WASHINGTON (Bloomberg) -- Fiat Chrysler Automobiles is running short on time to fix its emissions record in the U.S.
For the fourth consecutive year, the maker of Ram pickups and Jeep SUVs finished last in a 2014 Environmental Protection Agency ranking of carbon-dioxide emissions among big automakers. And the agency plans to accelerate its CO2 targets sharply beginning next year.
To comply, FCA must improve faster than bigger and richer rivals who also are straining to cut emissions. Failing that, it might be forced to stop building some of the light-duty trucks that Bloomberg Intelligence analyst Kevin Tynan says deliver 90 percent of its profit. Or, to keep making them, it could be forced into a merger.
"FCA doesn’t have the resources to fulfill the emissions requirements," said Maryann Keller, an independent auto-industry consultant in Stamford, Connecticut. "It's not a company that can survive in its present form."
To fight global warming, the EPA will cap tailpipe CO2 emissions at 163 grams per mile in 2025. FCA reported an average 428 grams per mile in 2014, compared with 302 for industry-leading Mazda.
FCA also faces tougher fuel-economy targets by 2025. The EPA requires automakers to boost average miles per gallon by 50 percent to 54.5 mpg. Meanwhile, California requires as much as 15 percent of sales come from zero-emission vehicles powered by fuel cells or batteries.
CEO Officer Sergio Marchionne describes these mandates as both expensive and an existential threat. He has been saying since fall 2014 that automakers should face the challenges and boost chronically low profits by merging. General Motors Co., which he has mainly focused on, said no.
“Nobody needs a merger with Chrysler,” Keller said.
Rely on Ram
FCA has struggled to meet fuel-efficiency requirements since the U.S. first set them in 1975, when Fiat and Chrysler were separate companies. Today it relies on Rams, Jeeps and minivans: With gasoline at about $2 a gallon, 78 percent of its U.S. sales volume comes from light-duty trucks, compared with 70 percent at GM and 69 percent at Ford Motor, according to Autodata Corp.
Its truck fuel economy was worse than GM’s in the 2014 model year, according to EPA data, with pickups averaging 17.3 mpg compared with 19.2 mpg. This excludes two-wheel-drive compact SUVs that help boost ratings, which accounted for 8.9 percent of FCA’s fleet and 13.4 percent of GM’s.