In 2014, the California Air Resources Board (CARB) requested a research on emissions differences between European and US vehicle models from the International Council on Clean Transportation (ICCT), which compiled information on 15 vehicles from three sources. Five scientists from the West Virginia University Center for Alternative Fuels Engines and Emissions (CAFEE) were among those hired for this project. Using a Japanese on-board emission testing system, they discovered extra emissions on two out of three diesel vehicles while conducting live road tests. [32] [33]
Two other sources of data were also purchased by ICCT. Portable Emissions Measurement Systems (PEMS), created by a number of people in the middle to late 1990s and released in May 2014, were used to generate the new road testing data and the purchased data. [34] [35] [36]
Regulators in several nations started looking into Volkswagen,[37] and in the days following the disclosure, the stock price of the company dropped by a third in value. Martin Winterkorn, the CEO of the Volkswagen Group, resigned, while Heinz-Jakob Neusser, Ulrich Hackenberg, and Wolfgang Hatz, the heads of Audi research and development, were suspended. In April 2016, Volkswagen announced intentions to repair the impacted vehicles as part of a recall effort and allocate 16.2 billion euros (or US$18.32 billion at April 2016 exchange rates)[38] to fixing the emissions problems. Volkswagen entered a plea of guilty in January 2017 and signed an agreed Statement of Facts that based on the findings of an investigation the company had commissioned from US attorneys Jones Day. The declaration explained how engineers created the defeat devices because diesel models needed them to pass US emissions tests and purposefully tried to hide their use. [39] A US federal judge imposed a $2.8 billion criminal fine on Volkswagen in April 2017 for “rigging diesel-powered vehicles to cheat on regulatory emissions testing.” The “extraordinary” plea agreement confirmed Volkswagen’s accepted punishment. [40] On May 3, 2018, Winterkorn was accused of fraud and conspiracy in the US. [15] As of 1 June 2020[update], fines, penalties, financial settlements, and repurchase costs incurred by VW as a result of the scandal totaled $33.3 billion. [41] The majority of the affected vehicles are located in the European Union and the United States, where a number of legal and governmental actions are currently being taken to ensure that Volkswagen has fairly compensated the owners, as it did in the United States, even though it is still legal for them to be driven there.
The controversy increased public knowledge of the greater pollution levels released by all diesel-powered vehicles from a wide range of auto manufacturers, which, when driven in actual traffic, exceeded legal emission limits. Investigations into other diesel emissions issues have begun as a result of a study by ICCT and ADAC that revealed the highest deviations came from Volvo, Renault, Jeep, Hyundai, Citron, and Fiat[42][43][44]. It was brought up that software-controlled machinery was often susceptible to fraud and that one solution would be to make the program available for public inspection. [45][46][47]
In This Article...
How did Volkswagen react to the controversy?
By installing a notice on their website on September 18, 2015, the US Environmental Protection Agency (EPA) informed the public that Volkswagen and Audi had violated the Clean Air Act “defeat mechanisms that let their vehicles pass inspections while emitting nitrogen dioxide at up to 40 times the legal limit.
The EPA had been informed by Volkswagen engineers on September 3 that defeat devices had been installed in 480,000 diesel vehicles in the US, but it wasn’t until September 18 when the regulator, not Volkswagen, revealed the problem that the information was made public.
On September 22, Volkswagen released a video statement in response to the controversy from Martin Winterkorn, who was the company’s then-CEO. Winterkorn reaffirmed Volkswagen’s commitment to working with the appropriate agencies and organizations on any investigations, and he described the company’s determination to “make every effort to undo the harm this has brought about and offered an apology. The declaration concluded with the pledge to “Do everything you can to be as transparent and open as possible.
On September 23, Winterkorn announced his resignation, claiming that Volkswagen “needs a fresh start” overall and that “the process of explanation and transparency must continue. It was also indicated at the conclusion of the declaration that he was “a lack of knowledge of any wrongdoing on his part.
Volkswagen acknowledged on the same day that an astounding 11 million vehicles (worldwide) had defeat devices installed instead of the 500,000 previously reported, and that this practice had been adopted widely for several years.
On November 2, the EPA announced that it had discovered a second defeat device in the other Volkswagen Group automobiles, specifically in Audi, Porsche, and VW 3-litre diesel cars, which has an impact on an additional 85,000 vehicles. In a brief and snappy statement, VW denied installing any software that would change the emissions characteristics.
On November 4, Volkswagen reversed course and acknowledged a third emissions issue: 800,000 vehicles had misrepresented their carbon dioxide levels. The firm said it was allocating $2 billion to address the issue. Despite their dedication to finding a solution, VW executives were only forced to divulge crucial information after being pressed.
Financial Times quotes Bernstein Research analyst Max Warburton as saying, “The press releases from Volkswagen almost seem to be written with the intention of enraging more investors and maybe authorities with their cryptic language.
Audi’s own about-face, in which they acknowledged on November 23 that their 3-liter cars contained an unlawful defeat device, made the problem even worse.
Matthias Mller, the new CEO of Volkswagen, visited the US in January 2016 and spoke with NPR, “VW certainly lied, but we didn’t. Mller had to phone NPR again and change his comments as a result of the backlash.
How did Volkswagen adjust following the scandal?
The choice made at that meeting in 2015, a few weeks after the emissions issue became widely known, was to Volkswagen’s favor. The executives approved the creation of a set of interchangeable parts that would form the framework for a variety of electric models, including cars, SUVs, and vans.
Why did Volkswagen cause the controversy?
The US Environmental Protection Agency (EPA) determined in September 2015 that Volkswagen had violated the Clean Air Act by using “defeat devices in the form of computer software, which was designed to cheat on federal emissions testing” in over 590,000 diesel motor cars.
A defeat device is one that disables or disabling the emission control system of a vehicle. These programs basically have the ability to recognize when a vehicle is conducting an emissions test and activate complete emissions controls at that time. The efficiency of such devices is decreased during routine driving.
What did Volkswagen do following its capture?
Another 20% of the company’s value is lost when the shares collapse once more.
To cover “the necessary service actions and other steps to win back the trust of our consumers,” Volkswagen issued a profit warning and put aside 6.5 billion (4.7 billion). The statement continues, “Discrepancies apply to Type EA 189 engine-equipped vehicles, involving about 11 million vehicles globally.”
Do you believe VW’s top executives handled the scandal well?
After an initial decline, VW’s most recent financial results indicate that the company is still doing well despite the late 2015 explosion of the emissions scandal, the subsequent public outrage at VW’s dishonest and deceitful actions, the enormous financial cost to the company, and the damaging environmental consequences of its actions.
What effects did the VW emissions scandal have on the business?
Damage to shareholders: It’s difficult to estimate precisely, but the business lost $42.5 billion, or 46%, of its worth in the first two months of the crisis. The S&P 500 is up 68% today while the DAX in Germany is around where it was in September 2015, yet the price of VW stock is still 35% below its pre-scandal level.
How did VW manipulate emissions?
According to American regulators, the software recognized when the automobile was being tested and then turned on technology that cut emissions. However, the software reduced the equipment during routine driving, raising emissions much above the permitted levels, either to conserve fuel or to enhance the torque and acceleration of the vehicle. To change parts like catalytic converters or valves used to recycle some exhaust fumes, the software was altered. The parts are designed to lower nitrogen oxide emissions, a pollutant that can lead to emphysema, bronchitis, and other respiratory conditions.
In order to reduce nitrogen oxide emissions from diesel engines, Volkswagen has used two fundamental types of technology: either trapping the pollutants or treating them with urea. Here, the first type is displayed.
By capturing nitrogen oxides, this technology lowers hazardous emissions. But for the trap to function, the engine must frequently consume more fuel.
By allowing more pollutants to travel through the exhaust system, the car’s computer may be able to conserve gasoline. Researchers at the International Council on Clean Transportation believe that Volkswagen’s software may have been changed to increase car pollution in order to save fuel.