Cummins Faces Hefty $2B Penalty And Over 600K Recalls In Ram Trucks Emissions Violation Case

In a landmark settlement, Cummins Inc. (NYSE:CMI) is ordered to recall 600,000 Ram Trucks. The engine manufacturer has been implicated in an emissions cheating scandal, leading to a record-breaking $2 billion penalty.

What Happened: The Department of Justice (DOJ) revealed on Wednesday details of a December settlement involving Cummins, AP News reported. The firm is accused of evading emissions testing by employing devices that can circumvent or disable emissions controls.

The agreement requires a recall of 600,000 Ram trucks fitted with Cummins diesel engines carrying the illicit engine control software. Cummins is set to pay a civil penalty of $1.67 billion, the highest ever under the Clean Air Act, in addition to $325 million for remedial actions. This brings the total penalty to over $2 billion.

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The U.S. Justice Department, the Environmental Protection Agency, the California Air Resources Board, and the California Attorney General have dubbed this a “landmark” settlement. “We won’t let greedy corporations cheat their way to success and run over the health and wellbeing of consumers and our environment along the way,” declared California AG Rob Bonta.

Cummins responded by stating that the settlement does not involve any additional financial commitments beyond those announced in December and is eager to finalize this prolonged issue.

Why It Matters: This unprecedented settlement is a result of Cummins’ alleged installation of emissions defeat devices on hundreds of thousands of engines. These devices were found on 630,000 model year 2013 to 2019 RAM 2500 and 3500 pickup truck engines, as well as undisclosed auxiliary emission control devices on 330,000 model year 2019 to 2023 RAM 2500 and 3500 pickup truck engines. The violation of the Clean Air Act has not only led to a significant financial penalty for Cummins but also impacted its share value negatively.

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