By: Dipak Krishnan, Contributor
The recent firestorm around Volkswagen has uncovered fraudulent practices surrounding the famous German automaker. The story of Volkswagen’s outrageous cheating reads like a villainous plot. It’s especially surprising that a company that has marketed itself as a brand that supports low-emission cars for environmentally-conscious people has been practicing the exact opposite of what it has preached to its customers.
So what did Volkswagen actually do?
The story starts in 2009 when the EPA started to up environmental regulations as a response to global warming and climate change. The Obama Administration, a supporter of dealing with global warming and climate change in a proactive manner, supported the new EPA regulations that were aimed at preventing harmful unburnt fuel emissions from getting into the exhaust system. Most car manufacturers use AdBlue, a chemical solution, to prevent unburnt fuel from getting into the exhaust of the car.
From our point of view, it’s unsurprising that VW did not use AdBlue and claimed they could meet the environmental regulation independently. What happened was that VW found a clever way to circumvent the process. Instead of using the conventional AdBlue, they installed computer software onto some 482,000 ‘clean diesel’ vehicles. This software tampered with the position of the steering wheel, speed, engine longevity, and barometric pressure. These are common scientific indicators for the efficacy of exhaust controls. If these inputs match the ones commonly found in vehicle testing, the software cuts harmful emissions to pass the exam. Basically, the software turns on the car’s pollution controls when the car is being tested in a lab. On the road, the pollution controls were off, and the supposedly ‘clean diesel’ cars spewed hazardous emissions into the air.
On Tuesday, Volkswagen accepted that 11 million cars had installed the software to cheat the emissions tests including popular models like the Passat, Beetle, Golf, and Jetta. EPA regulators quickly responded to the duplicity by ordering the automaker to fix the affected vehicles immediately. But more importantly, the EPA is considering fining VW $37,500 per car that spewed harmful emissions into the air. This could add up to $18 billion in total for VW. Investigating the violation of the Clean Air Act, the DOJ is contemplating whether VW committed any crimes in its cheating of the environmental standards.
The cars that were offenders were ‘clean diesel’ automobiles, intended to support high mileage while also cutting emissions. Simply, VW didn’t have a solution to providing diesel cars in a clean way while also keeping performance at the same level. They duped the test as a solution to this problem.
Ironically, the International Council of Clean Transportation (the group that caught VW) was testing the VW cars because they thought they were a clean-air friendly example of diesel cars. Little did they know, they would expose that popular cars like the Volkswagen Jetta exceeded nitrous oxide caps by 15 to 35 times, with the Passat exceeding emissions caps by five to 20 times. The overall air quality effect is about 1 million tons of air pollution having been produced as a result of the cheating.
Volkswagen now faces deep problems. CEO Martin Winterkorn resigned in the crisis, apologizing to VW customers for breaking their trust. The company’s stock is in freefall as well. The company has a third of its market cap in the last two weeks. The EPA and other government agencies are threatening to halt VW’s 2015 and 2016 production of its vehicles. The once-respected company now has a broken reputation, and for good reason. Volkswagen’s actions were reprehensible and illegal, damaging the environmental improvement of the car industry as a whole and making it harder for the shift to electric cars to occur with their duplicity. Unfortunately, since Volkswagen is such a big conglomerate, it won’t get the full comeuppance it deserves, but one can choose to make the shift to more transparent testing for cars, making sure this type of fraudulent practice never occurs again.