VW emissions scandal widens

Posted by Allan Whiting

In my September 2015 blog I suggested that Volkswagen may have been premature in saying 'sorry' for the fact that it had sold some half-million diesel-powered cars in the USA that didn’t comply with US Environmental Protection Agency (EPA) laws.

Since then, it has become apparent that VW's emissions violations are much greater than that: at least 11 million illegal vehicles around the world, including Audi, Skoda and Porsche models.

In a well-publicised September 2015 statement, Volkswagen’s then chief executive officer, Martin Winterkorn, said:
"I personally am deeply sorry that we have broken the trust of our customers and the public.
"We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly and completely establish all of the facts of this case."

He resigned not long after making this statement. 'Sorry' is only the beginning for VW.

Since September, not enough has been done by VW and many government agencies around the world have been threatening action. VW has said it will fix all the illegal engines, but as yet there's no clear means by which this can be done.

The way VW has handled this scandal will no doubt serve as a 'how not to do PR' exercise in university courses all around the world.

The USA's Department of Justice has finally lost patience and on December 4, 2016, sued Volkswagen AG in the Federal Court, seeking around $US18 billion in penalties over its acknowleged cheating on emissions tests, the Wall Street Journal reported.

The lawsuit specifically seeks more than $32,000 in penalties per violating vehicle. In this US lawsuit the offence is alleged to have occured in 580,000 sub-two-litre diesel-powered vehicles.

The Environmental Protection Agency's enforcement official Cynthia Giles said that vehicle recall talks haven’t resulted in  an acceptable way forward. Worse, VW seems to have obstructed investigation into likely anomalises in emissions from its three-litre V6 diesel.

“The United States’ efforts to learn the truth about the emission exceedances and other irregularities related to the 3.0L Subject Vehicles, including whether VW had committed the violations of federal law alleged herein, were impeded and obstructed by material omissions and misleading information provided by VW entities including at least Volkswagen AG and Audi AG ,” the lawsuit says.

“Volkswagen will continue to work cooperatively with the EPA on developing remedies to bring the…vehicles into full compliance with regulations as soon as possible,” VW said.

In addition to the EPA-instigated civil court action in the USA there's a possibility of criminal prosecution as well. The US Attorney in Detroit, Barbara McQuade, said this initial action marks only the first stage of the US Government’s efforts.

Volkswagen faces a further widening of the scandal after a European admission that hundreds of thousands of new cars from its 2016 range - including petrol engines - have 'implausible' CO2 ratings and could contain illegal software.

“We will overcome this crisis, and VW will emerge stronger from this situation,” Bernd Osterloh, the VW works chief, told Süddeustche Zeitung newspaper.

VW has taken a €6.7bn provision as a result of the scandal, which wiped billions off the value of the company and caused it to slump to its first quarterly loss in more than a decade.

Some European analysts think the total cost of the problem could total more than €30bn and VW is looking to secure some €20bn (£14bn) in short-term loans to get through the crisis.

In the backgrund the EU Bank is threatening to recall loans previously made to VW to finance emissions technology.

The company's previously spotless reputation for reliability and quality has also been tarnished and global sales are falling.

But despite the huge bill for the recall and declining sales, VW says it is confident it will not have to cut jobs.

“I do believe we can keep the core workforce,” Herbert Diess, the head of the Volkswagern brand, said.

The VW Group, which owns SEAT, Porsche, Audi and Skoda brands, is offering $1000 to each of the almost 500,000 American car owners affected by its emissions scandal. That has enraged European owners, who are organising several class actions against VW.

 

'Oh what a tangled web we weave...'

The VW emissions crisis had its beginnings back in 2005, when development engineer Wolfgang Bernhard left Daimler AG for VW. His engine design for VW was the EA189 and it used BlueTec (AdBlue) technology developed by Daimler and Robert Bosch GmbH. VW management insisted the engine be produced without the need for the patented BlueTec urea injection and Bernhard left VW in 2007

It seems that VW's development engineers were told to make the engine work without urea injection, but they couldn't, so that's where the cheating software came into play. The message from top management was apparently: 'make it work or be fired'.

Making these engines compaliant with US EPA requirements can be done in either of two ways: retrofit an AdBlue system, or cut back on combustion temperature. An AdBlue system retrofit would be ideal, preserving performance and fuel consumption, but is unlikely to be practical. The second route, which is probably the 'fix' that VW is contemplating, will reduce performance and increase fuel consumption.

This diesel fiasco is unlike the Toyota 'sticking accelerator' drama that wasn't premeditated. The Volkswagen situation is the result of management-encouraged law-breaking.


VW Group dealerships around the world are offering trade-in incentives and cash discounts in an effort to move stock, but illegal vehicles cannot be sold until they're rectified.

Violations of this type have happened before, but not on such a scale. In 2001, heavy truck diesel engine makers secured some real-world emissions testing concessions from the US Justice Department and the EPA.

This real-world test revision process started in 1998, when Caterpillar, Cummins, Detroit Diesel, Mack, Navistar-International, Renault and Volvo were found guilty of violating the US Clean Air Act (CAA) by using electronic fuel injection software that ‘defeated’ emission controls.

‘Defeat’ software alters an engine's pollution control equipment, allowing the engine to meet EPA emission standards during specific testing, but modifies the emission control system during normal driving.

Such an engine ‘knows’ when it’s running on the EPA's 20-minute Federal Test Procedure cycle, but when the engine is running on the highway, it can produce higher nitrogen oxides (NOx), hydrocarbon (HC) and particulate matter (Pm) emissions.

The CAA prohibits a manufacturer from selling a motor vehicle engine equipped with a device designed to defeat the engine's emission control system.

 

Heavy diesl experience

Back in 1998, US engine makers agreed to spend a collective one billion dollars to settle the pollution charges, including an $83.4 million civil penalty. In addition they agreed to comply with stricter environmental requirements that were brought forward from their original scheduling.

However, the engine makers set about gathering enough real-world test experience to counter-sue.

In 2001, five separate lawsuits were filed against the US EPA by the US Engine Manufacturers’ Association (EMA) and several individual trucking industry entities that made engines in addition to trucks.

Each of those lawsuits challenged the legality and technological feasibility of certain engine emission control standards in EPA regulations. These standards were called ‘Not-To-Exceed’ (NTE) requirements.

In its challenge, the EMA stated that to determine whether an engine meets a primary emission standard, engines were tested and assessed using the standardized Federal Test Procedure 20-minute emissions laboratory test.

NTE, in contrast, had no specified test procedure and applied over an almost infinite number of test conditions. This, in the engine manufacturers’ view, made it impossible to ensure total compliance with NTE requirements, because there was no practical way to test an engine under all conceivable conditions.

This allegation challenged the legality of NTE.

Heavy diesel engine makers proved the point that in light-engine-load and light-accelerator situations, low brake mean effective pressure (BMEP) made piston-ring oil control very difficult, causing inevitably higher burnt-oil, hydrocarbon (HC) emissions.

As a result, the EPA had to modify its NTE parameters to allow for real-world driving conditions. The original NTE engine emissions graphs were redrawn, with ‘carved-out’ sections that allowed for transitory higher emissions in typical on-road situations.

This precedent is unlikely to aid VW, because that real-world-test battle has been lost and won. Current EPA testing has the force of law behind it and, unlike the EMA litigants, VW would appear to be on its own. Allegations that other vehicle makers were in violation of EPA targets haven't been proved.

OTA will keep monitoring the situation, but In the meantime, if you're not trading in a VW you should be able to get a great deal on an Amarok!

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