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Wednesday, September 30, 2015

VW warned not to cheat on diesel emissions in 2007, suppressed internal 2011 whistleblower


As VW’s chain of lies about the emissions of its cars continues to unspool, investigators are moving to discover exactly when VW’s various executives and departments knew it had a problem, and what actions they took (or failed to take) to address it. Such findings could be critical to assessing penalties and fines from various regulatory agencies; If the cover-ups happened at the engineering level, that’s one thing. If senior management actively participated in hiding results from regulators, that’s another.
Unfortunately for VW shareholders, it appears that multiple companies knew VW was cheating, yet took no action to prevent. A letter from electronics manufacturer Bosch to VW in 2007warned the company not to use its testing mode for vehicles it intended to sell, noting that the “test mode” changes were meant for VW’s internal testing only. That means VW was implementing these safeguards, or at least considering how to implement them, at least two years before it introduced its then-next-generation TDI diesel vehicles in 2009. The fact that Bosch, a supplier, was aware of VW’s plans and cautioned the company against them is fairly good evidence that the problem was widespread, not limited to a handful of key individuals.
Perhaps more damaging are the reports that VW actively buried whistleblower reports back in 2011. An internal audit showed problems with VW’s diesel engines back in 2011, but by all accounts nothing was done to resolve the problems. This early news is courtesy of a new fraud investigation launched by German authorities into former CEO Martin Winterkorn’s role in the scandal. Since the news broke, VW has suspended Heinz-Jakob Neusser, head of VW brand development, Ulrich Hackenberg, who oversees R&D at Audi, and Wolfgang Hatz, who handles R&D for Porsche. VW has always had a reputation for centralized development and governance, and the fact that the suspensions have already spread to related car brands could be read as tacit proof that there’s still a day of reckoning coming for the German automaker.
VW hasn’t just been shuffling corporate officers, however — it’s also launching a website to provide US owners with additional information about any recalls, remedies, or issues specific to particular vehicles. There’s not much on the site right now, except for a video from the CEO and a letter detailing the current state of the situation, but VW states “Volkswagen is committed to finding a remedy as soon as possible.” That’s borderline hilarious, considering we now know the company perpetrated this scheme for as long as eight years — “as soon as possible” didn’t actually involve complying with the law until the company got caught.

Could this scandal bring down more than just VW?

So far, there’s been conflicting reports on whether or not other autos from other companies are implicated in VW’s massive cheating. CAFEE, the same organization that tested VW vehicles in real-world conditions, and reported those results to the EPA, found no evidence that the third car it tested, a BMW, had broken emission standards in anything like the same fashion as BMW. According to the UK-based Transport & Environment, independent testing shows that multiple diesel vehicles sold in the EU use up to 50% more fuel then they claim in laboratory tests. The graph below measures excess CO2 emissions, but CO2 emissions are a significant component of measuring fuel economy. This has become an increasing problem in the EU in recent years; the gap between real-world measurements and lab results was just 8% early last decade but certain cars have breached 50% in recent years.

Even if it proves true that Audi, BMW, Mercedes, VMW, and Toyota lied about their vehicle testing in the EU, it doesn’t automatically follow that they cheated US buyers. The European Union and the US don’t just have different emission standards, they have different test conditions. The fact that VW could program the ECU inside the car to disable parts of the emission control system is evidence that modern depend heavily on software to set their running parameters — this isn’t just a hardware problem. That said, a company willing to break the law of its home market is also more likely to break laws in other countries if it believes it can get away with it.
If it’s proven that automakers in other EU countries broke emissions standards, it could kill the use of diesel across Europe and America as well. If the scandal runs deep enough, fixing the problem on aftermarket vehicles could crush revenues at the various automakers and leave buyers substantially less happy with their vehicles. Whether or not light-duty diesel vehicles can recover from that kind of blow would be very much open to debate. In the US, future VW vehicles will have to meet much more stringent testing standards.

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