These past few weeks have not been a very good one for Volkswagen. If you’ve only heard or read about it in passing, the Volkswagen Emissions Crisis involves 11 million vehicles worldwide that have been made to appear more environmentally than they actually are. In fact, this scandal not only has wide-ranging implications for Volkswagen but also for the entire automobile and diesel industry as a whole.
What Exactly is the “Scandal”?
According to the United States Environmental Protection Agency, Volkswagen mislead and lied to the EPA by installing various “defeat device” software in millions of its diesel-powered vehicles in the United States for the purposes of making them appear to beat emissions tests.
More specifically, vehicles that had turbocharged direct injection (TDI) diesel engines had software in them that only activated their emissions controls while they were being tested by the EPA. The software was so sophisticated that it contained engine management unit firmware that was able to determine through such things as vehicle speed, barometric pressure, and the positioning of the steering wheel if the EPA was following its emissions testing protocol.
This lead to the vehicles performing their emissions control while being tested, but in reality, when operating normally, the cars emitted up to 35 to 40 times the allowable nitrogen oxides (Nox) that are allowed in the United States. This allows it to have better fuel economy and to produce a greater amount of torque and overall performance.
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Which Vehicles Are Affected?
In the United States alone, over 480,000 Volkswagen and Audi automobiles that have 2 liter TDI diesel engines and were sold between 2009 and 2015 are affected. The main models affected in the United States are the Jetta, Beetle, Audi A3 and Golf.
Worldwide, the number is over 11 million. The specifics are still coming out, but so far, according to Volkswagen itself, 5 million VW brand cars, 1.8 million Volkswagen light commercial vehicles, as well as 2.1 million Audis, 1.2 million Skodas, and 700,000 SEATs, all of which are owned by Volkswagen Group, are affected. All of the vehicles are the ones equipped with its E 189 engines.
What’s Volkswagen’s Response?
On September 23rd, the now-former CEO of Volkswagen, Martin Winterkorn, stepped down and has since been replaced by Mathias Muller. Volkswagen has stated that over $7 billion will be allocated towards fixing its vehicles, with a specific plan to be announced at some point in October. The company is hopeful that it will be able to fix the emissions issues through software updates as opposed to a full vehicle recall. In addition, CEO Muller has stated that not all of its 11 million vehicles had this “cheat device” software installed, meaning that the final number of vehicles affected is expected to be much lower.
Volkswagen itself has seen its stock expectedly tumble since the whole scandal went public. However, the consequences of it are just beginning. The United States Government could levy fines of $37,500 per vehicle, which add up to over $18 billion. The U.S. Justice Department and the California Air Resources Board are also investigating the issue, not to mention various governments and organizations in Europe. In addition, there are expected to be various civil suits filed against Volkswagen.
All of this doesn’t even include the amount of brand damage that Volkswagen has suffered, which will surely result in a decrease in sales over the next few years. Volkswagen has a major road to climb towards regaining the trust of the public and ensuring that it remains financially viable moving forward.
The good news is that there are no immediate health consequences to the owners of these vehicles, as they run perfectly fine. However, the higher amount of emissions are detrimental to the environment, including causing ozone build up and can lead to respiratory illness. It’s not recommended at this time that the owners of any of the affected vehicles trade them in. Instead, waiting for Volkswagen’s response to the issue is the best bet.
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