Volkswagen's customer base includes a lot of folks who want very low fuel consumption. So over the years, VW has come up with a line of Diesel engines for their cars that are powerful, quiet, durable, and don't emit visible smoke like old Diesels used to. And in much of the world, that is enough. But for the USA market, they had to meet some nearly impossible standards for NOx emissions. They cobbled up some band-aids but truthfully, nothing worked well enough while still providing the performance necessary to keep up with normal commuting conditions. So it looks like they cheated. They used one set of computer instructions to pass the EPA tests and another to sell their cars to the public. I have driven some of their TDI offerings and they did not seem crippled—so I have no problem believing this story. My reaction was along the lines of "This seems impossible but maybe those German engineers really are clever enough to make a clean Diesel."
The other tip-off should have been Toyota. They know how to make and sell Diesel engines and many people encourage them to import them into USA. Instead, we are sold Hybrid cars which are insanely difficult to make well and cost Toyota a fortune to perfect to a commercial level. My guess is that they tried to fix their Diesels to meet USA standards and decided that for them, it really was impossible to do.
The question now becomes, what can be done about the Diesel cheaters that VW sold in USA. VW can be fined, but that doesn't actually fix anything. They could be forced to cripple their cars to match the ones they gave the EPA—which would infuriate those owners that like cars that work properly and cause a black market in the cheater engine management chips.
This is over the top but is probably a good example of the thinking of the environmental community that believes folks who cannot do the impossible are just not trying hard enough.
Volkswagen Admits to Cheating on U.S. Emissions TestsJeff Plungis, September 18, 2015
Volkswagen AG admitted to systematically cheating U.S. air pollution tests, leaving the automaker vulnerable to billions in fines and possible criminal prosecution.
The company sold diesel versions of Volkswagen and Audi cars with software that turns on full pollution controls only when the car is undergoing official emissions testing.
During normal driving, the cars pollute 10 times to 40 times the legal limits, the Environmental Protection Agency said. EPA called the technology a “defeat device.”
Violations of the Clean Air Act could be referred to the Justice Department for criminal prosecution, the EPA said. The potential financial liability is unclear. The EPA could fine the company $37,500 per vehicle, said Cynthia Giles, the agency’s assistant administrator for enforcement. With 482,000 autos part of the case, the total could be $18 billion. The VW investigation involves model years 2009-2015.
“Using a defeat device in cars to evade clean air standards is illegal and a threat to public health,” Giles said. “EPA is committed to making sure that all automakers play by the same rules.”
Last year Ford Motor Co. was forced to lower mileage estimates and compensate more than 200,000 customers. The Dearborn, Michigan-based company sent out payments ranging from $200 to $1,050. In 2012, an investigation led to Hyundai Motor Co. and Kia Motors Corp. relabeling some of their top-selling U.S. models.
Volkswagen, based in Wolfsburg, Germany, said in a statement it’s cooperating with the investigation and unable to comment further. The EPA and the California Air Resources Board said their investigations are continuing.
The affected models include diesel-powered versions of some of VW’s most popular U.S. cars: the Beetle, the Jetta, the Golf and the Passat. The Audi A3 is also part of the investigation. As recently as July, diesel models accounted for 26 percent of VW brand sales in the U.S., according to a company news release.
Consumer Reports magazine issued a statement on Friday saying it suspended its “recommended” rating of the Jetta and Passat diesel models because of the use of the defeat device. The magazine said it plans to retest the vehicles once a recall repair is completed.
The company’s preferred shares fell 3.2 percent to close at 162.40 euros in Frankfurt.
In a letter to VW Friday, the EPA said the company admitted it had designed and installed software to evade pollution controls after regulators made clear they weren’t going to certify the automakers’ 2016 models.
Consumers haven’t yet been ordered to return to their dealers for a recall, and it’s safe to keep driving the cars, said Janet McCabe, acting assistant administrator of the agency’s Office of Air and Radiation.
It had been surprising that Volkswagen diesel models were able to get impressive horsepower output and fuel economy performance using less costly pollution control technology than employed in some other automakers’ engines, said Bill Visnic, an independent auto analyst in Weirton, West Virginia.
The software workaround may have enabled the performance without the expected pollution controls, he said.
“You can’t have anything like this that’s intended to game the system,” Visnic said.
It would be very difficult for Volkswagen to add new pollution-control equipment to the existing engines, so the only way to fix this may be to cut horsepower and fuel economy performance to lower the pollution output once the software is eliminated, said Visnic, who has been studying engine design for two decades.
The EPA has been concerned about how well its laboratory tests reflect conditions consumers experience in the real world, amid consumer complaints. The agency announced last July it would overhaul the tests, which involve allowing computers to drive cars on a dynamometer to ensure accurate, repeatable results. more
VW shares sink 25% after $18bn air pollution scandal© Ralph Orlowski / Reuters 21 Sep, 2015
Volkswagen AG lost almost a quarter of its value on Monday after it admitted cheating US air pollution tests since 2008. The company is facing a $37,500 fine for each car not compliant with Federal rules with a possible 482,000 vehicles involved.
As of 9:13 GMT, Volkswagen's shares had fallen 25 percent on the Frankfurt exchange.
"Put simply, these cars contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test," Cynthia Giles, an enforcement officer at the US Environmental Protection Agency was quoted by Reuters as saying on Friday.
The device allowed VW vehicles to pollute 10 to 40 times over the legal limit, the EPA stated.
The vehicles in question are four-cylinder diesel Volkswagen and Audi cars - Volkswagen Jetta (2009-2015), Volkswagen Beetle (2009-2015), Audi A3 (2009-2015), Volkswagen Golf (2009-2015) and Volkswagen Passat (2014-2015).
"I personally am deeply sorry that we have broken the trust of our customers. Volkswagen has ordered an external investigation of this matter," Chief Executive Officer Martin Winterkorn said in a statement on Sunday.
The Wall Street Journal reported that Volkswagen has overtaken Toyota in cars sales in the first half of 2015 and that the US market is key to its dominance in the auto business. However, the investigation is likely to stall the progress.
In its US commercials the company says it is the "No. 1 diesel car brand in America", having "clean diesel".
In 2014, VW revenue was $228 billion with a net profit of $12.3 billion. more
Volkswagen Just Nuked The Public's Trust In Companies Trying To Save The PlanetThe automaker has made it that much harder for any company to convince people that it supports sustainability.
Jo Confino, Executive Editor, Impact & Innovation, The Huffington Post, 09/21/2015
The world’s largest automaker has just given more ammunition to those who don’t trust that businesses are serious about preventing runaway climate change.
How ironic that Volkswagen, which has publicly signed a pledge to be a leader in “consistent, positive business engagement with policymakers on climate issues,” should be caught by the Environmental Protection Agency for allegedly cheating on emission-control standards.
Martin Winterkorn, Volkswagen's CEO, apologized on Sunday after the EPA accused the company of installing software in its diesel-powered vehicles specifically designed to allow the cars to evade regulators and emit 40 times the legal limit of nitrogen oxide. The chemical adds to the buildup of smog, which is tied to asthma and other respiratory illnesses.
The impact of one pound of N2O on warming the atmosphere is almost 300 times that of one pound of carbon dioxide.
In a statement, Winterkorn said that “I personally am deeply sorry that we have broken the trust of our customers and the public,” and ordered an external investigation.
This was equivalent to putting his finger in a bursting dam, given that the German company could face penalties of up to $18 billion for allegedly installing the illegal “defeat devices” to falsify emissions tests. Volkswagen shares plummeted on the Frankfurt DAX index in response to the news.
Apart from saving the reputation of his company, Winterkorn should also think about the damage he has done to the corporate sustainability movement. Volkswagen’s actions will fuel the cynics who believe businesses are just paying lip service when it comes to issues like climate change and resource scarcity.
This is a particularly poignant moment for such reflection, given scores of companies are converging on New York over the next few days to join Volkswagen in making commitments during Climate Week to creating a low-carbon economy.
What the Volkswagen scandal illustrates is that profit maximization is so deeply embedded in corporate culture that when push comes to shove, the vast majority of companies will put the bottom line above any moral case for change, and sometimes even cheat to keep the short-term profits coming in.
The only way this is going to change is if companies create a revolution in the way that staff are incentivized. If businesses really believe climate change is a serious issue, they need to stop paying their staff purely on the basis of meeting their quarterly targets.
It is true that a small but growing number of companies are starting to incorporate sustainability performance into their executive compensation packages, but these often represent a tiny percentage of overall pay and therefore are unlikely to change behavior.
Research by Wayne Guay, professor of accounting at the University of Pennsylvania's Wharton School of Business, found that for those companies that do incorporate sustainability targets, this normally makes up less than 1 percent of overall pay.
A study by Ceres, a nonprofit focused on sustainable business and climate action, found that in 613 of the nation's largest publicly traded companies, fewer than a third had boards of directors formally overseeing sustainability performance. And just 19 companies, or 3 percent, related compensation directly to voluntary sustainability performance targets such as greenhouse gas emissions reductions.
Ceres points to Alcoa, one of the world's largest producers of aluminum, as a leader in the field. A fifth of Alcoa's executive cash compensation is tied to safety, diversity goals and environmental stewardship, including greenhouse gas reductions and energy efficiency.
Our current form of capitalism has been around long enough for us to know the simple truth that people will act in accordance with how you assess their performance. If Volkswagen had spent the necessary time and energy to drive sustainability deep into the corporate culture, and linked this in a significant way to executive performance, it may have avoided the disaster it now faces.
Other companies looking on would also do well to note that as we move into a more carbon-constrained era, they ignore climate change at their peril. more