How Volkswagen cheated America, and the world

The Volkswagen group, headquartered at Wolfsburg, Germany, is an automaking behemoth. With brands such as Volkswagen, Skoda, Audi, Seat, Bugatti, Bentley, Lamborghini, Porsche, Scania, MAN, Ducati and Bugatti under its fold, worldwide dominance is what it seeks. Earlier this year, the car maker moved ahead of Toyota to become the largest car maker in the world. This move signified that Volkswagen is already in the driver’s seat, well on its way to global dominance. Well, all this was until last week. A cataclysmic event over the past few days has left Volkswagen gasping, its CEO fighting to keep his job, governments very angry and investors edgy. What happened? Two words, Volkswagen cheated.

 

Here’s how it all began.

In the United States, Volkswagen sold diesel cars, nearly half a million of them, with software designed to fool emission checks. The car maker did this by installing malicious code on the 2.0 liter TDI turbo diesel engine’s ECU (the brain of the engine). This code recognized one specific event, which was the emission check.

As soon as the code recognized that an emission check was being carried out on the car, it changed the engine’s characteristics by shifting it to a different engine map (the software that controls the engine). This change resulted in the engine producing lower tail pipe emissions, particularly nitrogen oxides (NOx).

As soon as the car got onto regular roads, the malicious code sensed it and stopped working, allowing the engine to spew out more nitrogen oxides, in some cases 15-35 times more than the permissible limits. And it was a while before investigators latched on to the trick that Volkswagen had pulled for a long time.

How did it all unravel?

The International Council on Clean Transportation (ICCT) is an independent non-profit that works towards cleaner means of transport. The ICCT began monitoring the emission of CO2 from car tail pipes between 2001-2013. It found that the actual emissions were 38 % higher than what manufacturers claimed. Keen to dig deeper, ICCT tied up with the University of West Virginia for further research.

From 2013, a joint research team began studying NOx emitted by Volkswagen cars in actual driving conditions and compared these values to those obtained in lab tests. The lab tests were conducted by the California Air Regulatory Board (CARB), a governmental agency that certifies car emissions. When the results were compared, the joint team found that Volkswagen cars emitted between 15-35 times more NOx on the road, than in the lab.

Alarmed, the U.S. Environment Protection Agency (EPA) got into action and asked Volkswagen to explain this discrepancy. Volkswagen lied. The automaker said that it had identified the reasons for the higher emissions, and even delivered a software fix through a recall. Even after the software fix, the level of NOx emissions were much higher than what US regulations mandated.

The EPA didn’t relent this time, and VW was pushed to a corner when the certifying agency said that it wouldn’t allow new VW diesel cars on American roads until this issue was fixed. The truth then came out rather quickly. Volkswagen admitted that it cheated by installing malicious software in the diesel cars’ ECU, which was meant to circumvent emission checks. “Defeat devices”, they call it.

The fallout?

[Image courtesy CarThrottle]

Imaginably, it’s been massive. In addition to the nearly half a million diesel cars in the US, Volkswagen admitted that it installed the malicious software in nearly 10.5 million more cars, sold predominantly in Europe.

The automaker is looking at a massive recall to fix this mess, and that could cost quite a bit of money.

Martin Winterkorn is looking at early retirement.

Volkswagen stock sank by a fourth, taking nearly 25 billion US dollars with it.

A fine of up to 18 billion US dollars stares VW in its face, threatening to wipe profits and push the automaker back by years.

The U.S. Justice Department has opened a criminal enquiry into this scandal.

The IRS is just getting warmed up. Well, Volkswagen has also cheated the US tax payers by claiming 51 million USD in tax incentives for “clean” diesels.

Class action lawsuits in the US? Yes, sir.

Countries such as Italy, South Korea, France and have already launched their own investigations into the Volkswagen Diesel Emissions Scandal.

India authorities are watching the situation closely as the EA189 family of diesel engines are sold here as well. However, since emission norms in India lag the west, the issue of emitting more noxious gases than permissible may not apply to Volkswagen cars sold here.

Has this happened before?

Oh yes. In the late 90s, the US EPA accused truck makers such as Caterpillar, Inc., Cummins Engine Company, Detroit Diesel Corporation, Mack Trucks, Inc., Navistar International Transportation Corporation, Renault Vehicules Industriels, s.a., and the Volvo Truck Corporation, of installing “defeat devices” in their diesel engines.

These “defeat devices”, similar to the the malicious code that VW installed in diesel cars ECUs, was meant to ensure that the diesel trucks passed emission tests in the lab, but emitted much more on actual roads. Back then, this case was settled, with the accused truck makers agreeing to pay 1 billion dollars as a penalty.

Closer home, General Motors India fudged emissions of the Chevrolet Tavera MUV. Many big heads rolled at the automaker’s American and Indian operations. However, a 11 crore rupee fine, and a recall to fix the Tavera’s emissions was all it took for the automaker to set the record straight.

Past lessons haven’t been learnt.

The need for more rigorous on-road testing remains paramount. In India, tail pipe emissions are checked with engines idling, and this hardly represents the actual emission of the said vehicle. About enforcement, the lesser said the better. And it’s not just about emissions. Let’s look at ARAI certified fuel efficiency numbers. ARAI certifies a certain diesel car to deliver a mileage over 25 Kmpl.

Now, will the car actually deliver that much in real world conditions? And who tells this to the unsuspecting customer, who actually goes out and buys a car thinking that (s)he has a car that will deliver over 25 Kms per liter? Automotive enthusiasts will understand the logic. The ARAI claim says that, X car is better than Y car based on certain tests, and leaves it at that. Much of this is lost in fine print, leaving tall advertisement claims and harried buyers.