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Volkswagen emissions scandal
2010 VW Golf TDI Clean Diesel on display at a U.S. auto show.
Date2009–2015
LocationWorldwide
TypeEmissions violation
CauseEngaging full emissions control only during testing
ParticipantsInternational Council on Clean Transportation, West Virginia University, Volkswagen Group, US EPA, other regulators
Footagehttp://www.vwdieselinfo.com
Timeline
1999New US Tier 2 rules established to replace Tier 1. NOx limit decreasing from 1.0 g/mi to .07 g/mi
2004–2009Phase in period of diesel emissions rules
2007VW suspends sales of current diesel lines awaiting technology to meet new standards. Bosch allegedly warns VW not to use its software illegally[1][2]
2008VW announces new Clean Diesel cars
2009US Tier 2 fully in effect, VW TDI cars go on sale in US. In Europe, some models are now being described as Euro emission class 5, a change from class 4 in 2008.[3][4]
2009–2015VW diesel sales in the US rebound, Clean Diesels win several enviornmental awards, receive tax breaks
2014International Council on Clean Transportation asks WVU CAFEE to help demonstrate the benefits of US diesel technology, hoping to have Europe follow suit
May 2014Instead, CAFEE finds discrepancies showing poor on-road emissions. Results presented at public forum and published, getting attention of EPA
2014–2015EPA repeats tests, and contacts VW for explanation of poor real world NOx emissions
December 2014VW orders voluntary recall of TDI cars but CARB and EPA not satisfied
September 3, 2015EPA threatens to not certify 2016 diesels, VW responds by admitting software was programmed to cheat testing
September 18, 2015Public announcement by EPA of order to recall 2009–2015 cars
September 20, 2015VW admits deception, issues public apology
September 21, 2015First business day after news, VW stock down 20%
September 22, 2015VW to spend $7.3B to cover costs of scandal; stock declines another 17%
September 23, 2015CEO Winterkorn resigns

In September 2015, the United States Environmental Protection Agency (EPA) alleged that German automaker Volkswagen AG was using software designed to circumvent U.S. emissions tests for almost 500,000 of its model year 2009 through 2015 diesel engine Volkswagen and Audi cars.[5][6][7][8][9][10] The software was installed in 11 million of its cars worldwide but only activated in an as yet unknown number. The software detected when cars were being lab tested for emissions, and turned on pollution controls that were normally inactive.[11][12] This resulted in car models passing United States Environmental Protection Agency (EPA) tests while in real-world driving emitting up to 35 times the legal limit of nitrogen oxides (NOx). The EPA has issued Volkswagen a Notice of Violation, saying that the software functions as a defeat device, as prohibited by the US Clean Air Act. The company has apologized for the action and is facing legal proceedings, regulatory investigations, and class action lawsuits in multiple countries.[13]

The independent body International Council on Clean Transportation (ICCT) commissioned a study in 2014 and sought data from three different sources on 15 vehicles. Among these sources was a group of five scientists at West Virginia University, who detected a high level of emissions during live road tests on three diesel cars.[14] ICCT also purchased data from two other sources.[15] They provided their findings to the EPA and the California Air Resources Board, who notified Volkswagen that the EPA believed they committed one or more violations in the design of their diesel engines.[5][16] The scrutiny focused on Volkswagen AG's use of engine control unit programming techniques in vehicles equipped with turbocharged direct injection (TDI) diesel engines to skirt vehicle emissions compliance laws in the United States. On 24 September Germany's Transport Minister Alexander Dobrindt said that Volkswagen has admitted to manipulating emissions tests in Europe as well.[17][18]

Background

Volkswagen TDITruthandDare.com Clean Diesel campaign[19][20][21][22] advertised on VW Golf TDI at the 2010 Washington Auto Show
The 2009 Volkswagen Jetta Diesel Sedan was chosen Green Car of the Year.

Starting with the 2009 model year, Volkswagen Group began migrating its light-duty passenger vehicle turbocharged direct injection (TDI) diesel engines to a common-rail fuel injection system. This type of injection system allows for higher-precision fuel delivery through the use of 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.[23][24]

Volkswagen Research and Development building in Wolfsburg

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 touted by Volkswagen as being as clean as or cleaner than US and Californian requirements, while providing good performance and drivability.[25][26]

Low emissions levels of Volkswagen vehicles enabled the company to receive green car subsidies and avail itself of tax exemptions in the US.[27]

Early warnings

The European Commission’s Joint Research Centre issued a report in 2013 warning that engine software could skew the results of exhaust readings, but regulators took no action.[28] In its 2013 report, ICCT 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.[29]

Similarly, 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. The government admitted in September 2015 it had received this evidence almost a year prior to Volkswagen's admissions, but had done nothing.[28]

Emission standards

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.[30] Either standard requires that nitrogen oxide emissions not exceed 0.07 grams per mile (0.043 g/km) for engines at full useful life which is defined as either 120,000 miles (190,000 km) or 150,000 miles (240,000 km) depending on the vehicle and optional certification choices.[31][32]

This standard for nitrogen oxide emissions is among the most stringent in the world. For comparison, the contemporary European standards known as Euro 5 (2009[33]–2014 models) and Euro 6 (2015 models) only limit nitrogen oxide emissions to 0.29 grams per mile (0.18 g/km) and 0.13 grams per mile (0.08 g/km) respectively.[32]

European discrepancies

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, an ICCT colleague in Europe. He had conducted research in Europe and identified significant emissions discrepancies in the diesel VW Passat and VW Jetta.[34] German said they chose to put U.S. vehicles through on-the-road tests because their emissions regulations are much 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.[35]

U.S. testing conducted

A well-regarded group of scientists at West Virginia University submitted a proposal to ICCT and John German awarded them the US$50,000 study[15][36] to conduct tests on three diesel cars: [14] a VW Passat, a VW Jetta, and a BMW X5.[35] 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.[15]

Two professors and two students began testing tailpipe emissions from the three vehicles under actual road conditions in the spring of 2014.[34] The three vehicles were all certified at a California Air Resources Board facility before the tests[34] as falling below the emissions limits when using the standard laboratory testing protocols.[37][38] They put 1,500 miles (2,400 km) 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 U.S. west coast,[35] over 2,000 miles (3,200 km).[34] The BMW was "at or below the standard … with exception of rural-up/downhill driving conditions".[37] 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".[37][14]

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".[39][40]

German said the deceit required more effort than merely adding some code to the engine software.[39]

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.[39]

The U.S. test results confirmed the ICCT's findings in Europe.[37] The West Virginia scientists didn't identify the defeat device, but reported their findings in a study they presented directly to the EPA and CARB in May 2014.[41][42]

EPA Notice of Violation

Volkswagen TDi engine

On September 18, 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.[5][43] 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.[44][45]

Volkswagon'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"[46] when positioned on a dynamometer using the FTP-75 test schedule.[47] These criteria very closely match the EPA's required emissions testing protocol[46] 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.[48]

Volkswagen's admission of violation

Former Volkswagen AG CEO Martin Winterkorn in March, 2015

I am shocked by the events of the past few days. I am stunned that misconduct on such a scale was possible in the Volkswagen Group. As CEO I accept responsibility for the irregularities. I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part.

Martin Winterkorn, resignation statement, September 23, 2015.[49]

According to the United States Environmental Protection Agency (EPA), Volkswagen had insisted for a year until the outbreak of the scandal that discrepancies were mere technical glitches.[50] Volkswagen only fully acknowledged that they had manipulated the vehicle emission tests after being confronted with evidence regarding the "defeat device".[51][8] Formal acknowledgement of the deception was made by Volkswagen executives in Germany and the United States to EPA and California officials during a September 3 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.[52]

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.[53] 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,[54][55] and then resigned as CEO on September 23, 2015.[56][57][58]

Volkswagen Group of America CEO Michael Horn was more direct, admitting "We've totally screwed up."[54] Horn added, "Our company was dishonest with the EPA, and the California Air Resources Board and with all of you."[55]

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 deceptive software at the heart of the fraudulent pollution statements.[59] 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.[12] The software, by Bosch has allegedly existed since at least as far back as 2007.[2]

On 28 September 2015 it was reported that VW had supended 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.[60]

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.[61]

Consequences

Health consequences

The Volkswagen diesels emit nitrogen dioxide (NOx), a precursor to ground-level ozone. NOx itself directly causes severe respiratory problems "including asthma attacks, other respiratory diseases and premature death".[9] Polluting models released into the market since 2009 include the Volkswagen Jetta, Beetle, Golf, and Passat, and the Audi A3.

Up to 11 million Volkswagen vehicles were sold that emit dangerous levels of NOx. The overwhelming majority of these - up to 10 million -- were sold in Europe.[62] 20% of European city dwellers are exposed to unhealthy levels of nitrogen-dioxide and Volkswagen's large market share of the diesel vehicle market is one cause. In London, where diesel road traffic is responsible for 40% of NOx emissions, air pollution causes more than 3,000 deaths a year.[63]

Government actions

  • Germany: German prosecutors have launched an investigation against former Volkswagen chief executive Martin Winterkorn. Winterkorn had resigned over the scandal, claiming he had no knowledge of the manipulation of emissions results.[68]
  • 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.[69]
  • 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".[70]
  • 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.[71]
  • 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.[72][73][74]
  • United Kingdom: The Department of 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.[75]
  • 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."[76][77] 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.[78]
  • 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 also committed fraud in the Netherlands.[79]
  • 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. Source: eNCA

Private actions

As of September 23, 2015, at least 25 class-action lawsuits have been filed in the U.S.[80][81] and Canada[82][83] 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.[84]

Market impact

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

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.[85]

The vehicles affected by the recall in the U.S. include the following model years:[86][87][88][89][90] Worldwide, around 2.1 million Audis may contain the software, including TTs and Qs.[91]

  • 2009–2015 Audi A3 2.0 L TDI
  • 2009–2015 VW Beetle 2.0 L TDI
  • 2009–2015 Beetle Convertible 2.0 L TDI
  • 2009–2015 VW Golf 2.0 L TDI
  • 2015 VW Golf Sportwagen 2.0 L TDI
  • 2009–2015 VW Jetta 2.0 L TDI
  • 2009-2014 Jetta Sportwagen 2.0 L TDI
  • 2012–2015 VW Passat 2.0 L TDI.

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.[92] 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.[93]

Stock value

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 plunged 20% on the Frankfurt Stock Exchange.[94] On 22 September, the stock fell another 22% for a 2-day cumulative decline of 32%. On 23 September, the stock quickly fell 10.5%, dropping through the €100 barrier to a record 4-year low before regaining some lost ground.[95][96] Share prices of other German automakers were also affected, with BMW down 4.9% and Daimler down 5.8%.[97]

Qatar, one of the biggest VW shareholders with a 17% stake in the company, lost nearly $5 billion as the company stock value plunged.[98]

Brand equity and media exposure

The Volkswagen TDI emissions scandal has received widespread negative media exposure all over the world,[99][100][101][102][103][104] with headlines fronting the websites of multiple news gathering and reporting organizations.[25][48][105][106]

Media outlets have called the scandal "Dieselgate" in reference to previous controversies.[107][108]

Reuters opined that the crisis at Volkswagen was a bigger threat to the German economy than fall-out from the Greek sovereign debt default.[109]

Deutsche Welle, Germany's state broadcaster, opined that a "lawsuit tsunami" was headed for Volkswagen and that the scandal had dealt a blow to the country's psyche and brand "Made in Germany".[110]

Popular Mechanics stated that the scandal "is much worse than a recall", highlighting that Volkswagen had engaged in a pattern of "cynical deceit".[111]

Reactions from political and sectorial leaders

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.[112]

Michel Sapin, the French Finance Minister, called for an investigation of diesel-powered cars that would encompass the entire continent of Europe.[113]

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".[114]

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.[115]

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.”[116]

Previous defeat device cases

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.[117]

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.[118][119][120] The switches were ordered removed from production but cars already on the road did not have to be recalled, and fines were relatively modest.[119][120]

In 1996 General Motors had to pay a near-record fine of $11 million, and had to recall almost as many cars as Volkswagen's US TDI diesels, 470,000, when they, like Volkswagen, programmed ECU software to disengage emissions controls during conditions known to exist when the cars were not being lab tested by the EPA.[121] Rather than analyzing wheel rotation, steering wheel position and other data to deduce testing was in progress, as VW did, 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 and heater were turned on, since the testing protocol specified they would be off.[121]

Also in 1996, Ford Motor Company paid $7.9 million for programming 60,000 vans to keep emissions low during the 20-minute EPA test routine, and then disable the emissions controls during normal highway cruising.[122] A similarly simple timer-based strategy was used by seven heavy truck manufacturers, who in 1998 paid the largest ever fine to date, $83.4 million, for 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.[123] The goal of both the Ford and the heavy truck defeat devices was better fuel economy than could be achieved under pollution limits.[123] 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.[117][123]

While Volkswagen's actions have significant precedents, the Center for Auto Safety's Clarence Ditlow said Volkswagen, "took it to another level of sophisticated deception we've never seen before."[117]

See also

References

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Further reading

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