Ford Motor Co. is facing a criminal investigation as the U.S. Department of Justice probes whether it improperly certified the mileage and emissions ratings on some of its vehicles.
The announcement by the second-largest domestic automaker comes just a day after it released unexpectedly strong earnings that sent its stock soaring past $10 a share for the first time since August 2018. Ford told investors in a statement that it “cannot provide assurance that (the results of the investigation) will not have a material adverse effect on us.”
Ford becomes the latest automaker to come under scrutiny for reporting inaccurate emissions and fuel economy numbers. Among other manufacturers who have been caught up in similar circumstances are Fiat Chrysler, Hyundai and sibling brand Kia and Volkswagen. The latter company has so far paid out about $30 billion in the U.S. alone through fines and settlements, with two of its former executives being prosecuted for their role in the scandal involving the German maker’s diesel-powered vehicles.
(Ford shares surge even as Q1 numbers take a hit. Click Here for the story.)
According to Ford the DoJ probe “currently focuses on issues relating to road load estimations, including analytical modeling and coastdown testing.”
Road load, at its most basic, calculates the various forces a vehicle faces while driving on a level road at constant speed, including such things as tire rolling resistance and driveline losses. It is normally calculated by using a dynamometer under carefully controlled conditions. Coastdown testing essentially helps validate the results of the load test.
The case was set in motion when, last September, some Ford employees advised the company that there appeared to be problems with the mathematical models it used to run emissions and fuel economy tests. Under federal law, manufacturers routinely certify their own numbers.
Ford subsequently hired an outside firm to validate its own test results and then, in February, launched an internal investigation that appeared to indicate that its emissions levels were being understated, while mileage numbers were being overstated on a number of its products.
It subsequently advised both the Environmental Protection Agency, as well as the California Air Resources Board, CARB setting its own mileage and emissions standards.
Ford said it is cooperating fully with those and other government agencies on the probe.
(EU claims BMW, Daimler, VW colluded to limit emissions tech. Click Here for the story.)
The results of the DoJ investigation could go in a variety of directions and charges could be levied against the company, even individual employees, were the government to determine the tests were intentionally rigged, as was the case at VW.
Even if the errors were unintentional, Ford could face fines that could add up into the millions of dollars though initial expectations are that it would not face anything like what the Germans were hit with after the diesel scandal broke more than three years ago.
When Fiat Chrysler agreed to settle a dispute involving its own Jeep and Ram diesel models this past January it was socked with an $800 million bill for both civil penalties and payouts to vehicle owners.
Hyundai and Kia faced hefty payouts, as well, when it turned out the two brands had overstated fuel economy numbers for models like the Hyundai Sonata and Kia Soul by as much as six miles per gallon. The automaker initially offered payouts to affected owners to cover, among other things, higher-than-expected fuel costs.
Even if the numbers were unintentionally miscalculated, the case could probe problematic for Ford. It could wind up having to reverse itself, for one thing, after having declared that its new Ranger pickup had the highest fuel economy of any gas-powered midsize pickup truck available in the U.S. market.
The diesel emissions scandal at Volkswagen was the most egregious case yet involving intentionally rigged mileage and emissions numbers. Along with the two executives who have so far been prosecuted in the U.S., a number of other former VW employees have been charged, including former Volkswagen AG CEO Martin Winterkorn. They have remained in Germany, however, which does not have an extradition treaty with the U.S. But Winterkorn and others, including the former head of the Audi division, have been charged in that country and face prosecution.
(SEC suing VW, former CEO Winterkorn, for “massive fraud” in emissions cheating scandal. Click Here for the story.)
“If we needed any more evidence that stronger consumer and environmental protections are needed, this is it,” Madeline Page, the coordinator of the Clean Cars Campaign, said after news of the Ford investigation was released. “We’ve said it before, and we’ll say it again: Ford and the entire auto industry cannot be trusted to do right by the public or the planet.”
Public Citizen, the non-profit that runs the Clean Cars Campaign, is one of a number of critics that have argued that automakers should not be allowed to self-certify emissions and mileage tests.
