2 ·vs-Vertraulich Von:                                                       @fcagroup.com ·Gesendet:                                  Freitag, 27. November 2015 19:06 An:                                                      @kba.de Ce:                                                @fcagroup.com; ■■■■■ @fcagroup .com Betreff:                                   Response to yuor request Anlagen:                                   2015 11 27 FCA Italy Response to KBA.pdf Please find attached our response to your request as per your letter dated November 13, 2015 and further discussions during the meeting of November 19, 2015. A separate mail will follow with relevant attachments. We would appreciate confirmation of receipt of these two mails . Best regards FC-A Emissions, Aftertreatment & Mechanical Systems (EAMS) Corso Settembrini 40, Torino - ltaly Corpo 3 - 2° Floor - Room C26 Office: +39 .011 Mobile: +39 Email:                   @fcagroup.com

Vt">-ver1rau11cn                                                                                      28 amtlich geheimgehalten FCA ... FIAT CHRYSLER AU r OMOBIL ES EMEA Emissions, Affe, Treatment and Mechanical Systems November 27, 201 ~ -, Kraftfahrt-Bundesamt Fördestraße 16 24944 - Flensburg Gennany • 1 • 1 J 43~ l Mr.- -==:::s ·      ' ;e:- Telefax: 0461 - E-Mail~ 1 ; ,IJ         Strictly Confidentlal ·I 1 .1 j ·• · mlll}~I Jeep c.c.      Mr.- Mr. Vehlcle Type Jeep Cherokee ·•                        This letter is in response to your request to comment and provide further infonnation •· on the results of the tests that you ("KBA") have recently perfonned on a Jeep Cherokee 1 sample ("Cherokee"), as announced in your letter to FCA Gennany AG dated November 13, 2015 and further discussed in the meeting which took place on November 19, 2015. m --. We appreciate being provided with the opportunity to com·ment on the results of your i tests and to provide our perspective in this matter.                                                                              ! 1 \ _·) ·1. KBA's testlng results We understand that you have first tested the Cherokee on the chassis dynamometer 1 !. 1 JTO 2.0L 170CV AT9 AWD               version FCA ltaly 8.p.A.                            Regla18nid Office: C.10 G. Agnelli 200, 10135 Turin, ltaly  Company wtth a SOie shr eholder EMEA            C.10 G. Agnelll 200, 10135 Turin, ltaly     Share Capital Euro& 800.000.000fully pald-up                "Dlrezlone e Coordinamento" 1 Ph. +39 011 0031111                       . Reg. ofComp. ofTurin, Fl&eal Coda,                          (all 2497 Italien Civil C9de):

288 VS-V~rtraulich amtlich 9eheim~ehühen .    FIA1 CHRYSLER AUTOMOBILES according to the regulatory homologation cycle pursuant to Regulation (EC) No 715/2007 of ' the European Parliament and of the Council of June 20 2007, as amended ("New European : Driving Cycle" or ."NEDC"). The result of the test indicated NOx emissions within the regulatory · limit (140 nig/km vs. the 180 mg/km limit). Then you have performed a second cycle, identical ! to the NEDC other than that the test has been commenced with warm engine (rather than cold\ as prescribed for the NEDC). ,The result of such second cycle as to NOx emissions·is 977              1 mg/km. The sa!,l'le cycle as used in the second test has then been repeated, • with • the relevant 11 results measured with a PEMS and the outc:ome was 1097 mg/km. Then you have carried out \ an on road cycle intended to replicate the conditions of the NEDC , but with warm engine at           \ start, with a NOx result of 2498 mg/km. Then this last cycle has been repeated on road three times with certain variations that you have introduced , with NOx results of 2344, 2560 and 2241 mg/km respectively. Finally you have perlormed an on road test according to a real driving cycle and recorded NOx emission of 2290 mg/km. In your letter of November 13, 2015 you have stated that you consider the NOx levels resulting from your test, both on the chassis dynamometer and on the road, "excessive•. In the meeting of November 19, 2015 you have expressed concerns regarding the difference in results between the test performed on the c~assis dynamometer according to the NEDC with cold engine at cranking ("Cold NEDC Test") versus the results of the same cycle performed with warm engine at cranking ("Wann NEDC Test") and the use of temperature as parameter in EGR control strategies. PIOlfS5IOIW 2 Our ~omments are as follows. Jeep 2.  Cherokee confonns to the f1omologated sample The result of the NEDC cycle performed by KBA under the regulatory conditions (i.e. with cold engine at cranking) is within the regulatory limit (NOx was 140 mg/km, vs, the 180 mg/km homologatiori ·nmit) and conforms to the homologation value. The result of your test performed i~ accordance with the regulatory requirements demonstral es that the Cherokee meets the regulatory requirement to conform to the homologated sample. 3.  Cherokee does not detect being tested oi, a chassis dynamometer Sensors and electronic cornponents in modern motor vehicles are capable of "detecting• the start of an emissions test in the laboratory and activating a specific p~edefined 2 FCA is not aware of the factual and logical background of the testing sequence and methodology used by KBA, nor of the details of its implementation and reserves further comments on each of them. 2 EMEA

VS - Vertraulich                                                            2: amtlich ·gaheimgeholten f'lt\T Cl1HYSLER AUTO MOB ILE- S- test mode, designed to operate solely during the performance of the test. In our case, .the result of the Warm NEDC Test is different from the result of the Cold NEDC Test. lf the vehicle had detected that a chassis dynamometer test was being carried out and had activated a specific test mode, the result of the Warm NEDC Test would have been the same as the result ofthe Cold NEDC Test. The results ofyour tests confirm that the Cherokee does not detect that it is under9oinq a bench test. In other words, its emission control strategies operate the same way on the bench and on the road. . Given the above, FCA would sfrongly reject any attempt to assimilate Cherokee to vehicles that detect that they are being tested and activate a functioning mode designed to 1 . 9  .· . .     ..... , 1 . operaie only under test. Any such allegation would be not only groundless, but disproved by the result ~f the KBA iests. Cherokee's controls operate the same way on the chassis dyriamometer and on the road . 4.   KBA's Classlficatlon of the results of the Warm NEDC Test ls merely .G)                                            quantitative · In the meeting of November 19, you have stated that you have established a classification of the·results of the Warm NEDC Test depending on the conformity factor (i.e. -.~                        the deviation ratio versus the regulatory limit). Such classification includes three categories: .~ ~-                          green, which is comprised of the vehicles which in the W_          arm NEDC Test have a conformity factor up to 2.1; yellow, which includes vehicles which in the same test have a conformity Jeep                         factor greater than 2.1 and lower than 3; and red, which includes vehicles whose Warm NEDS 3 Test result shows a conformity factor equal or higher than 3.                                              i •••   ·~-.::. lt must be noted that (being engine temperature at cranking the only difference between the Cold and Warm NEDC Test) any vehicle that has performed differently in the •m Warm NEDC Test vs. the Cold NEDC Test (i) detects temperature at c~anking and (li) uses · temperature at cranking as a parameter to modulate the emission treatment system. lf the use of temperature as described above was impermissible, all vehicles                  , performing differently in the two tests wÖuld be using an impermissible parameter, irrespective --· 1 of their position in the green, yellow or red category of KBA's classification.                       · In addition FCA does not believe that there is any possibility to establish a threshold . i' emissions' be.yond which the use of temperature as a parameter to modulate the EGR would 1 not be per'missible and     below   which   it would be permissible, particularly in the current EU . 1 •                                                                            1 j 3 ·    The grounds of the quantitative thresholds on which KBA's classification lies are undear to FCA and 1       1 . FCA reseives further comments 3,                                                     1 ! EMEA                                                                                                                                  i1 . .1 i                                                                                                                                       1     I 1

290 vs-Vertraulich amtlid1 gaheimgehalien FIAT CHf~Y5LER AUTOMOBILES regulato_  ry system which does not contemplate a "not-to-exceed" regulatory concept (other · \ , 4 than that prescribed for the homologation test). 1 5. Auxlllary Emission Control Strategles are permlsslble                                      '1 ! The purpose of NOx emission treatment systems, which in the case of Cherokee consists essentially of the exhaust gas recirculation ("EGR"), is to reduce engine emissions to the extent the Operation of the s·ystem does not result in risk of damage or accident to the                 1 , engine_or in risk for the safe operation of the vehicle.                                                     ; Manufacturers pursue these objectives.by developing control strategies that govem \· the operation of the EGR. In modern electronically controlled diesel engines numerous sensors, software calibrations a'nd algorithms may be used to modulate and control multiple , aspects of the engine operation, including operation of some or all of the emission control system . In particular EGR requires modulation by an engine computer employing software •·-~ G· Jj) , l!OflSSIÖII.U and/or hardware that embodies a control strategy. Any software or hardware that modulates, 1 activates, or deactivates any part of the emissions coritrol system is generally known as an Auxiliary Emission Control Strategy (" AECS").          5 Although almost all the AECS reduce the effectivenes~ of the emission control system, AEC~ are essential to the proper functioning of any modern diesel engine and emission treatment system and cannot be considered per se impermissible. Current rules provide an exemption for AECS that are justified in terms of protectinq the engine from damage. This Jeep            means that manufacturers are entitled to modulate the pollution control system to the extent . •• 6 necessary to protect the engine from damage or accident or for safe operation on the vehicle. c, 4 ~              Regulation (EC) No 715/2007 (Whereas No. 15) expressly contemplates as a matter for Mure (t )         consideration the introduction of the "not-to-exceed" regulatory concept, which is therefore not currently part of the existing EU rules: "The Commlssion should keep under review the need to revise the New European Drive Cycle as the test procedure that provides the basis of EC type approval emissions m - regulations. Revisions may be necessary to ensure that real world emissions correspond to .those measured at type approval. The use of portable emission measurement systems and the introduction of the 'not-to-exceed' requlato,y conceot shou/d also be considered: 5 Examples of such AECS include strategies that adjust fuel injection timing based on barometric pressure, intake manifold pressure, engine rpm, fuel rate, average fuel rate, amblent temperature, actual or lnferred gear ratio, lntake manifold ·1emperature, engine coolant temperature, oil temperature, the derivative(s) of these inputs, us'e of cruise control, idle periods, power-take-off (PTO) systems, or any i;imilar inputs for the purpose of determining dieser fuel injection timing. 6 Article 3.10 of Regulation (EC) No 715/2007 ofthe European Parliame·nt and of the Council of June 20 2007, as amended provides a definition of "defeat device" as "any element of design which senses temperature, vehicle speed, englne speed (RPM), transmission gear, manifold vacuum or any other parameter for the purpose of activatlng, modulating, delaying or deactivating the·op9ration of any part of 4 EMEA

VS-Vertraulich                                                                29 HAT Ct·IR'fSLER AUlOMOHIL ES Whether an AECS is justified is a judgmental decisioh which depends on a number of subjective and interpretational considerations (inter alia, safety related) rattier than the . outcome of an objective measurement in a prescribed cycle. These considerations include the expected ·performance of the vehicle and of the EGR, the long term impact of EGR's operation · on the engine and the risks that such operation may pose for the integrity of the engine and the safety of occµpants. Often such judgmental decision can be refined over _          time based on field experience and additional testing. Absent any furtlier specification of EU regulatory limits f                    and absent any guidance from the regulatory authorities as to the AECS that can be l                    considered juslified and those which cannot, manufacturers have been exercising their best judgement to develop control strategies that meet the objective of reducing NOx emissions and at the same time preserve the engine from damage and ttie occupants from safety risks. 6. Risk of englne damage The adverse effects that 'intensive EGR has on the engine are well known and recognized. lntroducing unfiltered exhaust gas into the intake manifold, and eventually into the combustion chamber, can acceierale deterioration of the cylinder bore and piston rings. High EGR rates, particularly if continuous and in demanding driving cycles, may cause massive soot generation and progressive fouling of the components of the engine, which ultimately ends up in engine malfunctioning and component failure. 7 JefrP                     The matter is dealt with in several scientific works. •a·            the emission control system, that reduces the effectiveness of the emission control system under condilions which may reasonab/y be expected tobe encountered in nonnal vehicle operation and use·. Article 5.2 of the same Regulation prohibits the use of def~at devlces "that reduce the effectiveness of the emission control system· with the following exceptions: "the need for the devlce ls fustified in terms of protectlnq the enq/ne aqalnst damaae or accldent and for safe Operation of the veh/cle: • 1 (b) the device does not function beyond the requirements of eng/ne starting; or (c) the conditions are m             substantia/ly lnc/uded in the test procedures for verifying evaporative emissions and average tallpipe emissions."                 · · ) 5 CMt:·A L-1. 1 L..r-"\ llc(,!ON

292 VS-Vertraulich amtlich geheimgehalten FCA rtAT CHRYSLER AUTOMOBILE'S Attached as Exhibit 1 are pictures of components showing the deteriorating impact 9f EGR. Exhibit 2 contains a list of patents related to software strategies detecting the degree of clogging of EGR system components. The components primarily affected by the above issues are: (a) the turbocharger variable geometry vanes; (b) the intake manifold and intake ducts; (c) the throttle valve; (d) the boosUtemperature sensor; (e) the cylinder head exhaust valves; (f) the after treatment sensors and other components in contact with exhaust gases; (g) the EGR cooler; and (h) the EGR valve. In particular, effects on the EGR, which may result in an ineffective NOx treatment, 8 primarily consist of: PIOIISSIOIW A.        Deposits:·carbonaceous material depositing on the walls of the EGR system pipes, -coolers; and valves reduces the capacity and efficiency of the system. These deposits Jeep          can restrict the flow through the EGR system to prevent the required amount ~f EGR tobe · mixed with the intake air.' These deposits can foul valves and cause them to stick; preventing accurate control of EGR flow. These deposits can also act as insulation, preventing efficient heat transfer from the exhaust gas to the cooling medium in the EGR cooler and incre8$e the . temperature of the EGR mixing with the intake air. Fouling of EGR coolers is a significant issue for compliance with NOx emissions stand_     ards and has negative imp~cts on cooler sizing and engine perfonnance. ,._.__ - 8 ■■■-■■■■■•••• "EGR Systems & Components·, (at: https:/twww,dieselnet.comttech/engine   egr sys.php) 6 - · EM EA

VS-Vertraulich amtlit:h   9eheim9chahen FCA H Ai CH RYSLF.R AlJTOMO BIU $ B.          Corrosion: the presence of sulfur (even with the use of low sulfur fuel} in the EGR system in the form of sulfuric acid must be viewed as a major threat to the integrity of its components. Corrosion in any of the tubes could introduce water (cooling medium} into the engine and perhaps cause a catastrophic failure. Of all the issues associated with EGR systems in any conftguration, this one is .the most serioui;. The more condensate is formed due to EGR cooling, the more likely c:orrosion will be experienced and will have serious durability consequences: . ' I. n                                    · · EGR rates are calibrated also to control DPF regeneration frequency and 1· consequently limit oil dilutioh that could lead under speciftc customer mission proftles to oil • vis~sity deterioration up to engine components failure. The affected engine components are: - ·8J 1} tlle pIston ana ffie pIston rings; 11 , .       • 1 1 ,               2) the be~rings and in general all rotating components protected by lubrication 5               a-                       {camshaft, efc.}; 3) the oil pump; and 4) the intake/exhaust valves. • ll'tOflUIOI\M Jeep lt i;> therefore a fact that no diesel engine can operate indefinitely under an intensive EGR treatment and that the operation of the EGR must be modulated to preserve the engine from damage or accident {which may resuit in a risk for the safety of the vehicle occupants}. 7. Cherokee's EGR speclflcs lmpactlng on test results .   •• " . -: _ The functioning of the EGR system of a specifted vehicle-depends on several factors . In particular vehicle weight and energy demanded to run at constant speed have a direct impact on EGR rate management. •m 1, Typically, a D-segment UV {like Cherokee)_weights 500-600kg more than a C-segment passenger car. As a consequence the energy demanded to run @100km/h the UV is · signiftcantly higher if compared to that requlred to run at the same speed a passenger car {as a referencefrom 13-14 kWto 17-18 kW, i.e. approximately +30%). --·                             The same diesel engine with the same transmission and gear ratios will therefore operate on a lN at same engine speeds but at higher loads.                                 · Typically, load increase in diesel engines is achieved through a higher quantity of injected fuel, which reduces fresh air available. As a consequence, the EGR operates at lower average rates. This is necessary to maintain stable combus~ion and to limit soot generation · and related engine _damage, but results in higher NOx emissions levels. 7 EMEA RHilOM

294 vs - Vertrau \ich . amtlich geheimgehalten FCA FIAT CHRYSL ER AU l O MOB IL~S 8. In particular: temperature (a) Coolant temperature Ouring engine wann-up (i.e. start with cold engine, which is the normal and statistically prevailing start condition), EGR rates are applied as a function of engine speed and load as · represented on the below graph. 16-,,------.---~------~------------                                                                                                                    1 \ 14 . ----- - - - - - - - '~- -          s:...:.._-.c;:..:.:.:..:..:..:...:,   ------- -- --· ' 12                                                   - - ~ - - - - -- - - - - ~ .                                               ~. -- - - - ._- . .' '                  . ' .. ' . \ ! w 10                                            - -- - '' ' ' - - ' - -- - - -- - -- lE A.        8                        ----'----'                                                                                 ·- -- : ______ ___ _ : C, ~ : :                       \ 6                                - --~- .- -- - - ·      ,                         .                        - - -\- :--- - -- . - -- .. 1 . • .• .'•                    ' 4 11----~.- ..                  .. - - ; . • •• - • - • - · r - -   -•- . 2    --- ----·-i··- -                          -- -                                                                               ------ --- • PICIIISSIONAl ..                  . 0 ..Jl,._..;;_..,._ _......;•'........._.;..;,._.....i.;..._ _ _ _                   -'-'~--"~~-.....,j Jeep                           1250        1500                1750              2000                2250     2500       2750                             3000            3250 C.> • ~ Englne Speed [rpm] As previously mentioned, the purpose of Cherokee's EGR is to reduce NOx engine emissions, to the extent the operation of the EGR does not result in risk of damage or accident to the engine or in risk for the safe ope·ration of the vehicle. Operating _the engine with the above EGR rates contlnuously, especially under partlcular driving conditions like door-to-door and heavy urban and generally short trips, may tn             lead to high soot generation, with progressive fouling of engine components up to --·            matfunctioning and/or permanent component failure. Furthermore, those EGR rates may lead to an increase of D~F Regeneration frequency and oil dilution that could drive under specific customer mission profil~s to oil viscosity deterioration up to engine components failure. · As a consequence, to protect engine reliability for cranking perfonned with waimed-up engine (i.e. start with warm engine, correspon~ing to instances of prolo11ged vehicle use, such as long trips with intennediate short stops) EGR rates are modulated (not deactivated) through a reduction of approximately 5 to 15 units. 8 EMEA

VS-Vertraulich                                                      2' amtlich geheimgehalten FCA·· F IAl CHRYSLER AUTOMOBIL-fS (b) Ambient temperature EGR rate management is also linked to ambient temperature with the purpose_of: A. avoiding combustion instability which can result in misfire, causing, in addition to uncontrolled production of HC and CO emissions, in conjunction with soot, vamishing on: 1) EGR valve 1                                     2) turbocharger variable geometry vanes 3) intake manifold and intake ducts 1 9                                4) throttle valve 5) boost/temperature sensor 6) EGR cooler 1 -~                               7) cylinder head exhaust valves 8) after treatment system sensors and all other components in contact with • exhaust gases; , 1 '!~~ B. reducing the risk of water condensation on EGR and intake system routing ; C. avoiding vehicle jerking caused by combustion instability; and Jeep          ·               D. reducing thermal load on the cooling system, which could lea(j to .engine •· · damage due to overheating. "·.. . : _             9. On road tests are irifluenced by a variety of factors 1 •m                    lt is largely known tha~ the on road NOx emission performance of a vehicle powered by a diesel engine may significantly differ from the performance of the same vehicle when tested on a chassis dynamometer . •   ~- Several studies have reported such difference and have arialyzed the factors impacting the test results. Annex 3 contains some of theni. In general terms emission measurements in on road tests are highly subjective, influenced by many factors. When different cycles on roller bench or on-road are performed these factors influence the engine operating point and therefore emission values. Examples of such factors include: (a) vehicle weight; 9 EMEA