Volkswagen, a company with a world-wide reputation for automotive reliability and technological fixes, has been caught in a fix of a different kind: cheating US government vehicle emissions standards via on-board sensors. The fix began in 2008, when the company installed engine management software in its diesel passenger vehicles that would fully switch on only when the car was being tested on a dynamometer, thereby enabling it to meet stringent Environmental Protection Agency emissions standards. When used in "real-world" conditions, however, the vehicles emitted 10 to 40 times more nitrogen oxides than was permissible under EPA rules.
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Nearly 500,000 VW diesels fitted with the "defeat device" have been sold in the US since 2008, and the company has admitted that 11 million cars world-wide may be similarly affected.
The ruse came to light after the International Council on Clean Transportation and West Virginia University began researching the "real-world" emissions performance of several vehicles, including a VW Jetta and Passat in 2013 and 2014. Only after the results were published, however, did the EPA sit up and take notice. At that point, VW offered to voluntarily recall cars fitted with its TDI "clean diesel" engines and to recalibrate the systems used to capture NOx. But further independent testing by the California Air Resources Board confirmed the earlier test. When the EPA threatened legal action to halt the sale of new VWs from 2016, the company finally confessed its duplicity.
On Monday, the head of VW's US division, Michael Horn, said, "Let's be clear about this. Our company was dishonest. With the EPA, and the California Air Resources Board, and with all of you. And in my German words, we have totally screwed up."
The company's extraordinary mea culpa is unlikely to pacify the EPA, however. It looks set to fine VW $37,500 for each of the offending 482,000 vehicles, or $US18 billion. Recall costs, and a criminal investigation by the US Justice Department, could add billions of dollars more to the final bill.
VW's decision to persevere with a NOx trap for its TDI engine (rather than use selective catalytic reduction technology) seems to have come down to a question of judgment, time, money and convenience. It chose what it believed to be most promising technology at the time and engineered, at great expense, a motor capable of meeting European standards, which place greater store on lower carbon monoxide emissions than on reduced NOx emissions. Amortisation costs require that production of engines continue for some time before more efficient engines are rolled out. But because it was in a hurry to establish a beachhead in a market where diesel cars have traditionally been overlooked by consumers, VW went for quick and dirty fix.
With is expansion plans for the important US market in tatters and its share price down by a third, VW is paying a high financial and reputational price for its deceit. But the company's penitent attitude (and its demonstrated ability to overcome other setbacks) suggests the damage may not be lasting.
