the company, saying their auxiliary emissions control software was letting the automobiles generate excess pollution, which violates the law.
Fiat Chrysler Stock Plummets Fast After the News
The stock went down sharply by 10.28 percent to close at $9.95 when the news was disclosed. EPA’s action is likely to affect about 104,000 cars and trucks of the business that they have sold since 2014, but by number, this is about a sixth of the vehicles affected in the Volkswagen case. Fiat Chrysler now faces a maximum penalty of $4.6 billion, which they can fight or appeal for settlement.
Unlike Volkswagen, however, which admitted the cheating and even offered an apology, Fiat Chrysler is defending their position. The company issued a statement saying they believe the emission control systems meet the applicable regulations. Software in the diesel engines is an allowable way to meet emissions rules, according to the automaker. Fiat Chrysler further stated the company is not cheating the emissions tests, but actually wants to improve performances of the engines.
EPA Disagrees With Fiat Chrysler’s Stand
Environmental Protection Agency, however, disagrees with this view. Fiat Chrysler (NYSE:FCAU) did not disclose this software to the agency before and are thus violating the Clean Air Act, even if there was no intention to cheat the emissions tests.
The automaker then proposed many steps to address the concerns of the agency, adding they will keep fighting these allegations.
The Justice Department has started their investigations already. Eric Schneiderman, the New York Attorney General said he was “deeply troubled” with the EPA claims and “will investigate the claims against Fiat Chrysler and stands ready to work with our state and federal partners”.