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Volkswagen emissions scandal
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2010s diesel emissions scandal involving Volkswagen
"Dieselgate" and "Emissionsgate" redirect here. For other diesel
emissions scandals, see Diesel emissions scandal.
CAPTION: Volkswagen emissions scandal
VW Golf TDI Clean Diesel WAS 2010 8983.JPG
A 2010 Volkswagen Golf TDI with defeat device displaying "Clean Diesel"
at the Detroit Auto Show
Date 2008-2015
Location Worldwide
Also known as Dieselgate, Emissionsgate
Type Emission standard violations
Cause Engaging full emissions control only during testing
Participants International Council on Clean Transportation, West
Virginia University, Volkswagen Group, US EPA, other regulators
Outcome Fines and lawsuits
Footage vwdieselinfo.com
CAPTION: Timeline
1999 New US Tier 2 rules established to replace Tier 1.
NO[x] limit decreasing from 1.0 g/mi to 0.07 g/mi
2004-2009 Phase in period of diesel emissions rules
2007 Volkswagen suspends sales of current diesel lines awaiting
technology to meet new standards. Bosch allegedly warns Volkswagen not
to use its software illegally^[1]^[2]
2008 Volkswagen announces new Clean Diesel cars. Some cars are
described in Europe as "EU4 emissions standard (EU5 compliant)".^[3]
Cars with the test-rigging software are sold in the UK.^[4]
2009 US Tier 2 fully in effect,
Volkswagen TDI cars go on sale in US. In Europe, some models are now
being described as Euro emission class 5, a change from class 4 in
2008.^[3]^[5]
2009-2015 Volkswagen diesel sales in the US rebound, Clean Diesels win
several environmental awards, receive tax breaks
2014 International Council on Clean Transportation asks WVU CAFEE to
help demonstrate the benefits of US diesel technology, hoping to have
Europe follow suit
May 2014 Instead, CAFEE finds discrepancies showing poor on-road
emissions. Results presented at public forum and published, getting
attention of EPA
2014-2015 EPA repeats tests, and contacts Volkswagen for explanation of
poor real world
NO[x] emissions
Dec 2014 Volkswagen orders voluntary recall of TDI cars but CARB and
EPA not satisfied
3 September 2015 EPA threatens to not certify 2016 diesels, Volkswagen
responds by admitting software was programmed to cheat testing
18 September 2015 Public announcement by EPA of order to recall
2009-2015 cars
20 September 2015 Volkswagen admits deception, issues public apology
21 September 2015 First business day after news, Volkswagen stock down
20 percent
22 September 2015 Volkswagen to spend $7.3B to cover costs of scandal;
stock declines another 17 percent
23 September 2015 CEO Martin Winterkorn resigns
29 September 2015 Volkswagen announces plans to refit up to 11 million
vehicles affected by the emissions violations scandal
2 October 2015 Volkswagen sets up an online based service on which
customers can check if their car is affected based on the vehicle
identification number
8 October 2015 Volkswagen US CEO Michael Horn testifies before US
Congress
3 November 2015 Volkswagen's investigation finds that CO[2] emissions
and fuel consumption figures are also affected by "irregularities".^[6]
25 November 2015 The German Federal Motor Transport Authority (KBA)
approves Volkswagen fixes for 1.2, 1.6 and 2.0 diesel engines in
Europe.^[7]^[8]
9 December 2015 Volkswagen revises previous estimates on CO[2]
emissions irregularities, saying that only around 36,000 vehicles are
affected.^[9]
9 March 2016 Volkswagen US CEO Michael Horn resigns, citing a "mutual
agreement" with the company.^[10]
21 April 2016 Volkswagen announces that it will offer its US customers
"substantial compensation" and car buyback offers for nearly 500,000
2.0-litre vehicles.^[11]
6 Nov 2016 Regulators in California discover that Audi engines were
rigged to produce lower CO[2].^[12]
11 January 2017 Volkswagen agrees to plead guilty to the emissions
scandal and to pay $4.3 billion in penalties. Six Volkswagen executives
are charged.^[13]^[14]
3 May 2018 Ex-CEO Winterkorn is indicted on fraud and conspiracy
charges in the US^[15]
18 June 2018 In connection with the case, Audi CEO Rupert Stadler is
arrested in Germany.^[16]
16 October 2018 Audi agrees to a fine of EUR800 million in Germany to
resolve civil claims over duty to oversight (Verletzung der
Aufsichtspflicht in Unternehmen)^[17]
14 March 2019 US SEC alleges that Volkswagen AG, Martin Winterkorn, et
al. defrauded investors and files suit in N.D. Cal.^[18]
15 April 2019 Winterkorn and four other executives are charged by
prosecutors in Braunschweig, Germany.^[19]
31 July 2019 Stadler and three others are charged by prosecutors in
Munich, Germany.^[20]
24 September 2019 Poetsch, Diess, and Winterkorn are charged with stock
market manipulation by prosecutors in Germany.^[21]
14 January 2020 Six additional individuals are charged by prosecutors
in Braunschweig, Germany.^[22]
The Volkswagen emissions scandal, sometimes known as
Dieselgate^[23]^[24] or Emissionsgate,^[25]^[24] began in September
2015, when the United States Environmental Protection Agency (EPA)
issued a notice of violation of the Clean Air Act to German automaker
Volkswagen Group.^[26] The agency had found that Volkswagen had
intentionally programmed turbocharged direct injection (TDI) diesel
engines to activate their emissions controls only during laboratory
emissions testing, which caused the vehicles'
NO[x] output to meet US standards during regulatory testing. However,
the vehicles emitted up to 40 times more NO[x] in real-world
driving.^[27] Volkswagen deployed this software in about 11 million
cars worldwide, including 500,000 in the United States, in model years
2009 through 2015.^[28]^[29]^[30]^[31]
[ ]
Contents
* 1 Background
+ 1.1 Introduction
+ 1.2 Volkswagen Diesel anti-pollution system
+ 1.3 Underlying U.S. and EU emission standards
+ 1.4 Early warnings 1998-
+ 1.5 European discrepancies, 2014
+ 1.6 Emission testing, US 2014
+ 1.7 EPA Notice of Violation, 2015
+ 1.8 Intelligence agencies, 2015
* 2 Volkswagen's response
+ 2.1 Initial response August, September 2015
+ 2.2 Other irregularities, November 2015
o 2.2.1 CO[2] emissions
o 2.2.2 3.0 litre TDI emissions
+ 2.3 Affected Volkswagen and Audi TDI models
+ 2.4 Vehicle recall and consequences
+ 2.5 Advertising, 2015
+ 2.6 New orders, September 2015
+ 2.7 US Congressional Testimony, October 2015
+ 2.8 Compensation, November 2015
+ 2.9 European actions, 2015-2020
* 3 Consequences
+ 3.1 Health consequences
o 3.1.1 Deaths
o 3.1.2 Non-fatal health impacts
+ 3.2 Environmental consequences
+ 3.3 Legal and financial repercussions
o 3.3.1 Government actions
# 3.3.1.1 Australia
# 3.3.1.2 Belgium
# 3.3.1.3 Brazil
# 3.3.1.4 Canada
# 3.3.1.5 China
# 3.3.1.6 European Union
# 3.3.1.7 France
# 3.3.1.8 Germany
# 3.3.1.9 Hong Kong
# 3.3.1.10 India
# 3.3.1.11 Italy
# 3.3.1.12 Japan
# 3.3.1.13 Netherlands
# 3.3.1.14 Norway
# 3.3.1.15 Romania
# 3.3.1.16 South Africa
# 3.3.1.17 South Korea
# 3.3.1.18 Spain
# 3.3.1.19 Sweden
# 3.3.1.20 Switzerland
# 3.3.1.21 United Kingdom
# 3.3.1.22 United States
@ 3.3.1.22.1 Charges against Volkswagen
engineering/management
@ 3.3.1.22.2 Settlement
@ 3.3.1.22.3 Securities and Exchange Commission
lawsuit
o 3.3.2 Private actions
+ 3.4 European Investment Bank's possible involvement
+ 3.5 Models affected
o 3.5.1 Resale value
+ 3.6 Effects on Volkswagen corporate
o 3.6.1 Stock value
o 3.6.2 Sales
+ 3.7 Transgressions by other manufacturers
+ 3.8 Industry consequences
+ 3.9 Secondary market consequences
* 4 Other manufacturers
* 5 Monkeygate
* 6 Reactions
+ 6.1 Political figures
+ 6.2 Automotive industry and other commentators
+ 6.3 Media
+ 6.4 Public polling
* 7 See also
* 8 Notes
* 9 Further reading
* 10 External links
Background[edit]
Introduction[edit]
In 2014, the California Air Resources Board (CARB) commissioned from
the International Council on Clean Transportation (ICCT) a study on
emissions discrepancies between European and US models of vehicles,
summing up the data on 15 vehicles from three sources. Among those
recruited to this task was a group of five scientists at the West
Virginia University Center for Alternative Fuels Engines and Emissions
(CAFEE), who used a Japanese on-board emission testing system and
detected additional emissions during live road tests on two out of
three diesel cars.^[32]^[33] ICCT also purchased data from two other
sources. The new road testing data and the purchased data were
generated using Portable Emissions Measurement Systems (PEMS) developed
by multiple individuals in the mid-late 1990s and published in May
2014.^[34]^[35]^[36]
Regulators in multiple countries began to investigate Volkswagen,^[37]
and its stock price fell in value by a third in the days immediately
after the news. Volkswagen Group CEO Martin Winterkorn resigned, and
the head of brand development Heinz-Jakob Neusser, Audi research and
development head Ulrich Hackenberg, and Porsche research and
development head Wolfgang Hatz were suspended. Volkswagen announced
plans in April 2016 to spend EUR16.2 billion (US$18.32 billion at April
2016 exchange rates)^[38] on rectifying the emissions issues, and
planned to refit the affected vehicles as part of a recall campaign. In
January 2017, Volkswagen pleaded guilty to criminal charges and signed
an agreed Statement of Facts, which drew on the results of an
investigation Volkswagen had itself commissioned from US lawyers Jones
Day. The statement set out how engineers had developed the defeat
devices, because diesel models could not pass US emissions tests
without them, and deliberately sought to conceal their use.^[39] In
April 2017, a US federal judge ordered Volkswagen to pay a $2.8 billion
criminal fine for "rigging diesel-powered vehicles to cheat on
government emissions tests". The "unprecedented" plea deal formalized
the punishment which Volkswagen had agreed to.^[40] Winterkorn was
charged in the United States with fraud and conspiracy on 3 May
2018.^[15] As of 1 June 2020^[update], the scandal had cost VW $33.3
billion in fines, penalties, financial settlements and buyback
costs.^[41] Various government and civil actions are currently
undergoing in the U.S., as well as the European Union, where most of
the affected vehicles are located; while they remain legal to drive
there, consumers groups and governments seek to make sure Volkswagen
has compensated these owners appropriately as they had to do in the
United States.
The scandal raised awareness over the higher levels of pollution
emitted by all diesel-powered vehicles from a wide range of car makers,
which under real-world driving conditions exceeded legal emission
limits. A study conducted by ICCT and ADAC showed the biggest
deviations from Volvo, Renault, Jeep, Hyundai, Citroen and
Fiat,^[42]^[43]^[44] resulting in investigations opening into other
diesel emissions scandals. A discussion was sparked on the topic of
software-controlled machinery being generally prone to cheating, and a
way out would be to open source the software for public
scrutiny.^[45]^[46]^[47]
Volkswagen Diesel anti-pollution system[edit]
In general, three-way catalytic converter technology, which has been
very effective at reducing nitrogen oxide (
NO[x]) in petrol engine exhaust, does not work well for diesel
vehicles, which emit 20 times more NO[x] unless somehow treated.^[48]
To deal with this fact, in 2005 Volkswagen licensed Mercedes'
urea-based "selective catalytic reduction (SCR)" system called BlueTec
for future diesel engine development.^[49]^[48] While effective at
reducing
NO[x], an SCR system like Bluetec was expensive, high-maintenance and
required more space than other methods, making it unsuitable for
Volkswagen's compact cars such as Golf or Jetta.^[50]^[48] Some
managers at Volkswagen rejected BlueTec, and preferred to develop their
own inexpensive "lean NO[x] trap" system.^[48]^[51]^[52]^[49] In 2007,
Volkswagen canceled the licensing deal for BlueTec and announced that
it would use its own pollution control technology.^[49]^[52]
Volkswagen chose the "lean
NO[x] trap" system for its turbo-diesel Golf and Jetta models, but the
solution did not work well as it required a fuel-rich exhaust gas in
the purification process and fuel economy suffered as a result.^[48]
Nonetheless, the company promoted the technological miracle of fast,
cheap, and green diesel vehicles - but the impression projected to
outsiders did not reflect the reality.^[48]^[53] In reality, the system
failed to combine lower fuel consumption with compliant NO[x]
emissions, and Volkswagen chose around 2006^[54] to program the Engine
Control Unit (ECU) to switch from lower fuel consumption and high NO[x]
emissions to low-emission compliant mode when it detected an emissions
test, particularly for the EA 189 engine.^[48] This caused the engine
to emit NO[x] levels above limits in daily operation, but comply with
US NO[x] standards when being tested, constituting a defeat
device.^[52]^[55] In 2015 the news magazine Der Spiegel reported that
at least 30 people at management level in Volkswagen knew about the
deceit for years, which Volkswagen denied in 2015.^[56]
Starting in the 2009 model year, Volkswagen Group began migrating its
light-duty passenger vehicle's turbocharged direct injection (TDI)
diesel engines to a common-rail fuel injection system. This system
allows for higher-precision fuel delivery using electronically
controlled fuel injectors and higher injection pressure, theoretically
leading to better fuel atomization, better air/fuel ratio control, and
by extension, better control of emissions.^[57]^[58]^[3]^[4]^[59]
Volkswagen described the diesel engines as being as clean as or cleaner
than US and Californian requirements, while providing good fuel economy
and performance.^[60]^[61] Due to the good fuel economy provided by its
diesel fleet, in 2014 Volkswagen was registered with an impressive
Corporate Average Fuel Economy (CAFE) of 34 mpg[-US] (6.9 L/100 km;
41 mpg[-imp]).^[62] The low emissions levels of Volkswagen vehicles
tested with the defeat device in operation enabled the company to
receive green car subsidies and tax exemptions in the US.^[63]
* The 2009 Volkswagen Jetta Diesel Sedan was awarded Green Car of the
Year. The award was rescinded in early October 2015.
The 2009 Volkswagen Jetta Diesel Sedan was awarded Green Car of the
Year. The award was rescinded in early October 2015.
* Volkswagen TDITruthandDare.com Clean Diesel
campaign[64][65][66][67] advertised on the Volkswagen Golf TDI at
the 2010 Washington Auto Show. (2009-4, 2009-7, 2010)
Volkswagen TDITruthandDare.com Clean Diesel
campaign^[64]^[65]^[66]^[67] advertised on the Volkswagen Golf TDI
at the 2010 Washington Auto Show. (2009-4, 2009-7, 2010)
* Volkswagen Research and Development building in Wolfsburg
Volkswagen Research and Development building in Wolfsburg
* Graphic about selective catalytic reduction (SCR) system that uses
Urea based Diesel exhaust fluid (DEF) known as BlueTec technology
Graphic about selective catalytic reduction (SCR) system that uses
Urea based Diesel exhaust fluid (DEF) known as BlueTec technology
Underlying U.S. and EU emission standards[edit]
Comparison of NOx_and_PM_emission_standards_in_the_US_and_Europe
The Volkswagen and Audi cars identified as violators had been certified
to meet either the US EPA Tier 2 / Bin 5 emissions standard or the
California LEV-II ULEV standard.^[68] Either standard requires that
nitrogen oxide emissions not exceed 0.043 grams per kilometre
(0.07 g/mi) for engines at full useful life which is defined as either
190,000 kilometres (120,000 mi) or 240,000 kilometres (150,000 mi)
depending on the vehicle and optional certification choices.^[69]^[70]
This standard for nitrogen oxide emissions is among the most stringent
in the world. For comparison, the contemporary European standards known
as Euro 5 (2008 "EU5 compliant",^[3] 2009^[5]-2014 models) and Euro 6
(2015 models) only limit nitrogen oxide emissions to 0.18 grams per
kilometre (0.29 g/mi) and 0.08 grams per kilometre (0.13 g/mi)
respectively.^[70]^[71] Defeat devices are forbidden in the EU.^[72]
The use of a defeat device is subject to a penalty.^[71]
Early warnings 1998-[edit]
In 1998, a Swedish researcher criticized the New European Driving Cycle
standard for allowing large emission differences between test and
reality.^[73] The Washington Post also reported that in the late 1990s,
EPA engineers at Virginia Testing Laboratory had built a system called
ROVER, designed to test a car's emissions on the road. The project was
shut down in 2001, despite preliminary tests indicating gaps between
emissions from lab tests and real world tests of about 10 to 20
percent.^[74]
In 2011, the European Commission's Joint Research Centre published a
report which found that all tested diesel vehicles emitted 0.93 +- 0.39
g/km^[clarification needed]and that the tested Euro 5 diesel vehicles
emitted 0.62 +- 0.19 g/km, which substantially exceeded the respective
Euro 3-5 emission limit.^[75] In 2013, the research center then warned:
Sensors and electronic components in modern light-duty vehicles are
capable of 'detecting' the start of an emissions test in the
laboratory (e.g., based on acceleration sensors or
not-driven/not-rotating wheels). Some vehicle functions may only be
operational in the laboratory, if a predefined test mode is
activated. Detecting emissions tests is problematic from the
perspective of emissions legislation, because it may enable the use
of defeat devices that activate, modulate, delay, or deactivate
emissions control systems with the purpose of either enhancing the
effectiveness of these systems during emissions testing or reducing
the effectiveness of these systems under normal vehicle operation
and use. While the use of defeat devices is generally prohibited,
exceptions exist in cases where it is necessary to protect the
engine against damage and to ensure safe vehicle operation (EC,
2007). These exceptions leave room for interpretation and provide
scope, together with the currently applied test procedure, for
tailoring the emissions performance [...].^[76]
The European Commission and European governments could not agree upon
who was responsible for taking action.^[77] In the United Kingdom, the
Department for Transport received a report from the International
Council on Clean Transportation (ICCT) in October 2014, which stated
there was a "real world nitrogen oxides compliance issue" with diesel
passenger cars.^[78] The UK's DEFRA research indicated a significant
reduction in
NO[x] and particulate matter from 1983 to 2014. Respirable suspended
particles with a diameter of 10 micrometres - also known as PM[10]
(including diesel particulates) - halved since 1996 despite the
increased number and size of diesel cars in the UK.^[79]
European discrepancies, 2014[edit]
The independent body International Council on Clean Transportation
(ICCT) commissioned a study in 2014 and obtained data on 15 vehicles
from three sources. John German, co-lead of the US branch of ICCT, said
the idea for the "very ordinary" test came from Peter Mock, managing
director ICCT in Europe. Mr. German said they chose to put US vehicles
through on-the-road tests because their emissions regulations are more
stringent than those in the European Union. The ICCT expected the cars
to pass, and thought they would be able to use the results to
demonstrate to Europeans that it was possible to run diesel cars with
cleaner emissions. The study found emissions discrepancies in the
diesel VW Passat and VW Jetta, and no discrepancies in a BMW X5. They
wanted to test a Mercedes as well, but could not obtain
one.^[36]^[80]^[81]
Emission testing, US 2014[edit]
A group of scientists at West Virginia University submitted a proposal
to ICCT, and John German awarded them a US$50,000 grant for a study to
conduct tests on three diesel cars: a Volkswagen Passat, a Volkswagen
Jetta, and a BMW X5.^[34]^[82]^[83]^[80] ICCT also purchased data from
Emissions Analytics, a UK-based emissions consultancy, and from
stakeholders in the Real Driving Emissions - Light Duty Vehicle working
group in charge of amending Euro 6 regulations.^[34] In early 2014, two
professors and two students began testing emissions from the three
vehicles under road conditions, using a portable emissions measurement
system, making it possible to collect real world driving emissions
data, for comparison with laboratory dynamometer testing.^[36]
The three vehicles were all certified at a California Air Resources
Board facility before the tests^[36] as falling below the emissions
limits when using the standard laboratory testing protocols.^[35]^[84]
They put 2,400 kilometres (1,500 mi) on the Jetta and X5. For their
final test, they wanted to put even more mileage on the Passat and
drove it from Los Angeles to Seattle and back again, virtually the
entire West Coast of the United States,^[80] over 3,200 kilometres
(2,000 mi).^[36] The BMW was "at or below the standard ... with
exception of rural-up/downhill driving conditions".^[35] But the
researchers found that under real-world driving conditions the Jetta
exceeded US emissions limits "by a factor of 15 to 35" while the Passat
exceeded the limit "by a factor of 5 to 20".^[35]^[83]
The emissions far exceeded legal limits set by both European and US
standards. One of the testers said, "... we did so much testing that we
couldn't repeatedly be doing the same mistake again and
again."^[85]^[86] John German said the deceit required more effort than
merely adding some code to the engine software, as the code would also
have to be validated.^[85] The US test results confirmed the ICCT's
findings in Europe.^[35] The West Virginia scientists did not identify
the defeat device, but they reported their findings in a study they
presented to the EPA and CARB in May 2014.^[87]^[88] In May 2014
Colorado's RapidScreen real-world emissions test data reinforced the
suspected abnormally high emissions levels.^[89] After a year-long
investigation, an international team of investigators identified the
defeat device as a piece of code labelled "acoustic condition" which
activated emissions-curbing systems when the car's computer identified
it was undergoing a test.^[90]
CAPTION:
NO[x] numbers for Volkswagen Passat and Jetta^[35] See note
Car EPA (United States) Euro5 Euro6 Comment
Limit Dyno WVU
measurement Limit Register Measurement
2011 Limit Register Measurement
201x
Vehicle A
Volkswagen Jetta^[82]
0.043 g/km 0.022 g/km 0.61-1.5 g/km 0.18 g/km^[71] 0.62 +- 0.19
g/km^[75] 0.08 g/km^[71] lean-
NO[x] trap (LNT) (Vehicle A)
Vehicle B
Volkswagen Passat^[82]
0.043 g/km 0.016 g/km 0.34-0.67 g/km 0.62 +- 0.19 g/km urea-based
selective catalytic reduction (SCR) system (Vehicle B)
* Note: The vehicles tested were anonymous in the original study.
Emissions listed on page 64-65. Limits listed on page 5.
NO[x] treatment listed on page 9.
VW NOx emissions WVU
20 percent of European city dwellers are exposed to unhealthy levels of
nitrogen dioxide. In London, where diesel road traffic is responsible
for 40 percent of
NO[x] emissions, 3,000 deaths per year can be attributed to air
pollution.^[91] A Channel 4 documentary in January 2015 referred to the
UK government moving to a CO[2] emission band system for road tax,
which favoured diesel power, as the "great car con", with Barry
Gardiner MP, former member of the Blair government, stating that the
policy, which lowered CO[2] emissions yet increased NO[x] pollution,
was a mistake.^[92]
EPA Notice of Violation, 2015[edit]
On 18 September 2015, the US EPA served a Notice of Violation (NOV) of
the Clean Air Act on Volkswagen Group alleging that Volkswagen and Audi
automobiles equipped with 2-litre TDI diesel engines, and sold in the
US between 2009 and 2015, had an emissions-compliance "defeat device"
installed, and ordered a recall of 482,000
vehicles.^[93]^[94]^[95]^[96] A Notice of Violation is a notification
to the recipient that the EPA believes it has committed violations and
is not a final determination of liability.^[97]^[98]
Volkswagen's "defeat device" is specially-written
engine-management-unit firmware that detects "the position of the
steering wheel, vehicle speed, the duration of the engine's operation,
and barometric pressure"^[99] when positioned on a dynamometer using
the FTP-75 test schedule.^[100] These criteria very closely match the
EPA's required emissions testing protocol^[99] which allowed the
vehicle to comply with emissions regulations by properly activating all
emissions control during testing. The EPA's NOV alleged that under
normal driving conditions, the software suppressed the emissions
controls, allowing better fuel economy, at the expense of emitting up
to 40 times more nitrogen oxides than allowed by law.^[93]^[101]
Intelligence agencies, 2015[edit]
In February 2017, Der Spiegel reported that in February 2015, ex
Israeli diplomat Avi Primor had shown Ferdinand Piech, then Volkswagen
chairman of the board at the time, a document in which US agencies
warned CEO Martin Winterkorn early about the manipulation. During this
meeting at the end of February 2015, Primor introduced Piech to his
friend Yuval Diskin, who after retiring from directing the Israeli
secret service of the Interior Shin Bet, had founded a cybersecurity
company. Shin Bet apparently knew about the scandal early. Primor
confirmed that the meeting took place, but both Primor and Diskin
denied tipping off Piech. In early March 2017, Piech asked Winterkorn
whether there had been a warning by US agencies, which Winterkorn
denied.^[102]^[103]^[104]^[105]
Volkswagen's response[edit]
Initial response August, September 2015[edit]
Former Volkswagen AG CEO Martin Winterkorn in March 2015
According to the EPA, Volkswagen had insisted for a year before the
outbreak of the scandal that discrepancies were mere technical
glitches.^[106] Volkswagen fully acknowledged that they had manipulated
the vehicle emission tests only after being confronted with evidence
regarding the "defeat device".^[107]^[108]
The first sign that Volkswagen was ready to come clean reportedly
occurred on 21 August 2015 at a conference on green transportation in
Pacific Grove, California, where an unnamed company representative
approached Christopher Grundler, director of the EPA Office of
Transportation and Air Quality, and surprised him by informally
admitting that the company had been deceiving regulators.^[109] A CARB
official was standing next to Grundler at the time.^[109]
Formal acknowledgement of the deception was made by Volkswagen
executives in Germany and the United States to EPA and California
officials during a 3 September conference call, during which Volkswagen
executives discussed written materials provided to the participants
demonstrating how Volkswagen's diesel engine software circumvented US
emissions tests. That admission came after the EPA threatened to
withhold approval for the company's 2016 Volkswagen and Audi diesel
models.^[110]
I am shocked by the events of the past few days. I am stunned that
misconduct on such a scale was possible in the Volkswagen Group. As
CEO I accept responsibility for the irregularities. I am doing this
in the interests of the company even though I am not aware of any
wrongdoing on my part.
Martin Winterkorn, -- Former Volkswagen CEO Martin Winterkorn
resignation statement, 23 September 2015.^[111]
Volkswagen's CEO Martin Winterkorn said: "I personally am deeply sorry
that we have broken the trust of our customers and the public."
Winterkorn was in charge at Volkswagen from the start of 2008 to
September 2015.^[112] He attributed the admitted wrongdoing to "the
terrible mistakes of a few people".^[113] Winterkorn initially resisted
calls to step down from his leadership role at VW,^[114]^[115] but then
resigned as CEO on 23 September 2015.^[116]^[117]^[118]
Volkswagen Group of America CEO Michael Horn was more direct, saying,
"We've totally screwed up."^[114] Horn added, "Our company was
dishonest with the EPA, and the California Air Resources Board and with
all of you."^[115] Olaf Lies, a Volkswagen board member and economy
minister of Lower Saxony, later told the BBC that the people "who
allowed this to happen, or who made the decision to install this
software" acted criminally, and must be held personally accountable. He
also said the board found out about the problems only "shortly before
the media did", and expressed concerns over "why the board wasn't
informed earlier about the problems when they were known about over a
year ago in the United States".^[119]
Volkswagen announced that 11 million cars were involved in the
falsified emission reports, and that over seven billion dollars would
be earmarked to deal with the costs of rectifying the software at the
heart of the pollution statements.^[31] The newly appointed CEO of
Volkswagen Mathias Mueller stated that the software was activated in
only a part of those 11 million cars, which has yet to be
determined.^[30] The German tabloid Bild claimed that top management
had been aware of the software's use to manipulate exhaust settings as
early as 2007. Bosch provided the software for testing purposes and
warned Volkswagen that it would be illegal to use the software to avoid
emissions compliance during normal driving.^[120] Der Spiegel followed
Bild with an article dated 30 September 2015 to state that some groups
of people were aware of this in 2005 or 2006.^[121] Sueddeutsche
Zeitung had similarly reported, that Heinz-Jakob Neusser, one of
Volkswagen's top executives, had ignored at least one engineer's
warnings over "possibly illegal" practices in 2011.^[122]
On 28 September 2015, it was reported that Volkswagen had suspended
Heinz-Jakob Neusser, head of brand development at its core Volkswagen
brand, Ulrich Hackenberg, the head of research and development at its
brand Audi who oversees technical development across the Volkswagen
group, and Wolfgang Hatz, research and development chief at its
sports-car brand Porsche who also heads engine and transmissions
development of the Volkswagen group.^[123] On the same day it was
reported that besides the internal investigation of the incidents, the
supervisory board of Volkswagen had hired American law firm Jones Day
to carry out an independent investigation.^[124] Computerworld
suggested that a software audit trail and test logs were ways to
investigate what took place when.^[125] In February 2016 Volkswagen
also contracted three public relations firms (Kekst in the United
States, Hering Schuppener in Germany, Finsbury in Britain), in addition
to its usual US-retained firm Edelman.^[126] To further help deal with
the scandal, Volkswagen hired ex-FBI director Louis Freeh, alongside
former German constitutional judge Christine Hohmann-Dennhardt
previously employed by Daimler, and as of 2016 on Volkswagen's board as
its director of integrity and legal affairs.^[127]
Other irregularities, November 2015[edit]
CO[2] emissions[edit]
On 3 November 2015, Volkswagen revealed that its internal investigation
found that CO[2] emissions and fuel consumption figures were also
affected by "irregularities". These new issues, first estimated to cost
up to EUR2 billion to repair, involved mainly diesel, but also some
petrol models, with initial estimates suggesting that approximately
800,000 vehicles equipped with 1.4, 1.6 and 2.0 litre motors from VW,
Skoda, Audi and SEAT might be affected.^[6] On 9 December 2015,
Volkswagen revised these estimates, saying that only around 36,000
vehicles are affected by the irregularities, while also affirming that
it had found no evidence of unlawful changing of CO[2] emissions
data.^[9] The news prompted a 7.3 percent increase in Volkswagen
preference shares on the same day.^[9]^[128]
In November 2016, California regulators claimed to have discovered
software installed on some Audi models that allowed the manufacturer to
cheat CO[2] emissions during standard testing, thereby also masking the
cars' contribution to global warming.^[12]
3.0 litre TDI emissions[edit]
On 20 November 2015, the EPA said Volkswagen officials told the agency
that all 3.0-litre TDI diesel engines sold in the US from 2009 through
2015 were also fitted with emissions-cheating software, in the form of
"alternate exhaust control devices". These are prohibited in the United
States, however the software is legal in Europe.^[129] Volkswagen
acknowledges these devices' existence, but maintains that they were not
installed with a "forbidden purpose".^[128] On 4 January 2016, the US
Department of Justice filed a complaint in a federal court against VW,
alleging that the respective 3.0-litre diesel engines meet the legal
emission requirements in only a "temperature conditioning" mode that is
automatically switched on during testing conditions, while at "all
other times, including during normal vehicle operation, the vehicles
operate in a 'normal mode' that permits
NO[x] emissions of up to nine times the federal standard".^[130] The
complaint covers around 85,000 3.0 litre diesel vehicles sold in the
United States since 2009, including the Volkswagen Touareg, Porsche
Cayenne, Audi A6 Quattro, Audi A7 Quattro, Audi A8, Audi A8L, Audi Q5,
and Audi Q7 models.^[130]
Affected Volkswagen and Audi TDI models[edit]
CAPTION: List of affected vehicles and generation of engine^[131]^[132]
Brand Model Model Years Generation of Engine
Audi A1 2010-2014 1
A3 2009-2013
Volkswagen Beetle 2013-2014
Beetle Convertible
Golf 2-Door 2010-2013
Golf 4-Door 2010-2014
Jetta 2009-2014
Jetta SportWagen
Passat 2012-2015
Audi A3 2015 3*
Volkswagen Beetle
Beetle Convertible
Golf 4-Door
Golf SportWagen
Jetta
Passat
Audi A3 2015 3**
Volkswagen Beetle
Beetle Convertible
Golf 4-Door
Golf SportWagen
Jetta
Passat
Touareg 2009-2012 3
Audi Q7 2009-2015
Volkswagen Touareg 2013-2016 3
Audi A6 2014-2016
A7
A8
A8L
Q5
Q7 2013-2015
*Initial Modification
**Subsequent Modification
Vehicle recall and consequences[edit]
On 29 September 2015, Volkswagen announced plans to refit up to 11
million affected vehicles, fitted with Volkswagen's EA 189 diesel
engines, including 5 million at Volkswagen brand, 2.1 million at Audi,
1.2 million at Skoda and 1.8 million light commercial vehicles. SEAT
said that 700,000 of its diesel models were affected. In Europe alone,
a total of 8 million vehicles are affected.^[133] In Germany, 2.8
million vehicles will have to be recalled, followed by the UK, with 1.2
million. In France, 984,064 vehicles were affected, in Austria around
360,000, while in the Czech Republic 148,000 vehicles were involved (of
which 101,000 were Skodas). In Portugal, Volkswagen said it had sold
94,400 vehicles with the software.^[134]^[135] The repair may not
require a formal recall; in the UK, for example, the company will
simply offer to repair the cars free of charge; a recall is required
only "when a defect is identified that... could result in serious
injury". As the rules violation involved enabling emission controls
during testing, but turning it off under normal conditions to improve
performance or fuel mileage, it has been speculated that the software
update might make cars perform less efficiently and impair fuel
economy; according to VW, however, its proposed solutions will be
designed to achieve legal EU emissions compliance without impairing
engine performance or consumption.^[136]
As of September 2015^[update] it was unclear whether the repair would
include hardware modifications, such as selective catalytic reduction
(SCR) upgrades.^[137]^[138] The recall was scheduled to start in
January 2016, with all affected cars projected to be fixed by the end
of the year. The company also announced a review of all of its brands
and models, including its supercar marque Bugatti.^[139]
On 8 October 2015, Volkswagen US CEO Michael Horn said in testimony
before the US Congress that it could take years to repair all the cars,
especially the older models, due to the required complex hardware and
software changes. He said that the fixes would likely preserve fuel
economy ratings but, "there might be a slight impact on
performance".^[140]^[141]
On 12 October 2015, Paul Willis, Volkswagen UK managing director, told
the Commons Transport Select Committee that about 400,000 Volkswagen
cars in the UK will need fuel injectors altered as well as a software
fix.^[59] The vehicles requiring the hardware fix are the 1.6 litre
diesel models. The 1.2 litre^[142] and 2.0 litre diesel models will
require only a software fix.^[59] On the same day, Volkswagen announced
it would overhaul its entire diesel strategy, saying that in Europe and
North America it will switch "as soon as possible" to the use of
selective catalytic reduction technology to improve diesel emissions.
It also announced plans to accelerate the development of electric cars
and plug-in hybrids, as well as petrol, instead of diesel engines for
smaller cars.^[143]
On 12-13 October 2015, Volkswagen Group vehicle drivers in the UK
started receiving notification letters, to "rectify the
issue".^[144]^[145] Volkswagen later announced a timeline for UK diesel
recalls, citing March 2016 for 2.0-litre engines, June 2016 for
1.2-litre engines, and October 2016 for 1.6-litre engines.^[146]
At the beginning of October 2015, Volkswagen suggested to let car
owners decide whether their cars would be recalled for
handling.^[147]^[148] However, the German Federal Motor Transport
Authority (Kraftfahrt-Bundesamt, or KBA)^[149] views the software as
illegal,^[150]^[151] and has ordered a full recall of all affected cars
in Germany. Volkswagen then decided to recall around 8.5 million cars
in Europe,^[148] about a third of all its car deliveries since
2009.^[152] KBA requires Volkswagen to send a recall plan to KBA before
the end of October for 2.0-litre cars, and end of November for 1.2 and
1.6-litre cars.^[151] If KBA approves a plan, Volkswagen can then start
handling the cars. The German authorities require that Volkswagen
remove the software and that Volkswagen ensures that emission rules are
fulfilled.^[147] Media estimates that the KBA procedure sets a
precedent for how authorities in other countries handle the
case.^[152]^[96]
On 18 November 2015, Autoblog reported that the KBA was reviewing a
Volkswagen fix for the affected 1.6 diesel engine.^[153] On 25 November
2015, Volkswagen said the fix involved a minor hardware modification to
the car's air intake system, alongside a software update.^[154] This
low-cost solution contradicted earlier speculation regarding the
possible fitting of new injection nozzles and catalytic
converters.^[153] In December 2015, Volkswagen said that the affected
1.2-litre and 2.0-litre diesel engines needed only a software
update.^[155]^[156] As of November 2015, the KBA had approved the fixes
with the first recalls likely to begin in January 2016.^[8] According
to VW, the measures aimed to achieve legal EU emissions compliance
without impairing engine output, fuel consumption, or
performance.^[136] The simple fixes with inexpensive parts and software
were then possible though not available when the engines were
developed, because engine technology understanding and intake flow
simulation capabilities had matured in the meantime, to address the
burning of diesel and air mixtures via intake flow shaping.^[157] As of
December 2015, due to stricter environmental legislation, fixes for US
vehicles were expected to take longer to produce and be more
technically complex.^[136]
As of February 2016, there were three sizes of affected diesel engines,
and more than a dozen variations to the repairs exist, prompting
Volkswagen to roll out the recalls in waves for each cluster of
vehicle; the first model to be repaired was the low-volume Volkswagen
Amarok.^[158] Classified as a light commercial vehicle, the Amarok
pickup has a higher Euro 5
NO[x] emissions limit than the passenger cars that are yet to have an
available approved fix. German motoring journal Auto Motor und Sport
tested two Amarok TDI pickups pre and post software update and found
that whilst engine power had remained the same, fuel consumption had
increased by 0.5 litres/100 km.^[159] This is believed in turn to have
delayed the next wave of updates to the larger volume Passat model
which had been expected to start on 29 February 2016 due to the further
testing of the update by the KBA.^[160] Volkswagen confirmed on 11
April 2016 that the Passat recall would be delayed as testing had
revealed higher fuel consumption.^[161] In 2017 Swedish auto journal
Teknikens Vaerld performed tests on 10 different models and most of
them showed a reduction in power output and increase in fuel
consumption after having the update applied.^[162]
Advertising, 2015[edit]
In France, the MediaCom media agency, which buys advertising for
Volkswagen, warned the French newspapers on 22 September 2015 that it
would cancel planned Volkswagen and Audi campaigns in case they would
cover the emission violations.^[163] Given the scale that the scandal
had already taken by that time, the threat had little effect on its
coverage.^[citation needed]
On the occasion of German Unity Day, Volkswagen launched an ad campaign
in German Sunday newspapers, that it wanted to express its joy about
the 25th anniversary of German reunification, its pride about having
shaped the country together with all people for the last 25 years, to
give thanks for the confidence of the customers it had experienced
during all this time and that it wanted to thank all its employees and
trade partners in Germany, and that in one sentence, that "it would do
everything to win back the confidence of its customers".^[164]
New orders, September 2015[edit]
In September 2015, Volkswagen's Belgian importer, D'Ieteren, announced
that it would offer free engine upgrades to 800 customers who had
ordered a vehicle with a diesel engine which was likely to have been
fitted with illegal software.^[165]^[166]
As of October 2015, Sales of vehicles with EA 189 engines were halted
in some European countries, including Spain, Switzerland, Italy, the
Netherlands, Belgium and the UK.^[165]^[167]
In the United States, Volkswagen withdrew its application for emissions
certification for its 2016 diesel models, leaving thousands of vehicles
stranded at ports in October 2015, which the company said contained
software which should have been disclosed to and certified by the
EPA.^[168] EPA quarantined some 2016-models until it would become clear
that their catalysts perform the same on the road as they do in
tests.^[169]
US Congressional Testimony, October 2015[edit]
External video
video icon Emissions Investigation Hearing, C-SPAN, 8 October 2015
On 8 October 2015, Volkswagen US CEO Michael Horn testified before the
United States House Committee on Energy and Commerce stating: "This was
not a corporate decision, from my point of view, and to my best
knowledge today. This was a couple of software engineers who put this
in for whatever reason... some people have made the wrong decisions in
order to get away with something that will have to be found
out."^[170]^[171] The response was widely ridiculed.^[172]^[173]
Compensation, November 2015[edit]
On 9 November 2015, Volkswagen announced that, in addition to the
US$2,000 it was offering current Volkswagen owners for trade-ins,
482,000 diesel Audi and Volkswagen owners in the United States would be
eligible to receive US$1,000 in vouchers.^[174] On 18 November 2015,
Volkswagen said that approximately one quarter of the affected vehicle
owners had applied to the program, which was estimated to cost at least
$120 million in benefits.^[175] Volkswagen confirmed that it is
offering vouchers including to customers in Canada.^[176] Volkswagen
America said that accepting the gift cards does not prevent owners from
filing lawsuits.^[177] Volkswagen also created a claims fund, managed
by the well-known mediation attorney Kenneth Feinberg, which will offer
full compensation packages (in the form of cash, buy-backs, repairs or
replacement cars) to the approximately 600,000 United States owners
affected by the scandal.^[178] Despite earlier hints to the contrary,
in December 2015 Volkswagen CEO Matthias Mueller said that customers
outside the US and Canada should also expect some type of compensation
package: "we are working on an attractive package, let's call it
compensation, for reduction in residual values in our
cars".^[179]^[180] However, on 11 January 2016, a Volkswagen spokesman
said "there won't be compensation. All the indications are that
residual values are unaffected";^[181] the company, which continued to
face pressure from E.U. officials to compensate European drivers as
well,^[182] blamed the confusion on "a slight mistranslation".^[181]
E.U. commissioner Elzbieta Bienkowska said Volkswagen was treating
European consumers unfairly, and Volkswagen responded that the
situation in US and Canadian markets, where confidence in diesel
technology was "severely shaken" and clients needed to wait longer for
an engine fix due to tougher emissions standards, was not
"automatically comparable" with other markets.^[182]
On 21 April 2016, the federal district court for the Northern District
of California, which was appointed in December 2015 to oversee almost
all of the US litigation, including claims filed by vehicle owners and
state governments, announced that Volkswagen would offer its US
customers "substantial compensation" and buy back nearly 500,000
2.0-litre vehicles as part of a settlement in North America.^[11] The
court appointed former FBI Director Robert Mueller as a mediator to
oversee the negotiations between claimants, regulators, and Volkswagen,
to produce a final "consent decree" by late June 2016.^[183]^[184]
European actions, 2015-2020[edit]
Following its admission and recall plans in the United States,
Volkswagen also started to establish similar plans in the European
Union, where it was estimated that 8.5 million of the 11 million diesel
vehicles affected by the scandal were located. The European Union
warned Volkswagen in 2018 that it did not believe it was moving fast
enough to issue repairs on the recalled cars, provide consumers with
appropriate information on what steps Volkswagen was doing to resolve
the problem, and what compensation they were offering affected
consumers.^[185] Volkswagen agreed to a EUR1 billion fine imposed by
Germany for failing to monitor the employees that modified the software
behind the scandal in 2018.^[186]
In Germany, over 60,000 civil lawsuits of various degrees representing
about 450,000 citizens were filed from 2015 through 2019 by Volkswagen
owners, seeking similar compensation as Volkswagen had given to United
States drivers. A case led by the Federation of German Consumer
Organizations (VZBV) was brought against Volkswagen. At the
Braunschweig Oberlandesgericht (Higher Regional Court) Volkswagen
argued that where the United States had banned the affected cars, no EU
member state had banned the affected vehicle, and thus there was no
basis for any compensation. However, Judge Michael Neef rejected a
summary judgement for Volkswagen in September 2019, allowing what was
anticipated to be a multi-year case to go forward.^[187]^[188]
Volkswagen had settled with VZBV for about EUR830 million - providing
between EUR1,350 and EUR6,257 to approximately 260,000 Volkswagen
owners through the VZBV - in February 2020.^[189] Many consumers were
angered over this settlement, representing only a fraction of what
Volkswagen had paid to United States' owners. One of the other civil
cases, serving as a template for those not covered by the VZBV case,
had reached the Federal Court of Justice, Germany's highest court, and
in May 2020, ruled that the consumer was entitled to the full market
value of the car, several times larger than what the settlement would
have offered. It is unclear how much Volkswagen will own from a result
of the remaining civil lawsuits.^[190]^[191]
A similar class-action suit against Volkswagen representing more than
91,000 owners is currently underway in the United Kingdom, seeking
greater compensation for being sold vehicles known by Volkswagen to be
defective. The High Court of Justice had giving preliminary findings in
the case in April 2020 that there is a likelihood that Volkswagen did
sell vehicles with a "defeat device" and attempted to abuse the
process, allowing the trial to go forward.^[192]
Consequences[edit]
Distribution of estimated actual excess Volkswagen light duty diesel
vehicle
NO[x] emissions summed over 2008 through 2015 (kg per km^2).^[193] The
median value of emissions is used for each year. Emission density peaks
at 446 kg per km^2 ^[193]
Annual excess Volkswagen light duty diesel vehicle
NO[x] emissions in kilotonnes (million kg). Results from 2008 through
2015 (blue) are estimates of actual excess emissions. Results from 2016
onward (red) are forecast based on the existing in-use vehicle fleet
assuming no new sales of non-compliant vehicles from September 2015 and
no retrofitting (used to calculate the benefit of a return to
compliance).^[193] The shaded region indicates the 95 percent
confidence interval. The discontinuity is due to the difference in the
baseline for past (based on FTP-75 drive cycle measurements) and future
(based on a return to regulatory limit) emissions.^[193]
Health consequences[edit]
Further information: Diesel exhaust
Deaths[edit]
A peer-reviewed study published in Environmental Research Letters
estimated that approximately 59 premature deaths will be caused by the
excess pollution produced between 2008 and 2015 by vehicles equipped
with the defeat device in the United States, the majority due to
particulate pollution (87 percent) with the remainder due to ozone (13
percent). The study also found that making these vehicles emissions
compliant by the end of 2016 would avert an additional 130 early
deaths.^[194]^[193]
Earlier non peer-reviewed studies published in media sources, quoted
estimates ranging from 10 to 350 excess deaths in the United States
related to the defeat devices based on varying assumptions.^[195]
A 2022 study by economists found that each cheating Volkswagen car per
1,000 cars caused a low birth weight rate increase of 1.9 percent and
infant mortality rate increase by 1.7 percent.^[196]
Non-fatal health impacts[edit]
Since NO^
[2] is a precursor to ground-level ozone it may cause respiratory
problems "including asthma, bronchitis and
emphysema".^[197]^[198]^[199] Nitrogen oxides amplify the effect of
fine particulate matter soot which causes heart problems, a form of air
pollution estimated to kill 50,000 in the United States annually.^[200]
A peer-reviewed study published in Environmental Pollution estimated
that the fraudulent emissions would be associated with 45 thousand
disability-adjusted life years (DALYs) and a value of life lost of at
least 39 billion US dollars.^[201]
In June 2016, Axel Friedrich, formerly with the German equivalent of
the E.P.A. and a co-founder of the International Council on Clean
Transportation stated "It's not just fraud - it's physical
assault."^[202]
Environmental consequences[edit]
NO[x] also contribute to acid rain, and visibly brown clouds or smog
due to both the visible nature of NO^
[2], and the ground level ozone created by NO. NO and NO^
[2] are not greenhouse gases, whereas N^
[2]O is.^[203] NO^
[2] is a precursor to ground-level ozone.
Legal and financial repercussions[edit]
Government actions[edit]
Australia[edit]
In October 2015, the Australian Competition & Consumer Commission
announced that it will not be investigating Volkswagen for possible
violations of emissions standards, citing that a reasonable consumer
would not be concerned about the tailpipe emissions of their vehicle
and hence would not be a deciding factor in their purchase.^[204] In
March 2017, the Sydney Morning Herald reported that Audi and Volkswagen
issued a voluntary recall for affected cars for software updates and in
some cases hardware updates had begun in December 2016.^[205] As of
January 2018^[update], several class action suits were dropped against
Volkswagen, Audi and Skoda.^[206]
In December 2019, Volkswagen was fined A$125,000,000 for making false
and misleading representations about compliance with Australian diesel
emissions standards.^[207]
Belgium[edit]
In October 2015, the Belgian Chamber of Representatives set up a
special Dieselgate committee.^[208] It finalized a consensus report in
March 2016, for the government to implement recommendations, with
near-unanimous approval on 28 April 2016.^[209]
In January 2016, public broadcaster VRT reported on Opel Zafira cars
having lower emissions after an update compared to before receiving the
update. Opel denied deploying software updates influencing emissions,
and the Economic Inspection of the Federal Government started an
investigation on the request of Minister of Consumer Protection Kris
Peeters.^[210]
Brazil[edit]
As of October 2015, Volkswagen Brazil confirmed that 17,057 units of
its Amarok mid-size pickups produced between 2011 and 2012 and sold in
Brazil were equipped with the emissions cheating software. The
Brazilian Institute for the Environment and Renewable Natural Resources
(Ibama) launched an investigation, warning that Volkswagen could face
fines up to R$50,000,000.^[211]
In September 2017, Volkswagen Brazil was ordered to pay R$1,000,000,000
to the 17,000 owners of the Amarok pickups equipped with defeat
devices, as decided by the 1st Business Court of the Court of Justice
of Rio de Janeiro. The automaker may still appeal the decision. The
total amount reaches R$1,092,648,000 (US$348 million at the September
2017 exchange rate) and each consumer will receive R$54,000 (US$17,000)
for material damages and another R$10,000 (US$3,000) for moral damages.
In addition, the magistrate ordered the automaker to pay an additional
R$1,000,000 into the National Consumer Protection Fund. According to
the judge, the purpose was "to compensate the Brazilian society as a
collective moral damage of a pedagogical and punitive nature because of
the collective fraud caused in the domestic motor vehicle
market".^[212]
Canada[edit]
In September 2015, Environment Canada announced that it had begun an
investigation to determine if "defeat devices" were installed in
Volkswagen vehicles to bypass emission control tests in Canada.^[213]
On 15 December 2016 an agreement was reached^[214] which allowed
buybacks or trade-ins based on market value on 18 September 2015 or
fitting an approved emissions modification. All three options also
added a cash payment between CA$5,100 and CA$8,000.^[215]
Ontario provincial authorities executed a search warrant at Volkswagen
Canada offices in the Toronto area on 19 September 2017^[216] as part
of its investigation into the emissions scandal that rocked the company
two years ago. The Ministry of the Environment and Climate Change have
charged Volkswagen AG with one count under the province's Environmental
Protection Act, alleging the German company did not comply with Ontario
emission standards. The allegations have not been proven in
court.^[217]
In July 2018, Volkswagen Group Canada announced plans for its new
Electrify Canada subsidiary to launch a network of public fast-charging
stations in major cities and along major highways, starting with 32
charging sites in the four most-populated provinces: Ontario, Quebec,
British Columbia and Alberta.^[218]^[219]
On 9 December 2019, Volkswagen AG was charged with 60 counts of
contravening the Canadian Environmental Protection Act, 1999.^[220] On
22 January 2020, Volkswagen pleaded guilty to all charges and was fined
CA$196.5 million.^[221]
China[edit]
In October 2015, China's General Administration of Quality Supervision,
Inspection and Quarantine announced the recall of 1,946 imported Tiguan
SUVs and four imported Passat B6 sedans, in order to fix the emissions
software problems.^[222]^[223]
European Union[edit]
In September 2015, Government regulatory agencies and investigators
initiated proceedings in France, Italy, Germany, Switzerland, Spain,
the Netherlands, the Czech Republic and Romania. Several
countries^[vague] called for a Europe-wide
investigation.^[224]^[225]^[226] In October 2015 Werner Hoyer,
President of the European Investment Bank (EIB) said the bank was
considering recalling Volkswagen loans, and announced their own
investigation into the matter.^[227] On 27 October 2015, the European
Parliament voted a resolution urging the bloc to establish a federal
authority to oversee car-emissions, following reports in the press that
top EU environmental officials had warned, since early 2013, that
manufacturers are tweaking vehicles to perform better in the lab than
on the road. The resolution urged for tougher emissions tests to be
fully implemented in 2017, instead of being phased in between 2017 and
2019, as had been originally planned.^[228] However, the European
Commission proceeded with passing legislation that allowed the car
industry an extra year before having to comply with the newer
regulation. Also, it was revealed^[by whom?] that the new "realistic"
EU driving emissions test will continue to allow cars to emit more than
twice the legal limit of nitrogen oxides (
NO[x]) from 2019 and up to 50 percent more from 2021.^[229] The
legislation, opposed only by the Netherlands, is considered^[by whom?]
a great victory for the car industry, and has drawn stern critique from
other MEPs. Dutch MEP Bas Eickhout referred to the new test as "a
sham",^[229] while liberal democrat MEP Catherine Bearder described the
legislation as "a disgraceful stitch-up by national governments, who
are once again putting the interests of carmakers ahead of public
health".^[229] In December 2015, the EU Parliament voted to establish a
special committee to investigate whether regulators and executive
officials, including the European Commission, failed to oversee the car
industry and its pollution testing regimes.^[230]
In June 2016, documents leaked to the press indicated that in 2010,
European Commission officials had been warned by their in-house science
team that at least one car manufacturer was possibly using a
NO[x]-related defeat device in order to bypass emission
regulation.^[231] Kathleen Van Brempt, the chair of the EU inquiry into
the scandal, found the documents "shocking" and suggested that they
raised serious concerns with regard to the future of commission
officials: "These documents show that there has been an astonishing
collective blindness to the defeat device issue in the European
commission, as well as in other EU institutions".^[231]
In September 2020, European union laws changed and the European
commission has the right to check car conformity to emission standards
and to recall vehicles when needed. Fines can be up to EUR30,000 per
car.^[232]
France[edit]
Renault and Peugeot's headquarters were raided by fraud investigators
in January and April 2016, respectively. As of January 2016, Renault
recalled 15,000 cars for emission testing and fixing.^[233]^[234]^[235]
French authorities opened an inquiry in March 2016^[236] into
Volkswagen over the rigging of emission tests, with prosecutors
investigating suspicions of "aggravated deception".^[167]
Germany[edit]
In September 2015 former Volkswagen chief executive Martin Winterkorn
resigned over the scandal, saying he had no knowledge of the
manipulation of emissions results. One week later German prosecutors
launched an investigation against him.^[237] On 1 October a German
prosecutor clarified, it was looking into allegations of fraud from
unidentified individuals, but that Winterkorn was not under formal
investigation.^[238] On 8 October 2015 police raided Volkswagen
headquarters.^[239] As of 16 October 2015, twenty investigators worked
on the case, targeting "more than two, but a lot fewer than 10"
Volkswagen staff.^[240] As of November 2015 the Kraftfahrt-Bundesamt
KBA tested 50 cars from different manufacturers, both in laboratory and
on-road with PEMS.^[241] In May 2016, German transport minister
Alexander Dobrindt said that Volkswagen, Audi, Mercedes-Benz, Opel and
Porsche would all adjust settings that increased emission levels such
as nitrogen dioxide in some diesel cars.^[242] On 16 March 2017, German
authorities raided the headquarters of Audi in Bavaria and Volkswagen
in Wolfsburg.^[243]
On 15 April 2019 Winterkorn and four other executives were charged by
prosecutors in Braunschweig, Germany.^[19] In August 2019, a district
court ruled that updated software didn't properly address the
emissions, citing a tested Tiguan turbodiesel engine that only reduced
emissions in the ambient temperature range of 10-32 DEGC
(50-90 DEGF).^[244]
Audi's then CEO Rupert Stadler was taken into German custody in June
2018 until being released in October 2018, when he was also removed
from being CEO.^[245] In July 2019, Stadler was charged with fraud in
Munich due to the scandal.^[246]
Hong Kong[edit]
The Hong Kong Environmental Protection Department banned the Volkswagen
Caddy on 16 October 2015.^[247] As of 16 October 2015 the department
had also tested the Amarok and Transporter commercial diesel vehicles
but found them to be free of the defeat device.^[248]
India[edit]
As of 25 September 2015^[update], the Indian government directed the
Automotive Research Association of India (ARAI) to investigate whether
Volkswagen's vehicles had circumvented Indian laws and regulations on
vehicle emission testing.^[249]^[250] On 22 September 2015 the Indian
Foundation of Transport, Research and Training (IFTRT) demanded a probe
into Volkswagen's Confirmation of Production process for vehicles sold
in India.^[251] In October the Government of India later extended its
deadline for the test results to the end of October 2015.^[252] On 11
January 2017, ARAI's investigation into defeat devices was published
and revealed that Volkswagen India had installed a derivation of the
software used in the U.S. to defeat emission testing procedures in all
of the Volkswagen group's product range in India with EA 189 engine
series. This included 1.2-L, 1.5-L, 1.6-L and 2.0-L diesel engine
variants across three different brands - Audi, Skoda and Volkswagen.
The report called the defeat device "not a product failure but a clear
case of cheating".^[253]
Italy[edit]
On 6 October 2015 Italy's regulator of competition announced plans to
investigate whether Volkswagen engaged in "improper commercial
practices" when promoting its affected diesel vehicles.^[254] On 15
October 2015, Italian State Police raided Volkswagen offices in Verona,
and Volkswagen's Lamborghini offices in Bologna, placing six executives
under investigation.^[255]
Japan[edit]
In October 2015, Japan's Ministry of the Environment held an expert
committee meeting to discuss this issue. There were 36 targeted cars
which had been privately imported, although they were not sold through
authorized resellers in Japan.^[256]
Netherlands[edit]
In December 2016 the Dutch consumers authority ACM decided to
investigate whether Dutch laws were broken and consumers misled, a
report was due by June 2017. 5,000 Dutch Volkswagen owners have signed
up for a class action lawsuit.^[when?]^[257] Netherlands has spent
billions of euros on subsidies in energy-efficient cars in the recent
years.^[vague] Jesse Klaver from the political party GroenLinks
responded^[when?] that the Netherlands must claim back money from the
car manufacturers if it emerges that they have committed fraud in the
Netherlands.^[258]
Norway[edit]
Norway's prosecutors opened a criminal investigation into possible
economic crimes committed by VW.^[259]
In May 2016, Norway's sovereign wealth fund, the world's largest ($850
bn) and also one of the company's biggest investors, announced legal
action against Volkswagen, to be filed in Germany as part of a
class-action lawsuit being prepared there.^[260]
Romania[edit]
On 1 October 2015 the Romanian Automotive Register (RAR) stopped
issuing registration documents for Volkswagen vehicles equipped with
Euro 5 diesel engines.^[261]
South Africa[edit]
On 28 September 2015, the departments of Environmental Affairs and
Transport and the National Regulator for Compulsory Specifications said
they still needed to determine whether local cars had been affected by
the rigging of US vehicle emissions tests.^[262]
South Korea[edit]
As of 19 January 2016 South Korea, the world's eighth-largest
diesel-car market, planned a criminal case against Volkswagen
executives.^[263] On 22 September 2015 South Korean authorities
announced pollution control investigations into cars manufactured by
Volkswagen and other European car-manufacturers. Park Pan-kyu, a deputy
director at South Korea's environment ministry said: "If South Korean
authorities find problems in the Volkswagen diesel cars, the probe
could be expanded to all German diesel cars".^[264]
In November 2015, after defeat devices had been found in some
Volkswagen models, the Environment Minister issued a fine of
W=14,100,000,000 and ordered the cars to be recalled.^[265] As of 20
January 2016, the country's environmental agency had filed criminal
charges against VW, seeking up to $48 billion in penalties. Johannes
Thammer, managing director of Audi Volkswagen Korea, was placed under
investigation and faced up to five years in prison and a fine of up to
W=30,000,000.^[266] Volkswagen's recall plan for South Korea, submitted
on 6 January 2016, was rejected by the authorities, as it failed to
meet a number of key legal requirements.^[263] Authorities are also
reported to have rejected a revised plan on 23 March 2016 for the same
reasons.^[267] In May 2016, following a wider investigation of 20
diesel-powered cars, South Korean authorities accused Nissan of using a
defeat device for manipulating emissions data for the British-built
Nissan Qashqai, allegations which the Japanese carmaker denied.^[268]
In August 2019, the government announced a ban on 8 VW Group diesel
models cars for cheating emissions regulations.^[269]^[270]
Spain[edit]
As of 28 October 2015, a Spanish court had opened a criminal probe
against Volkswagen AG, to establish whether the company's actions broke
any local laws.^[271]
Sweden[edit]
As of 29 September 2015, Sweden's chief prosecutor was considering
starting a preliminary investigation into Volkswagen's emissions
violations.^[272]
Switzerland[edit]
On 26 September 2015 Switzerland banned sales of Volkswagen diesel
cars, marking the most severe step taken so far by a government in
reaction to the emissions crisis.^[273]
United Kingdom[edit]
The Department for Transport announced on 24 September 2015 that it
would begin re-testing cars from a variety of manufacturers to ensure
the use of "defeat devices" was not industry wide.^[274] The UK
Parliamentary Transport Select Committee opened an enquiry into
Volkswagen Emissions Violations with evidence sessions on 12 October
2015 and 25 January 2016. The Select Committee published a letter from
Paul Willis, managing director of Volkswagen Group UK Ltd of 21
December 2015 stating: "In very simple terms, the software did amend
the
NO[x] characteristics in testing. The vehicles did meet EU5 standards,
so it clearly contributed to meeting the EU5 standards in
testing".^[275]
A report on "real world" tests commissioned by the Government published
in April 2016 showed emissions from 37 diesel engines up to 14 times
higher than had been claimed, with every vehicle exceeding the legal
limit of nitrogen oxide emissions.^[276] Only Volkswagen group vehicles
were found to have test cycle detection software.
In January 2017, an action group announced it had 25,000 vehicle owners
who were seeking compensation of -L-3,000-4,000 per vehicle.^[citation
needed]
In May 2022, VW UK settled UK class action claims from around 90,000
drivers, totalling -L-193m, without admitting liability.^[277] Due to
time limitations, Dieselgate victims not part of this group litigation
will unlikely be able to now make a claim. ^[278]
United States[edit]
Recalled Volkswagens stored at Gary/Chicago International Airport
VW suspended sales of TDI-equipped cars in the US on 20 September 2015.
On 21 September 2015 the EPA announced that should the allegations be
proven, Volkswagen Group could face fines of up to US$37,500 per
vehicle (about US$18 billion in total).^[279] In addition to possible
civil fines, the United States Department of Justice Environment and
Natural Resources Division were doing a criminal probe of Volkswagen
AG's conduct.^[280]^[281] 22 September 2015 The United States House
Energy Subcommittee on Oversight and Investigations announced that it
would hold a hearing into the Volkswagen scandal while New York
Attorney General Eric Schneiderman said that his investigation was
already underway.^[282] As of 29 October 2015, over 25 other states'
attorneys general, and the Federal Bureau of Investigation in Detroit,
were involved in similar investigations.^[259] On 12 November 2015, the
FBI confirmed to engineering magazine Ingenio/ren that it had an
ongoing investigation,^[283] after previous unconfirmed reports.^[41]
As of 6 October 2015, the EPA decided to broaden its investigations
onto 28 diesel-powered models made by BMW, Chrysler, General Motors,
Land Rover and Mercedes-Benz. The agency would initially focus on one
used vehicle of each model, and widen the probe if it encountered
suspicious data.^[284] The EPA has described^[when?] the hidden
Volkswagen pollution as "knowing endangerment".^[285] In May 2016, the
owners of Mercedes-Benz confirmed that the US Justice Department asked
Daimler AG to run an internal investigation into its diesel emissions
testing, as well.^[242]
On 4 January 2016, the Justice Department, on behalf of the EPA,
brought suit against Volkswagen in the United States District Court for
the Eastern District of Michigan in Detroit. The complaint, seeking up
to $46 billion in penalties for Clean Air Act violations,^[286] alleged
that Volkswagen equipped certain 2.0 and 3.0-litre diesel-engine
vehicles with emissions cheating software, causing
NO[x] pollution to exceed EPA's standards during normal driving
conditions. It further claimed that Volkswagen entities provided
misleading information and that material omissions impeded and
obstructed "efforts to learn the truth about the (excess)
emissions".^[286] while "so far recall discussions with the company
have not produced an acceptable way forward".^[130]^[287] On 9 January
2016, US officials criticized Volkswagen for citing German law in order
to withhold documents from a group of states investigating the
company's actions. Schneiderman also complained over Volkswagen's
slowness in producing documents from its US files, claiming the company
"has sought to delay responses until it completes its 'independent
investigation' several months from now".^[286]
On 12 January 2016, US regulators rejected Volkswagen's recall plans
for its affected 2.0-litre diesel engines, submitted to CARB in
December 2015, claiming that these "do not adequately address overall
impacts on vehicle performance, emissions and safety".^[288]^[289]
Volkswagen confirmed that its discussions with CARB will continue, and
said that the company is working on bringing "a package together which
satisfies our customers first and foremost and then also the
regulators".^[288] The states of Arizona, West Virginia, New Mexico,
and Texas, as well as Harris County, Texas, all filed separate lawsuits
seeking restitution from VW. The company also faces investigations by
48 United States state attorneys (as of
February 2016^[update]).^[290]^[291]^[292]
On 29 March 2016, Volkswagen was additionally sued by the United States
Federal Trade Commission for false advertising due to fraudulent claims
made by the company in its promotion of the affected models, which
touted the "environmental and economic advantages" of diesel engines
and contained claims of low emissions output. The suit was consolidated
into existing litigation over the matter in San Francisco, which would
allow the FTC to participate in global settlements over the
matter.^[293]
The Ninth U.S. Circuit Court of Appeals ruled on 1 June 2020 that
Volkswagen was liable for further legal damage lawsuits brought by
state and local governments in the emissions fraud. The unanimous
ruling by the court paved the way for two counties in Florida and Utah
to proceed with litigation against Volkswagen, as well as potential
further cases brought by jurisdictions in the US. By June 2020, VW had
already expended $33.3 billion in settlements and other costs including
buybacks of the excessively polluting diesel vehicles. In a statement,
VW said it would ask the circuit court to review the ruling, and that
the company if necessary would take the case to the U.S. Supreme
Court.^[294]
Charges against Volkswagen engineering/management[edit]
On 9 September 2016, James Robert Liang, a Volkswagen engineer working
at Volkswagen's testing facility in Oxnard, California, admitted as
part of a plea deal with the US Department of Justice that the defeat
device had been purposely installed in US vehicles with the knowledge
of his engineering team: "Liang admitted that beginning in about 2006,
he and his co-conspirators started to design a new "EA 189" diesel
engine for sale in the United States. ... When he and his
co-conspirators realized that they could not design a diesel engine
that would meet the stricter US emissions standards, they designed and
implemented [the defeat device] software".^[54]
On 7 January 2017, former top emissions compliance manager for
Volkswagen in the US Oliver Schmidt was arrested by the FBI on a charge
of conspiracy to defraud the United States.^[295] On 11 January 2017
Volkswagen pleaded guilty to weaving a vast conspiracy to defraud the
US government and obstructing a federal investigation and agreed to pay
a US$2.8 billion criminal fine and US$1.5 billion in civil penalties.
In addition, six executives have been criminally charged.^[296]
On 3 May 2018, former Volkswagen CEO Martin Winterkorn was indicted on
fraud and conspiracy charges in the emissions scandal case. He has
repeatedly denied any knowledge of the rigged emissions tests.^[15]
Settlement[edit]
On 25 October 2016, a final settlement was approved by a judge. About
475,000 Volkswagen owners in the US were given the choice between a
buyback or a free fix and compensation, if a repair becomes available.
Volkswagen will begin administering the settlement immediately, having
already devoted several hundred employees to handling the process.
Buybacks range in value from $12,475 to $44,176, including restitution
payments, and vary based on mileage. People who opt for a fix approved
by the Environmental Protection Agency will receive payouts ranging
from $5,100 to $9,852, depending on the book value of their car.
Of the buyback, 138,000 had been completed by 18 February 2017 with
150,000 more to be returned. 52,000 chose to keep their cars. 67,000
diesel cars from model year 2015 were cleared for repairs, but left
uncertainty about the future of 325,000 "Generation One" diesel VWs
from the 2009-2014 model years, which use the "lean
NO[x] trap" and would be harder to repair.^[297]^[298]
In March 2018, Reuters reported that 294,000 cars from the buyback
program have been stored at 37 regional US staging sites;^[299] some of
the first reported sites included: Colorado Springs, Colorado;^[300]
Pontiac, Michigan;^[301] Baltimore, Maryland;^[302] San Bernardino,
California;^[303] and Gary, Indiana.^[304]
Volkswagen will also pay $2.7 billion for environmental mitigation and
another $2 billion for clean-emissions infrastructure.^[305] Toward
that end, Volkswagen formed a U.S. subsidiary called Electrify America,
LLC., based in Reston, Virginia, that will manage the $2 billion
brand-neutral zero-emission vehicle infrastructure programs and
marketing campaigns for the next ten years. The group will get four
installments of $500 million, at
2+1/2-year intervals, subject to California Air Resources Board and
U.S. EPA approval.^[306] Volkswagen plans to install hundreds of
chargers with 50, 150 and even some ultra-fast 320 kW charge rate,
beginning in California in 2017.^[307]^[308] Competing charge networks
(and automakers) saw the effort as controversial.^[309]^[310] In August
2018, Electrify America launched the first national media advertising
campaign to promote electric vehicles; it featured the Chevy Bolt, with
other EVs in cameo roles.^[311]
Securities and Exchange Commission lawsuit[edit]
On 14 March 2019, the U.S. Securities and Exchange Commission filed a
complaint against Volkswagen and its former CEO Martin Winterkorn
alleging that they defrauded investors by selling corporate bonds and
asset-backed securities while knowingly making false and misleading
statements to government regulators, underwriters, and consumers as to
the quality of their automobiles.^[312]
Private actions[edit]
By 27 September 2015 at least 34 class-action lawsuits had been filed
in the United States^[313]^[314]^[315] and Canada^[316]^[317] on behalf
of Volkswagen and Audi owners, accusing Volkswagen of breach of
contract, fraudulent concealment, false advertising, and violations of
federal and state laws, and positing the "diminished value" of diesels
that will be fixed to conform with pollution regulations, due to
possible reductions in horsepower and fuel efficiency.^[318] According
to Reuters, one reason class action lawyers were able to mobilize so
fast is that the company's marketing to upscale professionals,
including jurists, had backfired.^[319]
As of 30 September 2015^[update], at least one investor lawsuit seeking
class action status for holders of Volkswagen American Depositary
Receipts had been filed in the United States seeking compensation for
the drop in stock value due to the emissions scandal.^[320]
On 7 October 2015, the Los Angeles Times reported that the number of
class-action lawsuits filed had grown to more than 230.^[321]
On 19 November 2015, ABC News Australia reported that more than 90,000
VW, Audi and Skoda diesel vehicle owners had filed a class action
lawsuit against Volkswagen in the country's Federal Court.^[177]
On 8 December 2015, the United States Judicial Panel on Multidistrict
Litigation issued an order consolidating over 500 class actions against
Volkswagen into a single multidistrict litigation, captioned In re:
Volkswagen 'Clean Diesel' Marketing, Sales Practices, and Products
Liability Litigation, MDL No. 2672, and transferred the entire MDL to
Judge Charles R. Breyer of the federal district court for the Northern
District of California.^[322]^[298]
On 21 January 2016, Judge Breyer held a hearing on the requests by over
150 plaintiff's attorneys for some kind of leadership role in the
gigantic Volkswagen MDL, of which over 50 sought to serve as lead
counsel or to chair the plaintiffs' steering committee.^[323] More than
100 of those attorneys tried to squeeze into his San Francisco
courtroom to argue their requests in person, and some of them had to
stand in the aisles or in the outside hallway.^[323] That afternoon,
Judge Breyer issued an order naming 22 attorneys to a plaintiffs'
steering committee, and of those, selected Elizabeth Cabraser of Lieff
Cabraser as chair of the committee.^[323] On the other side, Volkswagen
hired Robert Giuffra of Sullivan & Cromwell as its lead defense counsel
in the MDL.^[324]
On 14 March 2016, Volkswagen AG was sued in Germany for allegedly
failing to inform financial markets in a timely manner about defeat
devices used in diesel engines. The suit on behalf of 278 institutional
investors seeks EUR3.3 billion (US$3.7 billion at March 2016 exchange
rate) in compensation.^[325] BlackRock Inc., the world's largest asset
manager, joined other institutional investors in the lawsuit in
September 2016.^[326]
In November 2015, Moody's Investors Service downgraded Volkswagen's
bond credit rating from A2 to A3.^[327] Fitch Ratings downgraded
Volkswagen's Long-term Issuer Default Rating by two notches to BBB+,
with a negative outlook.^[174]^[328]
In May 2016, The Children's Investment Fund Management, run by Chris
Hohn and retaining a 2 percent stake in Volkswagen preference stock,
launched a campaign aiming to overhaul the company's executive pay
system, arguing that "for years management has been richly rewarded
with massive compensation despite presiding over a productivity and
profit collapse", thereby leading to an "aggressive management
behavior" and contributing to the diesel emission scandal.^[329] Later
the same month, German investor group DSW called for an independent
audit of Volkswagen's emissions-cheating practices, arguing that the
company's internal investigation might not necessarily make everything
transparent to smaller shareholders.^[330]
On 28 June 2016, Volkswagen agreed to pay $15.3 billion^[331] to settle
the various public and private civil actions in the United States, the
largest settlement ever of an automobile-related consumer class action
in United States history.^[332] On 25 October 2016, a U.S. federal
judge approved the settlement.^[333] Up to $10 billion will be paid to
475,000 Volkswagen or Audi owners whose cars are equipped with
2.0-litre diesel engines. Owners can also opt to have their car
repaired free of charge or can sell it back to the company, who will
pay back its estimated value from before the scandal began. Leases can
also be terminated without incurring penalty charges. Independent of
which options are selected, owners will still receive compensation
ranging from $5,000 to $10,000 per affected car. Additionally, should
they choose to decline the offer, they are free to pursue independent
legal action against the firm.^[334] The settlement also includes $2.7
billion for environmental mitigation, $2 billion to promote
zero-emissions vehicles and $603 million for claims by 44 states,
Washington, D.C., and Puerto Rico.^[335] Volkswagen agreed not to
resell or export any vehicles it repurchases unless an approved
emission repair has been completed.^[331] As of 28 June 2016^[update],
no practical engineering solutions that would bring the vehicles into
compliance with emission standards had been publicly identified.^[331]
The consumer settlement will resolve all claims by participating
consumers against Volkswagen and all its associates, except for any
potential claims against Robert Bosch GmbH.^[331] Bosch supplied two
exhaust treatment components and engine control software.^[155] In the
case of 3.0-litre V6 TDI engines, Volkswagen suggested it can provide
an uncomplicated fix that will bring the vehicles into compliance
without adversely affecting performance, a move that the company hopes
will avoid an expensive buyback of these cars.^[336]
European Investment Bank's possible involvement[edit]
In January 2016, documents obtained by CEE Bankwatch Network provided
more details for a European Investment Bank statement that its loans to
Volkswagen may have been connected to the car makers use of cheating
devices to rig emission tests. The 'Antrieb RDI' loan was supposedly
for creating cleaner drive trains.
However, during the bank's annual press conference on 14 January 2016,
the bank president, Werner Hoyer, admitted that the EUR400,000,000 loan
might have been used in the creation of an emissions defeat
device.^[337] Many redacted documents obtained by Bankwatch, along with
the EIB not disclosing the details of the loan, hint to the bank
possibly already knowing that there were some discrepancies with the
'Antrieb RDI' loan.^[338]
In 2017, the European Anti-Fraud Office (OLAF) found that Volkswagen
had misled the bank about the car company's use of emissions cheating
software, in a scandal that has become known as Dieselgate.^[337]
Also in 2017, Hoyer said the bank did not find "any indication" that
its loans had been misused. However, six months later news website
Politico reported that Olaf had concluded that Volkswagen acquired the
EIB loan through "fraud" and "deception".^[337]
Models affected[edit]
Vehicle line-up at 2012 Volkswagen Great Canadian Clean Diesel Tour
By 22 September 2015, Volkswagen had admitted that 11 million vehicles
sold worldwide are affected in addition to the 480,000 vehicles with
2.0 L TDI engines sold in the US.^[339] According to Volkswagen,
vehicles sold in other countries with the 1.6 L and 2.0 L 4-cylinder
TDI engine known as Type EA189 are also affected. This software is also
said to affect EA188 and the 2015 EA288 generation of the
four-cylinder.^[340] Worldwide, around 1.2 million Skodas^[341] and 2.1
million Audis may contain the software, including TTs and Qs.^[342] VW
states that Euro6 model in Germany are not affected, while 2015 US
models with the same EA288 engines are affected. This suggests that
normal-operation measurements that place the EA288
NO[x] emissions between the two standards' limits were readily
available at Volkswagen headquarters in Germany. According to Mueller,
the 1.2 and 2.0-litre models may be updated by software, whereas the
around 3 million 1.6-litre require various hardware solutions, and some
cars may even be replaced. The cars are so diverse that many different
solutions are required.^[343]
Over one quarter of Volkswagen's sales in the US are diesel-powered
vehicles. The corporation has chosen a market strategy that emphasizes
clean diesel over electric cars or hybrid electric vehicles.^[344]
The vehicles affected by the recall in the US include the following
model years:^[345]^[346]^[347]^[348]^[349]
* 2009-2015 Audi A3 2.0 L TDI
* 2009-2015 Volkswagen Beetle 2.0 L TDI
* 2009-2015 Volkswagen Beetle Convertible 2.0 L TDI
* 2009-2015 Volkswagen Golf 2.0 L TDI
* 2015 Volkswagen Golf Sportwagen 2.0 L TDI
* 2009-2015 Volkswagen Jetta 2.0 L TDI
* 2009-2014 Volkswagen Jetta Sportwagen 2.0 L TDI
* 2012-2015 Volkswagen Passat 2.0 L TDI
The EPA revealed on 2 November 2015 that Volkswagen had shipped
additional diesel models with defeat devices, including the 2014 VW
Touareg and the 2015 Porsche Cayenne. Model year 2016 Audi Quattro
diesels were also found affected, including several 2016 Audi Quattro
models (the 2016 Audi Quattro A6, A7, A8, A8L, and Q5).^[350] Cynthis
Giles, the EPA Assistant Administrator for Office of Enforcement and
Compliance Assurance, called out the company for further refusing to
take responsibility for its failure to comply with the law. Under US
federal Clean Air Act, Volkswagen could be liable for up to $375
million in fines.^[351]
Resale value[edit]
As of 26 October 2015^[update], the resale value of affected model cars
in the US was down from 5 to nearly 16 percent depending on model as
compiled by Black Book and Kelley Blue Book based on used car auction
prices, the volume of which was also down.^[352]
On 15 March 2016, Volkswagen Financial Services took a writedown of
EUR353,000,000 to cover a potential decline in the residual value of
the fleet of its leased cars.^[353]
Effects on Volkswagen corporate[edit]
Stock value[edit]
Price of Volkswagen AG (VOW.DE) stock, Adjusted Close. Width of line
shows Volume. Text in green is the percent difference from previous
day's close. In red is the percent difference from the close on 17
September 2015.^[354]
CAPTION: Price of Volkswagen AG (VOW.DE) stock 17 September-5 October
2015^[354]
Date Adj Close Volume % diff from 17 Sep % diff from previous day
17 September 167 60,600 0.00%
18 September 161 112,700 -3.61% -3.61%
21 September 134 1,496,700 -20.13% -17.14%
22 September 111 3,058,700 -33.57% -16.83%
23 September 119 2,381,300 -28.97% 6.92%
24 September 119 1,542,800 -28.97% 0.00%
25 September 116 880,700 -30.97% -2.82%
28 September 107 865,400 -36.02% -7.31%
29 September 103 513,700 -38.29% -3.55%
30 September 105 416,500 -37.31% 1.60%
1 October 105 477,700 -38.59% 0.10%
2 October 101 588,700 -39.58% -3.71%
5 October 103 754,400 -38.59% 1.63%
On 21 September 2015, the first day of trading after the EPA's Notice
of Violation to Volkswagen became public, share prices of Volkswagen AG
fell 20 percent on the Frankfurt Stock Exchange.^[355] On 22 September,
the stock fell another 12 percent. On 23 September, the stock quickly
fell 10.5 percent, dropping below EUR100 to a record 4-year low before
regaining some lost ground.^[356]^[357] Share prices of other German
automakers were also affected, with BMW down 4.9 percent and Daimler
down 5.8%.^[358] A year later Volkswagen stock was down by 30
percent.^[359]
Qatar, one of the biggest Volkswagen shareholders with a 17 percent
stake in the company, lost nearly $5 billion as the company stock value
fell.^[360]
Sales[edit]
The US sale of Volkswagens was 23,882 vehicles in November 2015, a 24.7
percent decline from November 2014.^[361]^[362]
In South Korea, sales in November rose 66 percent to 4,517 units from a
year ago due to the Volkswagen's aggressive marketing efforts such as a
discount of up to W=18,000,000 (US$15,600 at December 2015 exchange
rates) for some models.^[363]
In Great Britain, the scandal did not affect sales, which increased in
2016 to an all-point high, placing Volkswagen second in the league of
best-selling cars.^[364]
VW sales across Europe returned to growth in April 2016 for the first
time since the scandal broke, with a group market share of 25.2
percent, compared to its previous level of 26.1 percent.^[365]
Transgressions by other manufacturers[edit]
Main article: Diesel emissions scandal
The Volkswagen scandal more generally raised awareness over the high
levels of pollution being emitted by diesel vehicles built by a wide
range of carmakers, including Volvo, Renault, Mercedes, Jeep, Hyundai,
Citroen, BMW, Mazda, Fiat, Ford and Peugeot.^[43]^[44] Independent
tests carried out by ADAC proved that, under normal driving conditions,
diesel vehicles including the Volvo S60, Renault's Espace Energy and
the Jeep Renegade, exceeded legal European emission limits for nitrogen
oxide (
NO[x]) by more than 10 times.^[44] Researchers have criticized the
inadequacy of current regulations and called for the use of a
UN-sanctioned test called Worldwide harmonized Light vehicles Test
Procedures that better reflects real-life driving conditions, as well
as on-road emissions testing via PEMS. The two types of new test
started to come into force in 2017, with critics saying that car firms
have lobbied fiercely to delay their implementation, due to the high
cost of meeting stricter environmental controls.^[43]
The Volkswagen scandal has increased scrutiny on combustion engines in
general, and Volkswagen and several other car makes have been shown to
pollute more than allowed.^[42]^[43]^[44] A French government report in
2016 investigated 86 different cars, and about 1/5th of those were
found to comply with emission laws. Most did not. One car was measured
to emit 17 times more than allowed.^[366] An overview of tests showed
that cars turned off the exhaust improvement device in many ordinary
conditions,^[367] with 5 out 38 cars complying with regulations in an
English test.^[368] A German test showed 10 out of 53 cars compliant
when exposed to temperatures below 10 degrees Celsius.^[369] A French
test showed 4 out of 52 cars compliant when tested outside (not in a
laboratory).^[370] A 2016 test showed Volkswagen diesel cars to emit at
about twice the Euro6 limit, and several other manufacturers emitting
more, up to 14 times higher.^[371]
As of March 2017, 38 out of 40 diesel cars of all brands tested by ADAC
failed a
NO[x]-test based on government standards.^[372]
Industry consequences[edit]
Renault believes that diesel cars would become significantly more
expensive when re-engineered to comply with new emissions regulations
as a result of the Volkswagen disclosures, to the point that diesel
cars may not be competitive.^[373] Industry-wide, small diesel engines
are being replaced by bigger ones,^[374]^[375] and electric car sales
have risen.^[359]
Suzuki had won the case to terminate its partnership with Volkswagen at
the International Court of Arbitration of the International Chamber of
Commerce and dissolved the capital tie-up until September 2015,^[376]
and was not involved in this scandal.
On 16 June 2016, Volkswagen announced plans to make major investments
into the production of electric vehicles; Matthias Mueller predicted
that Volkswagen would introduce 30 all-electric models over the next 10
years, and that electric vehicles would account for around a quarter of
its annual sales by 2025. Volkswagen plans to fund the initiative by
streamlining its operations and engaging in cost-cutting. Mueller
stated that the changes would "require us - following the serious
setback as a result of the diesel issue - to learn from mistakes made,
rectify shortcomings and establish a corporate culture that is open,
value-driven and rooted in integrity".^[377] Volkswagen plans a battery
factory near Salzgitter to compensate for the reduced numbers of piston
engines.^[378]^[379]
In November 2016, Volkswagen and its labour unions agreed to reduce the
workforce by 30,000 people until 2021 as a result of the costs from the
violations. However, 9,000 new jobs would come by producing more
electric cars.^[380] Volkswagen CEO Herbert Diess stated to the German
financial publication Handelsblatt that the company planned to stop
marketing diesel models in the U.S., citing "the legal
framework".^[381]
Secondary market consequences[edit]
A study made by the researchers Prof. Itai Ater and Nir S. Yoseph from
Tel Aviv University explored the effect of the scandal on the secondary
market in Israel. According to this study, which was publish at The
Journal of Industrial Economics the Volkswagen emissions scandal had a
statistically significant negative effect on the number of transactions
in the secondary market involving the affected models (nearly -18
percent) and on their resale price (nearly -6 percent). The study also
find that the reduction in the number of transactions was driven mostly
by private sellers and that non-private sellers barely shied away from
the market. These findings suggest that the supply of used cars among
private sellers is much more elastic relative to the supply of used
cars among non-private sellers.^[382] The authors of the study argue
that lower willingness-to-pay and adverse selection following
Dieselgate could also explain those results. ^[383]
Other manufacturers[edit]
After news broke out of Volkswagen cheating on diesel emissions,
multiple other vehicle manufacturers got caught cheating on emissions
in a similar manner. This included FCA^[384] (now a part of
Stellantis), Opel^[385] (Under GM), Hino^[386] (subsidiary of Toyota),
Mercedes-Benz,^[387] and BMW.^[388] Other manufacturers such as
Nissan,^[389] Renault,^[390] Suzuki,^[391] Peugeot,^[392]
Citoren,^[393] Mitsubishi,^[394] Hyundai, and Kia^[395] have been
accused for cheating on emission tests.
Monkeygate[edit]
In January 2018, it was revealed that Volkswagen had experimented on
monkeys in May 2015 to prove that diesel exhaust was not harmful to
primates. The disclosure of the tests was named Monkeygate.^[396]^[397]
However, the test car was a Volkswagen Beetle fitted with the defeat
device that produced far less emissions in the experiment than it would
on the highway.^[398]^[399] Volkswagen's top lobbyist, Thomas Steg, was
suspended on 23 January 2018.^[400]
Reactions[edit]
Political figures[edit]
German Chancellor Angela Merkel stated she hoped that all facts in the
matter would be made known promptly, urging "complete transparency".
She additionally noted that Germany's Transport Minister, Alexander
Dobrindt, was in ongoing communication with Volkswagen.^[401]
Michel Sapin, the French Finance Minister, called for an investigation
of diesel-powered cars that would encompass the entire continent of
Europe.^[402]
Catherine Bearder, MEP for South East England, commented on 27 October
2015 in the European Parliament that "we now have the political
momentum for a radical overhaul that will ensure carmakers cannot dodge
the rules", defending an EU resolution meant to specifically "cut
deadly pollution from diesel vehicles".^[228] However, when the
European Commission proceeded with passing legislation that allowed the
car industry more time to comply with the newer regulation, while also
permitting cars, even under the more "realistic" tests, to emit more
than twice the legal limit of nitrogen oxides (
NO[x]) from 2019 and up to 50 percent more from 2021, Bearder denounced
the legislation as "a disgraceful stitch-up by national governments,
who are once again putting the interests of carmakers ahead of public
health".^[229]
London Assembly member Stephen Knight suggested on 1 November 2015 that
diesel vehicles should either be banned in the future, or face
stringent tests before being allowed to enter London's low-emissions
zone. The city's deputy mayor for the environment, Matthew Pencharz,
responded that such measures could lead to serious economic
problems.^[403]
Automotive industry and other commentators[edit]
Major car manufacturers, including Toyota, GM, PSA Peugeot Citroen,
Renault, Mazda, Daimler (Mercedes Benz), and Honda, issued press
statements reaffirming their vehicles' compliance with all regulations
and legislation for the markets in which they operate; The Society of
Motor Manufacturers and Traders described the issue as affecting "just
one company", with no evidence to suggest that the whole industry might
be affected.^[404]
Renault-Nissan CEO Carlos Ghosn said it would be difficult for an
automaker to conceal internally an effort to falsify vehicle emissions
data, such as has happened at Volkswagen AG: "I don't think you can do
something like this hiding in the bushes."^[405]
Jim Holder, the editorial director of Haymarket Automotive, which
publishes WhatCar and AutoCar, opined that there had never been a
scandal in the automotive industry of this size.^[406]
A commentary in Spiegel Online argued that the Volkswagen scandal will
affect the entire German industry, and that German companies operating
abroad will face a decrease in competitiveness.^[407]
Alan Brown, chairman of the Volkswagen National Dealer Advisory
Council, commented on the scandal's negative impact on US dealers, who
were already struggling with overpriced products and a deteriorating
relationship between the company and the dealer body.^[408] Car and
Driver similarly emphasized Volkswagen's inability to efficiently
operate in the US market, while also suggesting that the company had
grossly underestimated the EPA's power, and inexplicably failed to go
public before the story broke, despite receiving ample warning.^[409]
Tesla Motors CEO Elon Musk was asked about his opinion whether the
scandal will weaken the consumer's view on green technologies; he
responded saying he expects the opposite to happen: "What Volkswagen is
really showing is that we've reached the limit of what's possible with
diesel and petrol. The time has come to move to a new generation of
technology."^[410]
Similarly, analysts at Fitch suggested the Volkswagen diesel emissions
crisis was likely to affect the entire automotive industry, with petrol
cars potentially enjoying a revival in Europe and greater investment
being poured into electric vehicles.^[92] Other commentators argued
that the diesel engine will nevertheless regain its footing in the
market, due to its international indispensability, low CO[2] emissions
and strong presence in the US pickup- and commercial-truck
segments.^[409]
On 29 September 2015, S&P Dow Jones Indices and RobecoSAM stated that
Volkswagen AG's stock will be de-listed from the Dow Jones
Sustainability indexes after close of trading on 5 October 2015. Among
the reasons for the de-listing, the statement issued by RobecoSAM cited
social and ethical reasons, and confirmed that Volkswagen will no
longer be identified as an Industry Group Leader in the "Automobiles &
Components" industry group.^[411]
In early October, Green Car Journal rescinded its Green Car of the Year
awards, for models that "best raise the bar in environmental
performance", that were given to the 2009 Volkswagen Jetta TDI and 2010
Audi A3 TDI models.^[412]
In December 2015, a group of business and environmental leaders,
including Tesla CEO Elon Musk, addressed an open letter to CARB, urging
the agency to absolve Volkswagen of recalling the 85,000 diesel
vehicles affected by the scandal in the US, and argued that Volkswagen
should instead be asked to allocate resources to an accelerated rollout
of zero-emissions vehicles ("cure the air, not the cars"). The letter,
which includes a 5-step legally enforceable plan, argues that this
course of action could result in a "10 for 1 or greater reduction in
pollutant emissions as compared to the pollution associated with the
diesel fleet cheating", while suggesting that the affected vehicles on
the road in California "represent an insignificant portion of total
vehicles emissions in the State" and "do not, individually, present any
emissions-related risk to their owners or occupants".^[413]^[414]
Similar requests were put forward by the American Lung Association, who
petitioned the EPA to determine Volkswagen to promote zero-emissions
vehicles, build sustainable transport infrastructure and retrofit older
diesel models with superior emissions controls.^[415]
Volkswagen got a 2016 Ig Nobel Prize in chemistry from the scientific
humor magazine Annals of Improbable Research for "solving the problem
of excessive automobile pollution emissions by automatically,
electromechanically producing fewer emissions whenever the cars are
being tested".^[416]
Media[edit]
The Volkswagen TDI emissions scandal has received widespread negative
media exposure,^[417]^[418]^[419]^[420]^[421]^[422] with headlines
fronting the websites of multiple news gathering and reporting
organizations.^[60]^[101]^[423]^[424] Reuters said that the crisis at
Volkswagen could be a bigger threat to the German economy than the
consequences of the 2015 Greek sovereign debt default.^[425] Deutsche
Welle, one of Germany's state broadcasters, said that a "lawsuit
tsunami" was headed for Volkswagen and that the scandal had dealt a
blow to the country's psyche and "Made in Germany" brand.^[426] Popular
Mechanics said that the scandal "is much worse than a recall",
highlighting that Volkswagen had engaged in a pattern of "cynical
deceit".^[427]
The Volkswagen emissions cheating scandal has joined the ranks of other
-gate suffix stories, with media coining both Dieselgate and
Emissionsgate to describe it.^[150]^[162]^[208]^[428]^[429]^[430]
Public polling[edit]
Despite the scandal, one poll conducted for Bild suggested that the
majority of Germans (55 percent) still have "great faith" in
Volkswagen, with over three-quarters believing that other carmakers are
equally guilty of manipulation.^[431] Similarly, a poll conducted by
the management consultancy Prophet in October 2015 indicated that
two-thirds of Germans believe the scandal to be exaggerated and
continue to regard Volkswagen as a builder of "excellent cars".^[432] A
survey by Northwestern University's Kellogg School of Management, Brand
Imperatives and Survata said that nearly 50 percent of US consumers had
either a positive or very positive impression of Volkswagen, while 7.5
percent had a "very negative" impression.^[433] Another US survey by
market researcher AutoPacific found that 64 percent of vehicle owners
do not trust Volkswagen and only 25 percent of them have a positive
view of Volkswagen following the scandal.^[434]^[435]
See also[edit]
* Exhaust gas recirculation
* FTP-75
* Goodhart's law - Adage about statistical measures
* NOx adsorber
* Vehicle regulation
Portals:
Cars flag Germany Companies icon Law icon Environment
Notes[edit]
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Further reading[edit]
*
Plungis, Jeff; Hull, Dana (20 September 2015). "VW's Emissions Cheating
Found by Curious Clean-Air Group". The Washington Post. Archived from
the original on 23 September 2015. Retrieved 25 September 2015.
Duffer, Robert (22 September 2015). "Volkswagen diesel scandal: What
you need to know". Chicago Tribune. Retrieved 15 July 2016.
Bryant, Chris; Milne, Richard (4 October 2015). "Volkswagen's
'uniquely awful' governance at fault in emissions scandal". Wolfsburg
and Frankfurt: CNBC. Retrieved 5 October 2015.
Hyde, Justin (3 November 2015). "EPA Finds 10,000 Additional Audi,
Porsche And VW Diesels Faked Emissions". Yahoo! Autos. Retrieved 15
July 2016.
Sura, Marissa. "Double Exposure: WVU researchers uncovered an
emissions cheating scandal that made headlines around the world, but
the real story is how their work will create safer, healthier cities".
Archived from the original on 11 July 2016. Retrieved 15 July 2016.
External links[edit]
External images
image icon EA 189 engine, starboard side
image icon EA 189 engine, port side
* EPA Notice of Violation
* State of California EPA In-Use Compliance Letter Archived 24
September 2015 at the Wayback Machine
* VW diesel official FAQ
* Written Testimony of Michael Horn, CEO of Volkswagen Group of
America Before the U.S. House Committee on Energy and Commerce, 8
October 2015
* Analysis of the emission scandal from a procedural, organizational
and technical level: The exhaust emissions scandal ("Dieselgate"),
talk at 2015 Chaos Communication Congress.
* U.S. v. Volkswagen AG, Complaint, Filed 4 January 2016
* Infographic - simple overview
*
Koberstein, Hans (15 August 2017). The VW emissions scandal - past,
present and future. DW-TV. Retrieved 26 November 2019.
"UK drivers win first round in VW 'dieselgate' case". BBC. UK. 6
April 2020. Retrieved 6 April 2020.
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* Bank of Credit and Commerce International (1990)
* Indian stock market scam (1992)
* Banesto (1993)
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* Towers Financial Corporation (1993)
* Barings Bank (1995)
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* Lysine price-fixing conspiracy (1997)
* Daewoo (1999-2006)
* Long-Term Capital Management (2000)
* CINAR (2000)
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* Volkswagen emissions scandal (2008-ongoing)
* Satyam (2009)
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* Olympus (2011)
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* Toshiba (2015)
* 1Malaysia Development Berhad (2015-ongoing)
* Wells Fargo account fraud scandal (2016-ongoing)
* Facebook-Cambridge Analytica data scandal (2018)
* Moser Baer (2019)
* Wirecard (2020)
* Nikola (2020)
See also
Accounting scandals
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