The US Environmental Protection Agency (EPA) accused the company of using software that allowed excess diesel emissions in just over 100,000 US trucks and SUVs sold since 2014.
Shares listed in Europe ended the session over 16 per cent lower on the day. Shares in the US fell 16 per cent before being suspended from trading, wiping $2.3bn (£1.88bn) off the company’s market value.
“Failing to disclose software that affects emissions in a vehicle’s engine is a serious violation of the law, which can result in harmful pollution in the air we breathe,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance.
“Once again, a major automaker made the business decision to skirt the rules and got caught,” said California Air Resources Board chair, Mary Nichols.
Fiat Chrysler said in a statement it was “disappointed” about the notice of violation and that it intends to work with the incoming administration to ensure that its “diesel-powered vehicles meet all applicable regulatory requirements.”
It also said that it had already proposed actions to address the EPA’s concerns. Those include developing “software changes to our emissions control strategies that could be implemented in these vehicles immediately to further improve emissions performance,” the group said.
According to Reuters, the company now faces fines of up to $44,000 (£36,030) per vehicle if it is found guilty of violating emissions rules.
The US Clean Air Act requires carmakers to demonstrate to the environmental authority that their vehicles meet emission standards to control air pollution. As part of the certification process, automakers are required to disclose and explain any software – known as auxiliary emission control devices – that can alter how a vehicle emits air pollution. The EPA had for months declined to certify Fiat Chrysler’s 2017 diesel vehicles in the US.
“One thing is now clear,” said Neil Wilson, a London-based senior market analyst at ETX Capital. “This scandal goes well beyond VW and Fiat Chrysler’s involvement raises the possibility that other big carmakers are involved.”
Thursday’s news follows Volkswagen’s admission earlier in the week that it cheated diesel emissions tests in 580,000 US vehicles. Six senior VW employees from Germany were charged with fraud in the US on Wednesday for their alleged roles in the matter.
More broadly, the latest developments come at a tumultuous time for the global auto industry amid swelling concerns around safety standards.
In September last year, Fiat said that it was recalling 1.9 million vehicles worldwide on account of an air bag defect that it, at the time, linked to three deaths and five injuries.
That recall included models sold between 2010 and 2014, including the Chrysler Sebring, 200, Dodge Caliber, Avenger, Jeep Patriot and Compass SUVs.
The company at the time agreed to plead guilty to criminal charges and pay a fine of $4.3bn.
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