Fiat Chrysler Makes Diesels Again as U.S. Is Said to Near Ruling

  • Carmaker filed proposed fix to EPA in May before U.S. lawsuit
  • Justice Department, EPA claim models had used illegal software

A Fiat Chrysler Automobiles NV Dodge Ram pickup truck ahead of the 2016 Los Angeles Auto Show.

Photographer: Patrick T. Fallon/Bloomberg

Fiat Chrysler Automobiles NV resumed making diesel Ram pickups that were ordered off the market by U.S. regulators, preparing for a verdict from the Environmental Protection Agency in hopes of being able to sell them.

The carmaker began building a small number of the Ram trucks again this month, a spokesman said. The EPA is close to deciding whether or not to approve the pickups and the diesel-powered Jeep sport utility vehicle for sale as 2017 models, two people familiar with the matter said.

At stake is both the fate of the most fuel-efficient full-size pickup in the U.S. and a broader indication of whether regulators are inclined to treat diesel-powered engines as viable. The EPA and the California Air Resources Board have ratcheted up scrutiny of the powertrains in the wake of Volkswagen AG’s emissions software scandal dating back to 2015. The U.S. Department of Justice sued Fiat Chrysler in May, accusing the company of similar cheating.

Fiat Chrysler Chief Executive Officer Sergio Marchionne has been adamant that the company wasn’t trying to deceive regulators or circumvent clean-air rules. He’s said the EPA changed its process for documentation of software that allows for excess emissions in certain circumstances to protect the engine.

“I’m confident of the fact that there was no intention on our part to set up a defeat device that was even remotely similar to what VW had in their cars,” Marchionne told Bloomberg Television last month in Venice, Italy.

Proposed Fix

Fiat Chrysler filed in May for certification of the 2017 model year vehicles following months of discussions over emissions-control software. The company’s proposed fix fell short of staving off the Justice Department lawsuit days later that alleged the diesel engines had been outfitted with illegal software.

The EPA will decide whether Fiat Chrysler’s proposed system is adequate in the near future, said the people familiar with the matter, who asked not to be identified because the process is private. An EPA spokesperson said the agency doesn’t comment on certification applications prior to vehicles being introduced for sale. Dave Clegern, a California Air Resources Board spokesman, declined to comment.

Fiat Chrysler’s U.S. diesel woes began in January, when the EPA filed a formal notice of violation over undeclared emissions-control software in 2014 to 2016 model years of the Ram and Jeep models. Marchionne has said since then that any adjustments needed to win certification for the 2017 vehicles could be made retroactively to the earlier vehicles.

Other automakers have thrown in the towel on diesels for the U.S. market. In May, Daimler AG withdrew its effort to get 2017 models certified.

Read more: GM Suit Digs Deeper Grave for Diesel as Dirty Accusations Mount

Automotive News reported earlier that Fiat Chrysler resumed production of the diesel Rams, citing workers at the company’s factory in Warren, Michigan. The trade publication said the company was assembling fewer than two dozen vehicles per shift.

The Justice Department’s lawsuit filed in May was consolidated with consumer complaints before a San Francisco court. U.S. District Judge Edward Chen this week nominated Ken Feinberg, the lawyer who worked on compensation programs related to General Motors Co.’s deadly ignition switches, to work on negotiating a settlement. The DOJ also has an ongoing criminal investigation.

Altogether, the diesel matter may cost the company $460 million to $1 billion, according to estimates from analysts at Barclays Plc, Mediobanca SpA and Evercore ISI.

— With assistance by Tom Schoenberg

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