EU piles pressure on Italy as deadline set for response to FCA emissions accusations

February 03, 2017

An end of February deadline has been set for Italian authorities to respond to German accusations that Fiat Chrysler (FCA) vehicles manipulate emissions tests. EU Commissioner for Industry Elżbieta Bieńkowska has mandated that they should check whether Fiat has manipulated exhaust gas values. If they do not, the EU will take tougher measures.

Bieńkowska told Welt am Sonntag: ‘If we do not receive a satisfactory response to the allegations made by the German authorities before then, we are likely to proceed with an infringement procedure.  

Germany has accused that Fiat, similar to Volkswagen, used illegal software for the falsification of exhaust gas values. The Italian carmaker denies this. The German federal government refers to studies by the Federal Motor Vehicle Authority (KBA). It says its own tests show emissions from Fiat engines rise greatly after running for 22 minutes, when the EU official test lasts for 20 minutes.  

At the request of the German government, the EU Commission has acted as an intermediary between Berlin and Rome and has been working for many months on the Italian authorities. Bieńkowska added: ‘The longer answers remain due from the Italian authorities, the more suspicious I will be.’  

The US Environmental Protection Agency also suspects Fiat Chrysler has falsified emissions values for nitrogen oxides (NOx) in some 100,000 diesel cars. FCA chief operating officer Sergio Marchionne has sharply refuted this, and there remains no evidence against the group.  

The EU Commission has recently launched proceedings against Germany over possible violations of EU law, accusing the federal government of omissions and not penalizing Volkswagen for the emissions scandal. The federal government contests the allegations.  

Meanwhile, German ambassador to China Michael Clauss is vocally criticising Beijing’s electric vehicle (EV) plan to introduce a California-style carbon credit trading programme. China hopes to use the programme to encourage foreign carmakers to develop and build electric vehicles for their Chinese joint ventures. Foreign carmakers would have to localise not only production, but also the entire EV development process in China, Clauss noted in an article in the South China Morning Post.  

This means that all foreign automobile manufacturers would be forced to hand over 100 percent of their technology to their joint venture partners in mostly state-owned enterprises,’ he added.  

The carbon credit programme, originally announced in September, requires foreign and domestic carmakers to raise EV production or face severe penalties, with strict enforcement beginning in 2018. In an article on the German embassy’s website in December, Clauss criticised the programme for having unrealistic deadlines, In a second article in January, he warned Beijing’s one-year deadline is ‘an impossible task at such short notice.’ He added China’s EV production mandate is ‘so onerous that they could even bring a decades long trend of rising German investment in China’s manufacturing sector to a halt.’  

Germany is the biggest source of foreign investment in China’s auto industry, with it set to invest more than €18.5 billion euros in China over the next few years. The controversy comes as China’s economic growth is slowing, with massive amounts of capital fleeing the country in 2016 as investors lost confidence. The government cannot afford to discourage foreign investment in its auto industry, which is one of the few bright spots in China’s shaky manufacturing sector.

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March 31, 2017

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