FCA US has reached final settlements on civil, environmental and consumer claims with US federal and state agencies as well as private class actions to resolve differences over diesel emissions requirements. The estimated total cost of settlements is $0.8 billion, in line with financial charge taken for this purpose in third-quarter, 2018.

FCA will provide free software update for an estimated 100,000 vehicles; service provided through an emissions recall and does not require any hardware modification Settlements include an average of $2,800 in compensation for each eligible customer affected by the recall Civil penalties under the settlement total approximately $400 million, payable to various U.S. federal and state authorities FCA maintains its position that the Company did not engage in any deliberate scheme to install defeat devices to cheat emissions tests The consent decree and settlement agreements contain no finding or admission with regard to any alleged violations

Fiat Chrysler Automobiles’ wholly owned subsidiary FCA US LLC has agreed with with the U.S. Environmental Protection Agency (EPA), U.S. Department of Justice (DOJ), the California Air Resources Board (CARB), the State of California, 49 other States and U.S. Customs and Border Protection to pay approximately $400 million in civil penalties to resolve differences over diesel emissions requirements.

FCA US has also settled a putative class action on behalf of private consumers. Customer compensation, the estimated future cost of the extended warranty and the cost of environmental mitigation efforts also account for approximately $400 million, bringingbthecestimated total to $800 million.

The settlements do not change FCA’s position that it did not engage in any deliberate scheme to install defeat devices to cheat emissions tests. Further, the consent decree and settlement agreements contain no finding or admission with regard to any alleged violations of vehicle emissions rules.

We acknowledge that this has created uncertainty for our customers, and we believe this resolution will maintain their trust in us.

—Mark Chernoby, FCA Head of North American Safety and Regulatory Compliance

FCA US will conduct an emissions recall to update emission control software in an estimated 100,000 model-year 2014-2016 Ram 1500 pickups and Jeep Grand Cherokee SUVs equipped with 3.0-liter EcoDiesel V-6 engines. The software reflash does not affect average fuel economy, drivability, durability or refinement of the vehicles.

Each current and former owner and lessee of these vehicles will be eligible to receive a payment averaging $2,800 as part of the plaintiff steering committee settlement. The affected vehicles will also qualify for an extended warranty in connection with the software update.

The settlements are now lodged with the San Francisco division of the United States District Court, North District of California, where they await judicial approval. The approximately $400 million in civil penalties includes:

• $305 million payable to the U.S. Environmental Protection Agency (EPA), U.S. Department of Justice (DOJ) and the California Air Resources Board (CARB) for environmental claims.

• $13.5 million to the California Attorney General for consumer claims and mitigation expenses.

• $72.5 million to various other state attorneys general for environmental and consumer claims.

• $6 million to Customs and Border Protection.

In addition, FCA US will pay $19 million to the State of California for emissions mitigation initiatives, while also financing the upgrade of 200,000 high-efficiency catalytic converters through the aftermarket.

Affected customers will be advised when they may schedule service appointments. FCA US is in the process of establishing the required logistics to identify vehicle owners and provide service and remuneration.

Background. The settlement resolves allegations that Fiat Chrysler installed software in certain diesel vehicles that would cause NO_x emissions from vehicles to be within legal limits during emission testing, but to exceed legal limits during ordinary operation.

These exceedances were detected in a joint effort by U.S. Environmental Protection Agency (EPA) and CARB using enhanced screening and testing procedures originally developed during testing of Volkswagen light-duty diesel vehicles. Shortly after revelations of excess emissions by Volkswagen in September, 2015 all manufacturers of light-duty diesel vehicles were informed that these new testing methods would be employed to identify defeat devices.

Following the Volkswagen emission cheating scandal, CARB and the U.S. Environmental Protection Agency (EPA) performed enhanced screening on diesel vehicles sold by all manufacturers. As a result of investigations using the new testing procedures, the agencies alleged that diesel 2014-2016 Jeep Grand Cherokee and Ram 1500s contained defeat devices.

California’s complaint alleges that, in addition to misleading regulators and violating environmental laws, Fiat Chrysler’s use of the defeat device software and marketing of the vehicles violated California consumer protection laws. The vehicles were marketed to consumers as environmentally friendly, meeting or exceeding California’s emissions rules, and providing best in class fuel economy and driving range.

The settlements are subject to court approval.