Another air pollution scandal: Fiat Chrysler settles with California for $500 million

Bill Pugliano  Getty Images The Chrysler world headquarters in Auburn Hills Mich

Bill Pugliano Getty Images The Chrysler world headquarters in Auburn Hills Mich

Fiat Chrysler will pay more than $650 million to settle allegations of cheating on emissions tests.

In last year's third quarter, Fiat Chrysler, also known as FCA, took an US$810 million (700 million euros) charge to deal with possible USA diesel emissions settlement costs, cutting into the company's profits.

Fiat Chrysler will also pay fines totalling around US$400 ($557 million) to various government agencies, with US$305 million ($425 million) going to the US Environmental Protection Agency, Department of Justice and the California Air Resources Board. The company will also need to pay about $280 million to compensate owners.

The automaker will recall approximately 100,000 vehicles including model year 2014-2016 Jeep Grand Cherokees and Ram pickup trucks for the software update.

The Justice Department said Fiat Chrysler must work with one or more vendors of aftermarket catalytic converters to improve the efficiency of 200,000 converters that will be sold in the 47 USA states that do not already require the use of the California-mandated high-efficiency gasoline vehicle catalysts. The recalled vehicles - which are equipped with the "EcoDiesel" 3.0-liter engines - are to be installed with new software.

Fiat Chrysler said in a statement that it "maintains its position that the Company did not engage in any deliberate scheme to install defeat devices to cheat emissions tests". The company has set aside more than $30 billion to cover costs and settlements, including $15 billion to buy back or fix vehicles in the U.S.

As part of the recall, FCA will update emission control software on the offending vehicles and provide them with an extended warranty.

Fiat Chrysler will not admit wrongdoing as part of the civil settlement.

The settlement marks the conclusion of a lawsuit first brought on by the Justice Department in 2017.

"By concealing this software, Fiat Chrysler deceived regulators and violated environmental law", said Associate Attorney General Jesse Panuccio. About 500,000 VW vehicles were involved in the US cheating scandal.

The Justice Department said the settlement does not resolve an ongoing criminal investigation into Fiat Chrysler's conduct.

Asked about the message the settlement would send, acting Environmental Protection Agency Administrator Andrew Wheeler responded: "Don't cheat".