MPG Misstatements Cost Hyundai, Kia $755 Million

After a two-year investigation into Hyundai and Kia for exaggerating fuel economy ratings, a federal judge approved a record-breaking fine this week but didn’t set aside extra funds for electric vehicle programs.

In all, the mpg overstatements will cost the Korean automakers $755 million. Almost half of that is a $360 million fine from the U.S. Environmental Protection Agency (EPA) for violating the Clean Air Act, which was approved by U.S. District Judge Tanya Chutkan this week. Included in the fine is a $100 million civil penalty, the forfeiture of $210 million greenhouse gas (GHG) emission credits and $50 million to pay for independent fuel economy audits on future models.

The settlement doesn’t include a $50 million fund to support electric vehicle programs. The New Jersey EPA and state attorneys general from nine states – Connecticut, Maryland, Massachusetts, New Mexico, New York, Oregon, Rhode Island and Vermont – filed requests for the money.

“Failing to include environmental mitigation measures aimed at reducing greenhouse gas emissions from passenger vehicles the very purpose of the program Hyundai and Kia violated sets a bad precedent for future settlements involving this federal program,” the state attorneys general wrote. “We urge the United States to revise the settlement to provide that at least $25 million of the approximately $94 million currently slated to be paid into the U.S. Treasury instead be used on geographically diverse projects to accelerate the adoption of state programs outside of California for electric vehicles, including battery electric, fuel cell electric, or plug-in hybrid electric vehicles.”

While Judge Chutkan supported the goal behind the electric vehicle programs, she stated that the funds were not included in order to prevent the creation of a complex settlement, which would stall the process and threaten the remainder of the fine.

According to the EPA’s investigation, about 600,000 Hyundai 2011-2013 models and 300,000 Kia 2011-2013 models were sold in the U.S. with an incorrect fuel economy on the window sticker. The overestimations ranged from 1 mpg to 6 mpg. Affected models were identified as the Kia Optima Hybrid, Rio, Sorento, Soul, and Sportage and the Hyundai Accent, Azera, Elantra, Genesis, Santa Fe, Sonata Hybrid, Tucson, and Veloster.

SEE ALSO: Hyundai and Kia Envision 25-percent MPG improvement By 2020

A portion of the Korean automakers’ $755 million bill includes a $395 million settlement for consumers that purchased affected vehicles. Owners could use the award to offset fuels costs that were higher than expected or as a credit towards a new Hyundai or Kia.

The class action settlement was reached last November, at which time Hyundai issued a statement:

“Hyundai has acted transparently, reimbursed affected customers and fully cooperated with the EPA throughout the course of its investigation,” said David Zuchowski, president and CEO of Hyundai Motor America. “We are pleased to put this behind us, and gratified that even with our adjusted fuel economy ratings, Hyundai continues to lead the automotive industry in fuel efficiency and environmental performance.”

Hyundai declined to offer a comment after Judge Chutkan’s final ruling.

The Car Connection