Volkswagen emissions scandal

2010 VW Golf TDI displaying "Clean Diesel" at a U.S. auto show.
Date	2008–2015
Location	Worldwide
Type	Emissions violations
Cause	Engaging full emissions control only during testing
Participants	International Council on Clean Transportation, West Virginia University, Volkswagen Group, US EPA, other regulators
Footage	http://www.vwdieselinfo.com

On 18 September 2015, the United States' Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to Volkswagen Group, after it was found that the automaker had intentionally programmed turbocharged direct injection (TDI) diesel engines to activate certain emissions controls only during laboratory emissions testing. The programming caused the vehicles' nitrogen oxide (NO_x) output to meet U.S. standards during regulatory testing, but produce up to 40 times higher NO_x output in real-world driving.^[6] An estimated eleven million cars worldwide, and 500,000 in the United States, produced between model years 2009 and 2015, included such programming.^{[7][8][9][10][11]}

These findings stemmed from a study on regional emissions discrepancies commissioned in 2014 by the International Council on Clean Transportation (ICCT) summing up the data from three different sources on 15 vehicles. Among the research groups was a group of five scientists at West Virginia University, who detected additional emissions during live road tests on two out of three diesel cars. ICCT also purchased data from two other sources. They provided their findings to the California Air Resources Board (CARB) in May 2014.^[12][13][14]

Volkswagen became the target of regulatory investigations in multiple countries,^[15] and Volkswagen's stock price plunged in value by a third in the days immediately after the news. Volkswagen Group CEO Martin Winterkorn resigned, and the head of brand development Heinz-Jakob Neusser, Audi research and development head Ulrich Hackenberg, and Porsche research and development head Wolfgang Hatz were suspended. Volkswagen announced plans to spend US$7.3 billion on rectifying the emissions issues, and planned to refit the affected vehicles as part of a recall campaign. The scandal raised awareness over the higher levels of pollution being emitted by all vehicles built by a wide range of carmakers, which under real world driving conditions are prone to exceed legal emission limits. A study conducted by ICCT and ADAC showed biggest deviations from Volvo, Renault, Jeep, Hyundai, Citroën and Fiat.^[16][17][18] A discussion was sparked that software-controlled machinery will generally be prone to cheating, and a way out would be to make the software source code accessible to the public.^[19][20][21]

Background[edit]

VW anti-pollution system[edit]

In 2005, parts of VW intended to purchase Mercedes' BlueTec system for reducing pollution, but other parts of VW rejected that and preferred to develop their own system.^[22][23][24]

Starting with the 2009 model year (some date back to 2008^[3][4][25] "electronically controlled common rail direct injection system with Bosch high pressure pump"), Volkswagen Group began migrating its light-duty passenger vehicle turbocharged direct injection (TDI) diesel engines to a common-rail fuel injection system. This system allows for higher-precision fuel delivery using electronically controlled fuel injectors and higher injection pressure, theoretically leading to better fuel atomization, better air/fuel ratio control, and by extension, better control of emissions.^[26][27]

With the addition of a diesel particulate filter to capture soot, and on some vehicle models, a urea-based exhaust aftertreatment system, the engines were described by Volkswagen as being as clean as or cleaner than US and Californian requirements, while providing good performance.^[28][29] The system failed to combine good fuel economy with compliant emissions, and VW chose sometime before 2010 to program the engine control to switch from good fuel economy and high emissions to low-emission compliant mode when it detected an emissions test, particularly for the EA 189 engine. This caused the engine to pollute in daily operation, but comply with pollution rules only when being tested.^[23][30] The difference was deliberate, and the newspaper Der Spiegel reported that at least 30 people at management level in VW knew about the deceit for years, however VW denies this.^[31][32]

As of 2014^[update], VW is registered with a Corporate Average Fuel Economy (CAFE) of 34-38 mpg.^[33] The low emissions levels of Volkswagen vehicles tested with the defeat device in operation enabled the company to receive green car subsidies and tax exemptions in the US.^[34]

• 

  The 2009 Volkswagen Jetta Diesel Sedan was chosen Green Car of the Year. The award was rescinded in early October 2015.

• 

  Volkswagen TDITruthandDare.com Clean Diesel campaign^{[35][36][37][38]} advertised on VW Golf TDI at the 2010 Washington Auto Show. (2009-4, 2009-7, 2010)

• 

  Volkswagen Research and Development building in Wolfsburg

Early warnings[edit]

In 2011 the European Commission's Joint Research Centre published a report which found that all tested diesel vehicles emit 0.93 ± 0.39 g/km, the tested Euro 5 diesel vehicles emit 0.62 ± 0.19 g/km. This substantially exceeds the respective Euro 3-5 emission limit.^[39] In 2013 the research center then warned:

Sensors and electronic components in modern light-duty vehicles are capable of 'detecting' the start of an emissions test in the laboratory (e.g., based on acceleration sensors or not-driven/not-rotating wheels). Some vehicle functions may only be operational in the laboratory, if a predefined test mode is activated. Detecting emissions tests is problematic from the perspective of emissions legislation, because it may enable the use of defeat devices that activate, modulate, delay, or deactivate emissions control systems with the purpose of either enhancing the effectiveness of these systems during emissions testing or reducing the effectiveness of these systems under normal vehicle operation and use. While the use of defeat devices is generally prohibited, exceptions exist in cases where it is necessary to protect the engine against damage and to ensure safe vehicle operation (EC, 2007). These exceptions leave room for interpretation and provide scope, together with the currently applied test procedure, for tailoring the emissions performance [...]^[40]

The European commission and European governments could not agree who is responsible for taking action. In the United Kingdom, the Department for Transport received a report from the ICCT in October 2014 which stated there was a "real world nitrogen oxides compliance issue" with diesel passenger cars.^[41] The UK's DEFRA research indicates a significant reduction in NOx and particulate matter from 1983 to 2014. Respirable suspended particles with a diameter of 10 micrometres — also known as PM₁₀ (including diesel particulates) — have halved since 1996 despite the increased number and size diesel cars in the UK.^[42]

European discrepancies[edit]

The independent body International Council on Clean Transportation (ICCT) commissioned a study in 2014 and obtained data on 15 vehicles from three sources. John German, co-lead of the U.S. branch of ICCT, said the idea for the "very ordinary" test came from Peter Mock, managing director ICCT in Europe. Mr. German said they chose to put U.S. vehicles through on-the-road tests because their emissions regulations are more stringent than in the European Union. The ICCT expected the cars to pass, and thought they would be able to use the results to demonstrate to Europeans that it was possible to run diesels with cleaner emissions. The study found emissions discrepancies in the diesel VW Passat and VW Jetta, and no discrepancies in a BMW X5. They wanted to test a Mercedes as well, but could not get one.^[14][43][44]

U.S. testing conducted[edit]

A group of scientists at West Virginia University submitted a proposal to ICCT, and John German awarded them a US$50,000 grant for a study^[12][45] to conduct tests on three diesel cars:^[46] a VW Passat, a VW Jetta, and a BMW X5.^[43] ICCT also purchased data from Emissions Analytics, a UK-based emissions consultancy, and from stakeholders in the Real Driving Emissions-Light Duty Vehicle working group in charge of amending Euro 6 regulations.^[12]

Two professors and two students began testing emissions from the three vehicles under road conditions in early 2014, using a portable emissions measurement system, making it possible to collect real world driving emissions data, for comparison with laboratory dynamometer testing.^[14] The three vehicles were all certified at a California Air Resources Board facility before the tests^[14] as falling below the emissions limits when using the standard laboratory testing protocols.^[13][47] They put 2,400 kilometres (1,500 mi) on the Jetta and BMW. For their final test, they wanted to put even more mileage on the Passat and drove it from Los Angeles to Seattle and back again, virtually the entire West Coast of the United States,^[43] over 3,200 kilometres (2,000 mi).^[14] The BMW was "at or below the standard … with exception of rural-up/downhill driving conditions."^[13] But the researchers found that under real-world driving conditions the Jetta exceeded U.S. emissions limits "by a factor of 15 to 35" while the Passat exceeded the limit "by a factor of 5 to 20."^[13][46]

The emissions far exceeded legal limits set by both European and U.S. standards. One of the testers, Research Assistant Professor Arvind Thiruvengadam said, "... we did so much testing that we couldn't repeatedly be doing the same mistake again and again."^[48][49]

Mr. German said the deceit required more effort than merely adding some code to the engine software.^[48]

It's both writing the code, but you also need to do validation. So someone had to take these vehicles out, test them on the standard test cycle, make sure that the emission controls are supposed to be working when they're supposed to be working.^[48]

The U.S. test results confirmed the ICCT's findings in Europe.^[13] The West Virginia scientists did not identify the defeat device, but they reported their findings in a study they presented directly to the EPA and CARB in May 2014.^[50][51] Colorado's RapidScreen real-world emissions test data reinforced the suspected abnormally high emissions levels.^[52]

Emission standards[edit]

The VW and Audi cars identified as violators had been certified to meet either the US EPA Tier 2 / Bin 5 emissions standard or the California LEV-II ULEV standard.^[53] Either standard requires that nitrogen oxide emissions not exceed 0.043 grams per kilometre (0.07 g/mi) for engines at full useful life which is defined as either 190,000 kilometres (120,000 mi) or 240,000 kilometres (150,000 mi) depending on the vehicle and optional certification choices.^[54][55]

This standard for nitrogen oxide emissions is among the most stringent in the world. For comparison, the contemporary European standards known as Euro 5 (2008 "EU5 compliant",^[3] 2009^[5]–2014 models) and Euro 6 (2015 models) only limit nitrogen oxide emissions to 0.18 grams per kilometre (0.29 g/mi) and 0.08 grams per kilometre (0.13 g/mi) respectively.^[56][55] Defeat devices are forbidden in the EU.^[57] The use of a defeat device is subject to a penalty.^[56]

• Note: The vehicles tested were anonymous in the original study. Emissions listed on page 64-65. Limits listed on page 5. NOx treatment listed on page 9.

20% of European city dwellers are exposed to unhealthy levels of nitrogen dioxide. In London, where diesel road traffic is responsible for 40% of NOx emissions, air pollution causes more than 3,000 deaths a year.^[58] A Channel 4 documentary in January 2015 referred to the UK government moving to a CO₂ emission band system for road tax, which favoured diesel power, as the "great car con", with Barry Gardiner MP, former member of the Blair government, stating that the policy, which lowered CO₂ emissions yet increased NOx pollution, was a mistake.^[59]

EPA Notice of Violation[edit]

On 18 September 2015 the U.S. EPA served a Notice of Violation (NOV) on Volkswagen Group alleging that approximately 480,000 VW and Audi automobiles equipped with 2-litre TDI engines, and sold in the U.S. between 2009 and 2015, had an emissions-compliance "defeat device" installed.^[7][60] A Notice of Violation is a notification to the recipient that the EPA believes it has committed violations and is not a final determination of liability.^[61][62]

Volkswagen's "defeat device" is specially written engine management unit firmware that detects "the position of the steering wheel, vehicle speed, the duration of the engine's operation, and barometric pressure"^[63] when positioned on a dynamometer using the FTP-75 test schedule.^[64] These criteria very closely match the EPA's required emissions testing protocol^[63] which allowed the vehicle to comply with emissions regulations by properly activating all emissions control during testing. The EPA's NOV alleged that under normal driving conditions, the software suppressed the emissions controls, allowing the engine to produce more torque and get better fuel economy, at the expense of emitting up to 40 times more nitrogen oxides than allowed by law.^[65]

Volkswagen's response[edit]

Initial response[edit]

Former Volkswagen AG CEO Martin Winterkorn in March 2015

According to the EPA, Volkswagen had insisted for a year before the outbreak of the scandal that discrepancies were mere technical glitches.^[66] Volkswagen only fully acknowledged that they had manipulated the vehicle emission tests after being confronted with evidence regarding the "defeat device".^[67][68] Formal acknowledgement of the deception was made by Volkswagen executives in Germany and the United States to EPA and California officials during a 3 September conference call, during which Volkswagen executives discussed written materials provided to the participants demonstrating how Volkswagen's diesel engine software circumvented U.S. emissions tests. That admission came after the EPA threatened to withhold approval for the company's 2016 Volkswagen and Audi diesel models.^[8]

Volkswagen's CEO Martin Winterkorn said: "I personally am deeply sorry that we have broken the trust of our customers and the public." Winterkorn was in charge at Volkswagen from the start of 2008 to September 2015.^[70] He attributed the admitted wrongdoing to "the terrible mistakes of a few people". Winterkorn initially resisted calls to step down from his leadership role at VW,^[71][72] but then resigned as CEO on 23 September 2015.^[73][74][75]

Volkswagen Group of America CEO Michael Horn was more direct, saying, "We've totally screwed up."^[71] Horn added, "Our company was dishonest with the EPA, and the California Air Resources Board and with all of you."^[72] Olaf Lies, a Volkswagen board member and economy minister of Lower Saxony, later told the BBC that the people "who allowed this to happen, or who made the decision to install this software" acted criminally, and must be held personally accountable. He also said the board only found out about the problems "shortly before the media did", and expressed concerns over "why the board wasn't informed earlier about the problems when they were known about over a year ago in the United States".^[76]

Volkswagen announced that 11 million cars were involved in the falsified emission reports, and that over seven billion dollars would be earmarked to deal with the costs of rectifying the software at the heart of the pollution statements.^[11] The newly appointed CEO of VW Mathias Müller stated that the software was only activated in a part of those 11 million cars, which has yet to be determined.^[10] The German tabloid Bild claimed that top management had been aware of the software's use to manipulate exhaust settings as early as 2007. Bosch provided the software for testing purposes and warned VW that it would be illegal to use the software to avoid emissions compliance during normal driving.^[77] Der Spiegel followed Bild with an article dated 30 September 2015 to state that some groups of people were aware of this in 2005 or 2006.^[78] Süddeutsche Zeitung had similarly reported, that Heinz-Jakob Neusser, one of VW's top executives, had ignored at least one engineer's warnings over "possibly illegal" practices in 2011.^[79]

On 28 September 2015, it was reported that VW had suspended Heinz-Jakob Neusser, head of brand development at its core VW brand; Ulrich Hackenberg, the head of research and development at its brand Audi who oversees technical development across the VW group; and Wolfgang Hatz, research and development chief at its sports-car brand Porsche who also heads engine and transmissions development of the VW group.^[80]

On the same day it was reported that in addition to the internal revision process to investigate the incidents, the supervisory board of VW hired American law firm Jones Day to carry out an independent external investigation.^[81] A software audit trail is one possible way of investigating what took place when; test logs is another way.^[82]

For the European market, VW has stated unequivocally that EA288-engined cars (which conform to Euro 6 standards) are not affected, even though MY2015 TDIs in the US (which all use the EA288) are part of the EPA allegation and VW's admission. VW announcements to the German press make no mention of any EA288-equipped cars being part of the scandal in any country.

Vehicle recall and consequences[edit]

On 29 September 2015 Volkswagen announced plans to refit up to 11 million vehicles affected by the emissions violations scandal. The recall will affect models fitted with Volkswagen's EA 189 diesel engines, including 5 million at VW brand, 2.1 million at Audi, 1.2 million at Škoda and 1.8 million light commercial vehicles. SEAT said that 700,000 of its diesel models were affected. In Europe, a total of 8 million vehicles are affected.^[83]

In Germany, 2.8 million vehicles will have to be recalled, followed by the UK, with 1.2 million. In France, 984,064 vehicles were affected, in Austria around 360,000, while in the Czech Republic 148,000 vehicles were involved (of which 101,000 were Škodas). In Portugal, VW said it had sold 94,400 vehicles with the rogue software.^[84][85] The repair may not require a formal recall; in the UK, for example, the company will simply offer to repair the cars free of charge; a recall is only required, "when a defect is identified that... could result in serious injury". As the rules violation involved enabling emission controls during testing, but turning it off under normal conditions to improve performance or fuel mileage, the necessary software update might make cars perform less efficiently and impair fuel economy.

It was unclear as of September 2015^[update] whether the repair would also include hardware modifications, such as selective catalytic reduction upgrades.^[86][87] The recall was scheduled to start in January 2016, with all affected cars projected to be fixed by the end of the year. The company also announced a review of all of its brands and models, including its supercar marque Bugatti.^[88]

On 8 October 2015, Volkswagen US CEO Michael Horn said in testimony before the U.S. Congress that it could nevertheless take years to repair all the cars, especially the older models, due to the complex hardware and software changes that will be required. He also said that the fixes will likely preserve fuel economy ratings but, "there might be a slight impact on performance".^[89][90] In Europe, almost half of the affected cars require hardware changes, including the fitting of new parts, in order to meet emission standards.^[91]

On 10 October 2015, Consumer Reports tested a 2015 Jetta TDI and a 2011 Jetta Sportwagen TDI in what they presumed was the special emissions testing, or cheat, mode. The 0 to 60 mph (0 to 97 km/h) acceleration time of the 2011 Jetta increased from 9.9 to 10.5 seconds, and the 2015 car's time went from 9.1 to 9.2 seconds. The fuel economy of the 2011 car decreased from 50 to 46 mpg_-US (4.7 to 5.1 L/100 km; 60 to 55 mpg_-imp) and the 2015 car's fuel economy decreased from 53 to 50 mpg_-US (4.4 to 4.7 L/100 km; 64 to 60 mpg_-imp). Consumer Reports‍ '​s Director of Auto Testing said that while the added fuel costs, "may not be dramatic, these cars may no longer stand out among many very efficient competitors."^[92] The method the magazine used to engage cheat mode while driving required making assumptions about the ECU's operations. Because disabling electronic stability control is a necessary step for running a car on a dynamometer, the magazine assumed that this would put the car in cheat mode.^[92] In order to keep the electronic stability control from reactivating while driving, they disconnected the cars' rear wheel speed sensors, simulating the inputs the ECU receives while the car is on a stationary test rig, even though it was being driven on the road.^[92] Besides front and rear wheel speeds, the EPA had said that steering wheel movement, barometric pressure and duration of engine operation were factors in triggering cheat mode.^[7]

On 12 October 2015, Paul Willis, VW UK managing director told the Commons Transport Select Committee that about 400,000 Volkswagen cars in the UK will need fuel injectors altered as well as a software fix.^[25] The vehicles requiring the hardware fix are the 1.6 litre diesel models. The 1.2 litre^[93] and 2.0 litre diesel models will only require a software fix.^[25]

On the same day, Volkswagen announced it would overhaul its entire diesel strategy, saying that in Europe and North America it will switch "as soon as possible" to the use of selective catalytic reduction technology to improve diesel emissions. It also announced plans to accelerate the development of electric cars and plug-in hybrids, as well as petrol, instead of diesel engines for smaller cars.^[94]

On 12–13 October 2015, Volkswagen Group vehicle drivers in the UK started receiving notification letters, to "rectify the issue".^[95][96] VW said on 15 October 2015 that it would recall around 8.5 million vehicles affected in the European Union, after being ordered to do a recall for Germany by the German Federal Motor Transport Authority (Kraftfahrt-Bundesamt, or KBA).^[97]

Communication actions[edit]

In France, the MediaCom media agency, which buys advertising for Volkswagen, warned the French newspapers on 22 September that it would cancel planned Volkswagen and Audi campaigns in case they would cover the emission violations.^[98] Given the scale that the scandal had already taken by that time, the threat had little effect on its coverage.

On the occasion of German Unity Day, Volkswagen launched an ad campaign in German Sunday-newspapers. In the ad Volkswagen stated that actually at this point it wanted to express its joy about the 25th anniversary of German reunification, its pride about having shaped the country together with all people for the last 25 years, to give thanks for the confidence of the customers it had experienced during all this time and that it wanted to thank all its employees and trade partners in Germany, but concluded that it wants to express in one sentence, that it will do everything to win back the confidence of its customers.^[99]

New orders[edit]

Volkswagen's Belgian importer, D'Ieteren, announced that it would offer free engine upgrades to 800 customers who had ordered a vehicle with a diesel engine that was likely to have been fitted with illegal software.^[100][101]

Sales of vehicles with EA 189 engines were halted in some European countries, including Spain, Switzerland, Italy, the Netherlands, Belgium and the UK.^[100][102]

In the United States, VW has withdrawn its application for emissions certification for its 2016 diesel models, leaving thousands of vehicles stranded at ports. The company said the vehicles contain software that should have been disclosed to and certified by the EPA.^[103] EPA has quarantined some 2016-models until it becomes clear that their catalysts perform the same on the road as they do in tests.^[104]

Consequences[edit]

Health consequences[edit]

Deaths[edit]

A statistical and computer analysis by a group of scientists working with The Associated Press estimated that the practice caused between 16 and 94 deaths in the United States. The Associated Press said that an open source EPA model placed the estimate at 12 to 69 deaths. These studies were based on past epidemiological studies, which have found that, on average, an extra 1300 tons of nitrogen oxide emissions causes one death.^[105] The New York Times cited estimates of 40 and 106 deaths in the U.S.^[106] This death toll was limited because Volkswagen diesel cars represent fewer than 1% of the cars on the road in the U.S.,^[106] but there may have been hundreds killed in Europe where the vehicles are more common.^[105]

Non-fatal health impacts[edit]

NO₂ is a precursor to ground-level ozone and may cause respiratory problems "including asthma, bronchitis and emphysema".^{[107][108][109]} Nitrogen oxides also amplify the effect of fine particulate soot that causes heart problems, a form of air pollution estimated to kill 50,000 in the United States annually.^[105]

Environmental consequences[edit]

NOx are also regulated as a pollutant for their contribution to acid rain, and to formation of a visible brown cloud or smog due to both the visible nature of NO₂, and the tropospheric ozone created by NO. NO and NO₂ are not greenhouse gases, whereas N₂O is.^[110]

Legal and financial repercussions[edit]

Government actions[edit]

• Australia: The Australian Competition and Consumer Commission is investigating VW for possible violations of consumer and safety standards. ^[111]
• Canada: Environment Canada has announced that it has initiated proceedings to evaluate if "defeat devices" were installed in Volkswagen vehicles to bypass emission control tests in Canada.^[112]
• China: The General Administration of Quality Supervision, Inspection and Quarantine of China announced it will recall 1,946 imported Tiguan SUVs and four imported Passat B6 sedans to correct the cheat software.^[113][114]
• European Union: Government regulatory agencies and investigators have initiated proceedings in France, Italy, Germany, Spain, the Netherlands, the Czech Republic and Romania. Several countries have called for a Europe-wide investigation.^{[115][116][117]} The European Investment Bank (EIB) said it is considering recalling VW loans, and announced its own investigation into the matter.^[118]
• France: French authorities have opened an inquiry into Volkswagen over the rigging of emission tests, with prosecutors investigating suspicions of "aggravated deception".^[102]
• Germany: German prosecutors have launched an investigation against former Volkswagen chief executive Martin Winterkorn. Winterkorn had resigned over the scandal, saying he had no knowledge of the manipulation of emissions results.^[119] A German prosecutor later clarified the status of these inquiries, saying it was looking into allegations of fraud from unidentified individuals, but that Winterkorn was not under formal investigation.^[120] Police raided VW headquarters on 8 October 2015. ^[121] On 16 October 2015 there were 20 investigators working on the case, targeting "more than two, but a lot fewer than 10" VW staff. ^[122]
• India: Automotive Research Association of India (ARAI) has been instructed by the Indian government to investigate if vehicles from Volkswagen had circumvented Indian laws and regulations on vehicle emission testing. Ambuj Sharma, additional secretary at the Ministry of Heavy Industry, said: "ARAI has been asked to submit its report within a week."^[123][124] The Indian Foundation of Transport, Research and Training (IFTRT) has demanded a probe into Volkswagen's Confirmation of Production process for vehicles sold in India.^[125] Government of India has extended the deadline for the submission of the test results to the end of October 2015 (after German Chancellor Angela Merkel's visit to India starting from 4 October 2015).^[126]
• Italy: Italy's competition regulator announced plans to investigate whether VW engaged in “improper commercial practices” when promoting its affected diesel vehicles.^[127] On 15 October 2015, Italian police raided VW offices in Verona, and the company's Lamborghini offices in Bologna, placing six executives under investigation. ^[128]
• Netherlands: Netherlands has spent billions of euros on subsidies in energy-efficient cars in the recent years. Jesse Klaver from the political party GroenLinks responded that the Netherlands must claim back money from the car manufacturers if it emerges that they have committed fraud in the Netherlands.^[129]
• Romania: The Romanian Automotive Register (RAR) stopped issuing registration documents for VW vehicles equipped with Euro 5 diesel engines.^[130]
• South Africa: The departments of Environmental Affairs and Transport as well as the National Regulator for Compulsory Specifications say they need to determine whether local cars have been affected by the rigging of US vehicle emissions tests.
• South Korea: Authorities in South Korea announced pollution control investigations into cars manufactured by Volkswagen and other European car-manufacturers. Park Pan-kyu, a deputy director at South Korea's environment ministry said: "If South Korean authorities find problems in the VW diesel cars, the probe could be expanded to all German diesel cars".^[131]
• Sweden: Sweden's chief prosecutor is considering starting a preliminary investigation into Volkswagen's emissions violations.^[132]
• Switzerland: Switzerland has banned sales of Volkswagen diesel cars, marking the most severe step taken so far by a government in reaction to the emissions crisis.^[133]
• United Kingdom: The Department for Transport announced on 24 September that it would begin re-testing cars from a variety of manufacturers to ensure the use of "defeat devices" is not industry wide.^[134]
• United States: The EPA announced that should the allegations be proven, Volkswagen Group could face fines of up to US$37,500 per vehicle (approximately US$18 billion in total). VW suspended sales of TDI-equipped cars in the US on 20 September 2015.^[135] In addition to possible civil fines, media reports state that the United States Department of Justice Environment and Natural Resources Division is conducting a criminal probe of Volkswagen AG's conduct.^[136][137] The United States House Energy Subcommittee on Oversight and Investigations has announced that it would hold a hearing into the Volkswagen scandal. New York Attorney General Eric Schneiderman said that his investigation was already underway and warned: "No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods".^[138] Following the scandal, the EPA decided to broaden its investigations, focusing on 28 diesel-powered models made by BMW, Chrysler, General Motors, Land Rover and Mercedes-Benz. The agency will initially focus on one used vehicle of each model, and will widen the probe should it encounter suspicious data.^[139]
• West Virginia: filed a lawsuit, possibly the first state to do so, seeking restitution for its almost 2700 defeat-device-equipped diesel car owners.^[140]

Private actions[edit]

By 27 September 2015 at least 34 class-action lawsuits had been filed in the U.S.^[141][142] and Canada^[143][144] on behalf of Volkswagen and Audi owners, claiming fraud and breach of contract, positing the "diminished value" of diesels that will be fixed to conform with pollution regulations, due to expected reductions in horsepower and fuel efficiency.^[145] According to Reuters, one reason class action lawyers were able to mobilize so fast is that the company's marketing to upscale professionals, including jurists, had backfired.^[146]

As of 30 September 2015 at least one investor lawsuit seeking class action status for holders of Volkswagen American Depositary Receipts had been filed in the United States seeking compensation for the drop in stock value due to the emissions scandal.^[147]

On 7 October, the L.A. Times reported that the number of class-action lawsuits filed had grown to more than 230.^[148]

Market impact[edit]

Vehicle line-up at 2012 Volkswagen Great Canadian Clean Diesel Tour.

Volkswagen has also stated that 11 million vehicles sold worldwide are affected in addition to the 480,000 vehicles with 2.0 L TDI engines sold in the US.^[149] According to Volkswagen, vehicles sold in other countries with the 1.6 L and 2.0 L 4-cylinder TDI engine known as Type EA189 are also affected. This software is also said to affect EA188 and the 2015 EA288 generation of the four-cylinder.^[150] Worldwide, around 1.2 million Skodas^[151] and 2.1 million Audis may contain the software, including TTs and Qs.^[152] VW states that Euro6 model in Germany are not affected, while 2015 US models with the same EA288 engines are affected. This suggests that normal-operation measurements that place the EA288 NOx emissions between the two standards' limits were readily available at VW headquarters in Germany. According to Müller, the 1.2 and 2.0 liter models may be updated by software, whereas the around 3 million 1.6 liter require various hardware solutions, and some cars may even be replaced. The cars are so diverse that many different solutions are required.^[153]

Over one quarter of VW's sales in the U.S. are diesel-powered vehicles. The corporation has chosen a market strategy that emphasizes clean diesel over electric cars or hybrid electric vehicles.^[154]

The vehicles affected by the recall in the U.S. include the following model years:^{[155][156][157][158][159]}

Stock value[edit]

Price of Volkswagen AG (VOW.DE) stock, Adjusted Close. Width of line shows Volume. Text in green is the percent difference from previous day's close. In red is the percent difference from the close on 17 September 2015^[160]

On 21 September 2015 the first day of trading after the EPA's Notice of Violation to Volkswagen became public, share prices of Volkswagen AG fell 20% on the Frankfurt Stock Exchange.^[161] On 22 September, the stock fell another 12% for a 2-day cumulative decline of 32%. On 23 September, the stock quickly fell 10.5%, dropping below €100 to a record 4-year low before regaining some lost ground.^[162][163] Share prices of other German automakers were also affected, with BMW down 4.9% and Daimler down 5.8%.^[164]

Qatar, one of the biggest VW shareholders with a 17% stake in the company, lost nearly $5 billion as the company stock value fell.^[165]

Media reaction[edit]

The Volkswagen TDI emissions scandal has received widespread negative media exposure,^[166] with headlines fronting the websites of multiple news gathering and reporting organizations.^{[28][65][167]} Reuters said that the crisis at Volkswagen could be a bigger threat to the German economy than the consequences of the 2015 Greek sovereign debt default.^[168] Deutsche Welle, one of Germany's state broadcasters, said that a "lawsuit tsunami" was headed for Volkswagen and that the scandal had dealt a blow to the country's psyche and "Made in Germany" brand.^[169] Popular Mechanics said that the scandal "is much worse than a recall", highlighting that Volkswagen had engaged in a pattern of "cynical deceit".^[170]

Public polling[edit]

Despite the scandal, one poll conducted for Bild suggested that the majority of Germans (55%) still have "great faith" in Volkswagen, with over three-quarters believing that other carmakers are equally guilty of manipulation.^[171] Similarly, a poll conducted by the management consultancy Prophet in October 2015 indicated that two-thirds of Germans believe the scandal to be exaggerated and continue to regard VW as a builder of "excellent cars". ^[111] A survey by Northwestern University's Kellogg School of Management, Brand Imperatives and Survata said that nearly 50% of U.S. consumers had either a positive or very positive impression of Volkswagen, while 7.5% had a "very negative" impression.^[172] Another US survey by market researcher AutoPacific found that 64% of vehicle owners do not trust Volkswagen and only 25% of them have a positive view of Volkwagen following the scandal.^[173][174]

Reactions[edit]

Political figures[edit]

German Chancellor Angela Merkel stated she hoped that all facts in the matter would be made known promptly, urging "complete transparency". She additionally noted that Germany's Transport Minister, Alexander Dobrindt, was in ongoing communication with Volkswagen.^[175]

The German Green Party accused Merkel of knowing about the defeat devices with a "wink".^[176]

Michel Sapin, the French Finance Minister, called for an investigation of diesel-powered cars that would encompass the entire continent of Europe.^[177]

Automotive industry and commentators[edit]

Major car manufacturers, including Toyota, GM, PSA Peugeot Citroen, Renault, Daimler (Mercedes Benz), and Honda, issued press statements reaffirming their vehicles' compliance with all regulations and legislation for the markets in which they operate; The Society of Motor Manufacturers and Traders described the issue as affecting "just one company", with no evidence to suggest that the whole industry might be affected.^[178]

Renault-Nissan CEO Carlos Ghosn said it would be difficult for an automaker to conceal internally an effort to falsify vehicle emissions data, such as has happened at Volkswagen AG: "I don't think you can do something like this hiding in the bushes."^[179]

Jim Holder, the editorial director of Haymarket Automotive, which publishes WhatCar and AutoCar, opined that there had never been a scandal in the automotive industry of this size.^[180]

A commentary in Spiegel Online argued that the VW scandal will affect the entire German industry, and that German companies operating abroad will face a decrease in competitivity.^[181]

Alan Brown, chairman of the Volkswagen National Dealer Advisory Council, commented on the scandal's negative impact on U.S. dealers, who were already struggling with overpriced products and a deteriorating relationship between the company and the dealer body.^[182] Car and Driver similarly emphasized VW's inability to efficiently operate in the U.S. market, while also suggesting that the company had grossly underestimated the EPA's power, and inexplicably failed to go public before the story broke, despite receiving ample warning.^[183]

Tesla Motors CEO Elon Musk was asked about his opinion whether the scandal will weaken the consumer's view on green technologies; he responded saying he expects the opposite to happen: "What Volkswagen is really showing is that we've reached the limit of what's possible with diesel and gasoline. The time has come to move to a new generation of technology."^[184]

Similarly, analysts at Fitch suggested the VW diesel emissions crisis was likely to affect the entire automotive industry, with petrol cars potentially enjoying a revival in Europe and greater investment being poured into electric vehicles.^[59] Other commentators argued that the diesel engine will nevertheless regain its footing in the market, due to its international indispensability, low CO₂ emissions and strong presence in the U.S. pickup- and commercial-truck segments.^[183]

On 29 September 2015, S&P Dow Jones Indices and RobecoSAM stated that Volkswagen AG's stock will be de-listed from the Dow Jones Sustainability indexes after close of trading on 5 October 2015. Among the reasons for the de-listing, the statement issued by RobecoSAM cited social and ethical reasons, and confirmed that VW will no longer be identified as an Industry Group Leader in the "Automobiles & Components" industry group.^[185]

In early October, Green Car Journal rescinded its Green Car of the Year awards, for models that "best raise the bar in environmental performance", that were given to the 2009 VW Jetta TDI and 2010 Audi A3 TDI models.^[186]

The VW scandal more generally raised awareness over the high levels of pollution being emitted by diesel vehicles built by a wide range of carmakers, including Volvo, Renault, Mercedes, Jeep, Hyundai, Citroen, BMW, Mazda, Fiat, Ford and Peugeot.^[17][18] Independent tests carried out by ADAC proved that, under normal driving conditions, diesel vehicles including the Volvo S60, Renault's Espace Energy and the Jeep Renegade, exceeded legal European emission limits for nitrogen oxide (NOx) by more than 10 times.^[18] Researchers have criticized the inadequacy of current regulations and called for the use of a UN-sanctioned test that better reflects real-life driving conditions. The test is not due to come into force until 2017, with critics saying that car firms have lobbied fiercely to delay its implementation due to the high cost of meeting stricter environmental controls.^[17] The Washington Post also reported that in the late 1990s, EPA engineers at Virginia Testing Laboratory had built a system called ROVER, designed to test a car's emissions on the road. The project was shut down in 2001, despite preliminary tests indicating gaps between emissions from lab tests and real world tests of about 10 to 20 percent.^[187]

Previous defeat device cases[edit]

The Volkswagen TDI diesel emissions case is not the first use of defeat devices, nor the first time automakers have taken advantage of their foreknowledge of the specific lab test conditions in order to engage emissions controls only during testing, but not during normal driving.^[188]

In 1973 Chrysler, Ford Motor Company, General Motors, Toyota, and Volkswagen had to remove ambient temperature switches which affected emissions, though the companies denied intentional cheating and said that strategies like enriching fuel mixture during cold engine warm-up periods could reduce overall pollution.^{[189][190][191]} The switches were ordered removed from production but cars already on the road did not have to be recalled, and fines were relatively modest.^[190][191]

In 1996 General Motors had to pay a near-record fine of $11 million, and recall 470,000 vehicles, because of ECU software programmed to disengage emissions controls during conditions known to exist when the cars were not being lab tested by the EPA.^[192] The model year 1991–1995 Cadillacs were programmed to simply enrich the engine's fuel mixture, increasing carbon monoxide (CO) and unburned hydrocarbon (HC) pollution, any time the car's air conditioning or heater was turned on, since the testing protocol specified they would be off.^[192]

In 1998, Honda Motor Company had to spend $267 million to correct the disabling of the misfire monitoring device on 1.6 million 1996 and 1997 model year vehicles, and Ford Motor Company paid $7.8 million for programming 60,000 1997 Ford Econoline vans to keep emissions low during the 20-minute EPA test routine, and then disabling the emissions controls during normal highway cruising.^[193]

Another timer-based strategy was used by seven heavy truck manufacturers, Caterpillar Inc., Cummins Engine Company, Detroit Diesel Corporation, Mack Trucks, Navistar International, Renault Vehicules Industriels, and Volvo Trucks, who in 1998 paid the largest ever fine to date, $83.4 million, for, in the same manner as Volkswagen, programming trucks to keep NOx emissions low during the test cycle, and then disabling the controls and emitting up to three times the maximum during normal highway driving.^[194]

The goal of both the Ford and the heavy truck defeat devices was better fuel economy than could be achieved under pollution limits.^[194] The major truck manufacturers also had to spend up to $1 billion to correct the problem, which affected 1.3 million heavy duty diesel trucks.^[188][194]

While Volkswagen's actions have significant precedents, the Center for Auto Safety's Clarence Ditlow said that Volkswagen "took it to another level of sophisticated deception we've never seen before."^[188]

See also[edit]

• Exhaust gas recirculation
• FTP-75
• NOx adsorber – a system to trap oxides of nitrogen used by Volkswagen "Clean Diesel" cars
• Spread-spectrum clocking – a computer firmware setting used to comply with RF emissions testing but may be turned off afterwards
• Vehicle regulation

Notes[edit]

Further reading[edit]

• Plungis, Jeff; Hull, Dana (20 September 2015). "VW's Emissions Cheating Found by Curious Clean-Air Group". The Washington Post. Retrieved 25 September 2015. 
• "Volkswagen diesel scandal: What you need to know", Chicago Tribune, 22 September 2015 
• "Volkswagen's 'uniquely awful' governance at fault in emissions scandal". cnbc.com. Retrieved 5 October 2015. 

External links[edit]

External images

EA 189 engine, starboard side

EA 189 engine, port side

• EPA Notice of Violation
• EPA Notices of Violation FAQ
• State of California EPA In-Use Compliance Letter
• VW diesel official FAQ
• Written Testimony of Michael Horn, CEO of Volkswagen Group of America Before the U.S. House Committee on Energy and Commerce October 8, 2015
• Interview with Müller

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