Volkswagen Investigation underway for Deliberately Violating Diesel Emission Rules – $18 Billion in Fines Coming?

“We are working to develop a remedy that meets emissions standards.” A buyback program on top a a large recall is going to be expensive. Then there will be fines and   lawsuits that could last years.

Volkswagen Group of America, Volkswagen AG and Audi AG are under investigation from the US Environmental Protection Agency, US Department of Justice and the California Air Resources Board for deliberately violating diesel emission rules. As a result no turbo diesels are on sale in the US, new or used as it is illegal to do so. Customers paid as much as $7000 more compared to a gasoline car.

The so-called ‘notice of violation’ alleges VW used software that circumvents emissions testing for air pollutants, specifically NOx emissions that are problematic on high compression diesel engines.

Involved are 482,000 four-cylinder Volkswagen and Audi turbo diesel cars from model years 2009-2015. California is separately issuing a so-called In-Use Compliance letter to Volkswagen saying the cars fail to meet CARB standards. VW had previously claimed to have fixed the problem with an earlier recall that was bogus. 

In 2014 VW recalled turbo diesel engines in the US for the same NOx violations after compliance testing showed they failed to meet NOx standards. The fix did not work, and by VW’s admission it then used illegal software. Already a class-action lawsuit has been filed. More litigation will follow.

A sophisticated software algorithm on VW and Audi diesel engines detects when the car is undergoing official emissions testing, and turns full emissions controls on only during the test. The effectiveness of these vehicles’ pollution emissions control devices is greatly reduced during all normal driving situations. These results in cars that meet emissions standards in the laboratory or testing station, but during normal operation, emit nitrogen oxides, or NOx, at up ten to 40 times the standard. The software produced by Volkswagen is a “defeat device,” as defined by the Clean Air Act.

EPA and CARB uncovered the defeat device software after independent analysis by researchers at West Virginia University, working with the International Council on Clean Transportation, a non-governmental organization, raised questions about emissions levels and the effectiveness of the recall. The agencies began further investigations into the issue. In September, after EPA and CARB demanded an explanation for the identified emission problems, Volkswagen admitted that the cars contained defeat devices.

NOx pollution contributes to nitrogen dioxide, ground-level ozone, and fine particulate matter. Exposure to these pollutants is linked with a range of serious health effects, including increased asthma attacks and other respiratory illnesses that can be serious enough to send people to the hospital. Exposure to ozone and particulate matter have also been associated with premature death due to respiratory-related or cardiovascular-related effects. Children, the elderly, and people with pre-existing respiratory disease are particularly at risk for health effects of these pollutants.

“Using a defeat device in cars to evade clean air standards is illegal and a threat to public health,” said Cynthia Giles, Assistant Administrator for the Office of Enforcement and Compliance Assurance. “Working closely with the California Air Resources Board, EPA is committed to making sure that all automakers play by the same rules. EPA will continue to investigate these very serious matters.”

In a statement issued two days later, Martin Winterkorn, CEO of Volkswagen AG said, “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.”

Counting the fines up to almost $400,000 per illegal car sold, the recall fix costs – none is technically feasable, possible buy back programs and  lawsuits, Winterkorn’s CEO job at the world’s largest automaker already under assault this past year could be in question. (See Contract for Martin Winterkorn, Chairman of the Board at Volkswagen, to be Extended Once Again)

About Ken Zino

Ken Zino is an auto industry veteran with global experience in print, broadcast and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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