The U.S. Justice Department has opened a criminal investigation into Ford Motor Co.'s emissions certification process, intensifying an issue the automaker disclosed two months ago.
The government notified the company of its investigation earlier this month, Kim Pittel, group vice president of sustainability, environment and safety engineering, said Friday in a statement.
It also voluntarily disclosed the matter to the Environmental Protection Agency and the California Air Resources Board, according to the Securities and Exchange Commission filing. The Dearborn, Mich., auto company said it has notified several other state and federal agencies, and that it is fully cooperating with authorities.
The inquiry makes Ford at least the third major automaker to fall under federal investigation over emissions in the span of a few years. Volkswagen paid a $4.3 billion penalty in 2017 for misleading regulators and customers about its diesel engines' emissions. The German automaker paid nearly $15 billion to settle shareholder claims from the scandal and is now being sued by the SEC on charges of defrauding investors.
Fiat Chrysler, which had used emissions-cheating devices in Jeep and Ram vehicles from 2014 to 2016, agreed to an $800 million penalty to resolve the case in January. Last month, the company recalled almost 863,000 vehicles that violate pollution standards.
Ford said in February that it may have taken a flawed approach to calculating the effect of aerodynamic drag and tire friction on the fuel economy of its vehicles outside of testing labs. It hired a company earlier this year to help conduct an investigation that could stretch into the summer.
Ford shares shrugged off the disclosure after a better-than-expected earnings report Thursday. The stock closed up 10.7% to $10.41 in New York.
The Justice Department declined to comment while the Environmental Protection Agency did not have an immediate comment.
"The government can conduct investigations that are civil or criminal. It chooses criminal when it thinks it may find evidence that the company intentionally violated the law," said Erik Gordon, a professor at the University of Michigan's Ross School of Business.
Ford discovered potential flaws in how it calculated key data used to determine new-vehicle fuel economy ratings and tailpipe pollution levels. It's unclear whether the problems Ford discovered led to inaccurate mileage ratings.
After employees raised concerns about the accuracy of emissions and gas mileage modeling methods in September, Ford hired an outside firm to review its emissions practices and hired an independent lab to conduct tests, the company announced in February.
At the time, the automaker said "there's been no determination that this affects Ford's fuel economy labels or emissions certifications."
"Our focus is on completing our investigation and a thorough technical review of this matter and cooperating with government and regulatory agencies," Pittel said Friday.
The investigation doesn't involve the use of emissions cheat devices that VW was found to be using to game emissions testing, he said.
Ford has had fuel-economy issues before. It restated ratings on six models, including the Fiesta, C-Max and Fusion hybrid cars, in 2014 and cut checks for as much as $1,050 to more than 200,000 owners to compensate for their vehicles' mileage shortcomings.
Hyundai Motor Co. and Kia Motors Corp. in 2014 were hit with a $100 million civil penalty after selling roughly 1.2 million vehicles with inflated fuel economy ratings. The inaccurate ratings stemmed from faulty procedures used by the companies to calculate road-load forces.
Information for this article was contributed by Ryan Beene of Bloomberg News; by Taylor Telford of The Washington Post; and by Tiffany Hsu of The New York Times.
Business on 04/27/2019