It’s been a tumultuous weekend for the Volkswagen Group. Last weeks announcement that the EPA and CARB are investigating the company over allegations that VW had fabricated TDI Diesel car emissions results has thrown a monkey wrench into the credibility of not only the VW Group but the whole system of validating emissions claims. If we’re going to avoid the climate change calamity, we need to adopt technology which actually changes our emissions footprint, with certainty that our changes are making an actual change, and certainty of the improvements.
As I pointed out in my previous post on this, back in the 2009-10 time frame the VW Group introduced several Volkswagen and Audi cars with TDI Diesel engines (TDI: Turbo Charged Direct Injection). The turbo-charging system was not used for performance enhancements, but to burn the fuel more efficiently and cleanly, and avoid the negative emissions effects of older technology diesel engines. By directly spraying the fuel into the combustion chamber, rather than into a pre-combustion chamber, and by increasing the air-fuel ratio, allowed for better engine efficiency and power output.
As a result (referring back to my reporting from 2010) the VW TDI Diesel vehicles met “Tier 2 bin 5” standard of EPA’s Vehicle and Gasoline Sulfur program, and California’s LEV-II ULEV standard. Additionally the Golf TDI, Jetta Sportwagon TDI and Jetta TDI were all listed as a “SmartWay” vehicle in the 2011 EPA Green Vehicle Guide. According to the LA Times, in 2009 about 40,000 Jetta TDI and Jetta Sportwagon TDI models were sold which qualified for federal subsidies totaling $51 million.
Both CARB and the EPA certified these vehicles with important marks of approval. In what’s now been shown to be false pretenses. The VW Group is suffering a hugely negative backlash, stock prices plummeting and more, but shouldn’t the regulators also face negative backlash?
It’s not the first time an automaker has fudged EPA ratings. AutoNews tells us that in recent years both Ford and Hyundai/Kia have done so. In Hyundai’s case it was because their engineers miscalibrated emissions testing equipment. In Fords case, the company exploited loopholes in the law. In both cases they had to restate the fuel economy numbers and fix the cars.
The penalty for this sort of violation maxes out at $37,500 per car, or about $18 billion total penalty. That’s a heck of a lot of money, matching the size of the the VW’s violation.
The VW Group knew what they had done – it’s not like this was an accident, it was a deliberate action. The official Notice of Violation letter sent by the EPA makes it clear that the VW Group knowingly violated the rules. As the EPA describes it, software in the affected cars detects the conditions of an emission test by looking at “various inputs including position of the steering wheel, vehicle speed, the duration of the engine’s operation, and barometric pressure.” Those parameters determine whether the car operates in “dyno calibration” mode or “road calibration” mode, which affects the configuration of the emissions control system.
According to Consumer Reports, it’s not uncommon for a car to have a “test mode”. What’s different is that VW engineered these cars to behave differently when being tested in order to circumvent emissions control laws.
For over a year the EPA had been investigating independent research showing VW Group TDI Diesel cars were far dirtier in real use than in lab conditions. EPA asked the VW Group several times to explain, only to get explanations of various technical difficulties. By early September 2015, the EPA simply demanded an explanation at which point the VW Group confessed.
The investigation began with a report by TheICCT which noted many diesel cars being sold in Europe didn’t match the Euro 6 guideline. That researcher thought since VW’s vehicles sold in America supposedly exceeded that guideline, he could prove that Diesel vehicles could be cleaned up if only the companies brought to Europe what’s being sold in America. They ran a test in America and astonishingly found emissions that hugely exceeded the EPA guidelines, while the same car tested in a lab passed that test. That testing, and the eventual confession from the VW Group, resulted in the current legal trouble.
In late 2014 VW proposed a fix and issued a recall to implement that fix. CARB followed up with further testing beginning in May 2015, and in July 2015 notified VW that test vehicles still exceeded allowed emissions limits.
The EPA has now withheld certification of the 2016 VW and Audi TDI Diesel models, blocking their sale. In addition to the EPA and CARB investigations, the US Justice Department has launched a criminal investigation. And, the US Congress has also jumped on the bandwagon perhaps smelling an opportunity to embarrass the Obama Administration? The EPA and CARB have announced they’ll broaden the investigation to look at cars from other automakers.
VW America has ordered dealers to halt sale of 2015 models with 2.0 liter diesel engines, as has VW Canada.
European regulators, including the German Transport Ministry, have launched their own investigations. Prof. Dr. Martin Winterkorn, CEO of Volkswagen AG says he supports those investigations, has launched an internal investigation, and that the company will cooperate fully. Given the nature of the problem, one wonders how much value to put into that promise.
Four-cylinder TDI models account for 20 to 25 percent of VW’s U.S. sales. Not only will the VW Group face a huge fine from the EPA, but plummeting sales will be a huge problem.
Owners of the cars VW/Audi sold between 2009 until today face some problems. The EPA may require fixes to be retrofitted to those cars, and while the EPA is not block sales of those cars at this time it’s a possible result. The controversy may affect resale value, because these are now tainted cars. I see in the news that at least two law firms have announced filing class action lawsuits in the matter.
The scandal could affect other car makers as well. A report by The Guardian (London) quotes Greg Archer, a former British government adviser and head of clean vehicles at the respected Transport & Environment thinktank, saying: “I am not surprised. There has been a lot of anecdotal evidence about carmakers using these defeat devices. All credit to the EPA for investigating and finding the truth.” The problem is “probably not limited to diesel and not limited to emissions,” according to Archer.
The Financial Times discussed a question of why this violation regarding Diesel engines was discovered in the U.S. at all? Diesel vehicles aren’t at all popular in the U.S., making up only 4% of sales. FT talked with the same Greg Archer who said the European regulatory system did not have a single enforcement agency. That lets car makers shop around to different countries for approval. The testing agencies “may also be reluctant to investigate problems because many are paid by carmakers under cost-recovery procedures,” Archer told the FT.
According to Bloomberg News, the Prime Minister of Lower Saxony (where VW is headquartered) warns of “consequences” against VW. “Any manipulation of emissions tests is completely unacceptable and cannot possibly be justified,” Stephan Weil, a Social Democrat, said in an e-mailed statement on Monday. “It must obviously be in the interest of VW to conform with legal frameworks.”
“The government will hold talks with Mr. Winterkorn in the near future,” Andreas Kuebler, a spokesman for Germany’s Environment Ministry, said Monday in Berlin. “We expect reliable information from the carmakers” so German regulators “can check if comparable manipulations in the emissions control system also happened in Germany or Europe,” he said.
On Sunday, Prof. Dr. Martin Winterkorn, CEO of Volkswagen AG issued this statement:
The U.S. Environmental Protection Agency and the California Air Resources Board (EPA and CARB) revealed their findings that while testing diesel cars of the Volkswagen Group they have detected manipulations that violate American environmental standards.
The Board of Management at Volkswagen AG takes these findings very seriously. I personally am deeply sorry that we have broken the trust of our customers and the public. We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly, and completely establish all of the facts of this case. Volkswagen has ordered an external investigation of this matter.
We do not and will not tolerate violations of any kind of our internal rules or of the law.
The trust of our customers and the public is and continues to be our most important asset. We at Volkswagen will do everything that must be done in order to re-establish the trust that so many people have placed in us, and we will do everything necessary in order to reverse the damage this has caused. This matter has first priority for me, personally, and for our entire Board of Management.
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