Volkswagen & Dieselgate: Where Are We Now?

1. What is Dieselgate?
2. What penalties were handed down?
3. Past Cases & The Future Of Volkswagen

What is Dieselgate?

The Environmental Protection Agency issued Volkswagen a violation of the Clean Air Act in September 2015. The violation came after it was determined that certain Volkswagen models--namely TDI, or turbocharged direct injection diesel engines--had emission control settings that were only activated during certain types of emission tests. What this did was allow the vehicles to essentially give a false negative in tests about emission pollution.

In some cases, the cars that were passing emissions tests were giving off up to 40 times more than a number of nitrous oxide emissions allowed by current regulations. All told, this “technology” was implemented in over 11 million vehicles between 2009 and 2015, of which about 500,000 were in the U.S.

What penalties were handed down?

Volkswagen will face criminal charges from the U.S. Department of Justice in light of the scandal, the details of which are still being worked out. It remains to be seen whether a guilty plea will be sought out, though Volkswagen has already agreed that it deceived regulators with the practice.

Most likely, the case will be settled with financial penalties and a deferred prosecution agreement, as has been the case in past safety issues with auto manufacturers, namely GM and Toyota. As part of the penalty, Volkswagen must pay nearly $15 million to both consumers and regulators for intentionally misleading them. In the wake of the scandal, Volkswagen’s chief executive resigned after the findings of the EPA were revealed.

Past Cases & The Future Of Volkswagen

According to an article in the Wall Street Journal, Volkswagen has earmarked $21 billion to deal with the aftermath of the scandal. Obviously, no small sum of money, which indicates the German automaker may be bracing for an even larger penalty and more fallout.

Previous Cases

Toyota - Toyota was forced to pay $1.2 billion in a settlement in 2014 in which it was revealed that they intentionally hid safety defects in their cars from consumers and regulators. The defect was related to a sudden and unexpected acceleration of several of their vehicle models.

General Motors - Following on the heels of the Toyota scandal, GM was forced to pay a $900 million fine an ignition-switch defect. The defect was connected to nearly 200 deaths before being discovered.

Looking Forward

Based on the two previous cases that most closely resemble the Volkswagen emission scandal, it would seem that a hefty fine and a promise to change their methods is all that will come of this. In both the Toyota and GM case, no criminal charges were brought forward against specific employees and a deferred agreement was reached with prosecutors.