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Embattled FCA denies it cheated on diesel testing

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DETROIT — Five years ago, Chrysler had big dreams for diesel.

Lagging far behind competitors in fleet fuel efficiency, the company now known as Fiat Chrysler reached into a house-owned engine maker, VM Motori, and plucked out a 3.0-liter diesel that VM Motori had developed for its former owner, General Motors, but never used.

The torque-rich engine was rebranded EcoDiesel, and it was perfect for the automaker’s big U.S. sellers: Jeep’s heavy Grand Cherokee SUV, in which it would get up to 30 mpg on the highway, and the Ram 1500 pickup, in which it would get a best-in-class 29 mpg highway. Once those beachheads were established, executives said at the time, diesels would spread elsewhere across the U.S. fleet, first to the Wrangler and perhaps later, even into the car lineup, commanding heavy premiums to boost Chrysler’s bottom line as well as its lagging fuel economy ratings.

But according to the EPA and now the U.S. Department of Justice, FCA left some of the “Eco” out of its EcoDiesels. And now, like rival Volkswagen before it, FCA finds itself on the wrong end of the law.

Last week, the agencies filed suit in Detroit against FCA and its VM Motori subsidiary, alleging that the automaker failed to declare at least eight pieces of software, so-called defeat devices, that reduce the effectiveness of emissions control systems on 103,828 Jeep Grand Cherokee and Ram 1500 EcoDiesels produced between 2013 and 2016.

The civil suit seeks billions of dollars in potential fines and penalties. Analysts estimated last week that the issue could cost cash-poor FCA between $460 million and more than $1 billion, Bloomberg reported.

Marchionne: No defeat devices to cheat on tests

FCA said in a statement last week that it “intends to defend itself vigorously, particularly against any claims that the company engaged in any deliberate scheme to install defeat devices to cheat U.S. emissions tests.” The statement echoed comments from FCA CEO Sergio Marchionne in January, who angrily denied that the company had purposely used defeat devices to cheat on U.S. emissions tests, after FCA was hit with a notice of violation by the EPA under the previous administration.

The EPA’s case against FCA differs from its earlier successful prosecution of Volkswagen, most notably because the government — at least so far — isn’t alleging a wide-ranging conspiracy or criminal wrongdoing by FCA to cheat on the tests, as it did with VW. But like VW, FCA is alleged to have failed to disclose software in the EcoDiesel vehicles that “cause the emission control system to underperform or shut off” when the vehicles were “operating outside the parameters of Federal Emissions Tests.”

Emissions-altering software is not illegal in and of itself but automakers must alert regulators to its existence before seeking certification to sell vehicles in the U.S., which is what FCA allegedly failed to do in the 2014, 2015 and 2016 model years.

Since last fall, FCA has been trying to win certification for its dealers to sell diesel-powered 2017 Ram 1500s and Jeep Grand Cherokees. Last week, before the government’s lawsuit but after reports that the filing was imminent, FCA announced that it had “formally filed an application for diesel vehicle emissions certification” for 2017 model diesels. The automaker said the vehicles “feature updated emissions software calibrations” and that it had proposed to make the same software modifications on its earlier diesel engines. Regulators have yet to approve FCA’s plan.

Diesel-powered Ram 1500s with manufacturer plates have been seen testing again on Detroit area roads, with one notable difference: The “EcoDiesel” badge has been replaced with one that just says: “Diesel.”

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