The United States on Thursday charged Fiat Chrysler with using software on its trucks to evade emissions standards on about 104,000 vehicles, an accusation the company immediately denied.
The Environmental Protection Agency said the undisclosed software on the 2014 to 2016 models of Grand Cherokees and Dodge Ram 1500 trucks sold in the United States allowed the vehicles to emit more nitrogen oxides than permitted.
Trading of FCA shares was briefly suspended on the New York Stock Exchange, after the share price had fallen over 16 percent just after the announcement. When it restarted it was down 14.5 percent around 1640 GMT. In Milan, the share price fell nearly 15 percent before trading was halted.
The company already is facing two class-action lawsuits over use of the defeat software.
However, FCA US said in a statement that emissions control systems on its vehicles meet all US requirements and "are not 'defeat devices.'" It said it looks forward to working with the "incoming administration" to resolve the matter.
President-elect Donald Trump Wednesday praised the company for its plans for new investment in the United States which will create 2,000 new jobs.
The EPA announcement about FCA comes a day after the government announced a final settlement of the criminal charges against German auto giant Volkswagen for using defeat technology in its diesel cars.
"Failing to disclose software that affects emissions in a vehicle's engine is a serious violation of the law," said Cynthia Giles from EPA's Office of Enforcement and Compliance Assurance.
"We continue to investigate the nature and impact of these devices. All automakers must play by the same rules, and we will continue to hold companies accountable," Giles said in a statement.
The EPA is working with the California Air Resources Board (CARB), which also is investigating FCA.
The company said in a statement it was disappointed with the EPA decision, and has provided evidence to the agency to prove "its emission control systems meet the applicable requirements."
"FCA US intends to work with the incoming administration to present its case and resolve this matter fairly and equitably and to assure the EPA and FCA US customers that the company's diesel-powered vehicles meet all applicable regulatory requirements."
VW on Wednesday agreed to plead guilty to three criminal charges and pay $4.3 billion in civil and criminal fines for conspiracy and fraud in its emissions scandal. That was in addition to $17.5 billion paid to consumers, dealers and to CARB for environmental cleanup.