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Volkswagen Could Face $18 Billion Fine Over Emission-Cheating Software
After getting caught cheating on emissions testing by means of software, Volkswagen could face up to $18 billion in fines, reports USA Today. That number is based on the company being assessed the maximum penalty of $37,500 per affected vehicle. That's not the only bad news for Volkswagen, which has halted sales of its 4-cylinder diesel cars; the linked article reports that the violations "could also invite charges of false marketing by regulators, a vehicle recall and payment to car owners, either voluntarily or through lawsuits. Volkswagen advertised the cars under the 'Clean Diesel' moniker. The state of California is also investigating the emissions violations."
And to think I was looking at their shares just like week. Dodged a bullet right there....
For reference, $18B would be about 23% of the market cap of the company. In other words, if the company were to pay such a fine by issuing new stock and giving the stock to the government, the government would end up with 23% of the company (or so goes the math if the stock market were being logical).
That's not what's going to happen, but it shows that the company should be able to raise the money to pay the fine if it comes to it. Of course, such things usually take many years of lawsuits and appeals before it's all settled, which is why these things often are settled out of court for a lower price.
And a civilization-killer asteroid *could* crash into the Earth this evening. They're both equally unlikely.
"I don't know, therefore Aliens" Wafflebox1
Unless there is some mitigating factor that none of the reports on this story have so far mentioned; Volkswagen seems to be 100% deserving of an absolutely brutal smackdown.
Building ECU code specifically to deliver 'correct' results under test; and totally different results elsewhere, is going to be difficult to explain as an 'accident'; and also the sort of thing that it'd be pretty tricky for a single rogue actor to pull off without the knowledge, and probably the cooperation, of others on the design team and in management.
I realize that it is considered unspeakably barbaric to pierce the corporate veil and cruelly touch the people who actually made the decisions; but under any non-corporate circumstance I'd have to imagine that the prosecution would have a stack of conspiracy charges so thick that it has to be delivered by two burly paralegals, in addition to charges related to the violations themselves; and all the possible civil litigation on the part of the misled customers.
Just like Clean Coal.
Rol,
Someone's gonna be hanging.
If found guilty (which certainly looks to be the case) see a huge black eye to the industry, a huge fine (hopefully leveraged over years to avoid outright murdering the company but gutting profits), and ideally better testing a cheat prevention applicable to all other participants. Considering how few players are big in passenger vehicle diesel engines these days, it may just be the end of them as well.
Bye!
Surprised only one company got caught so far and that it took so long.
"The state of California is also investigating the emissions violations"
Oh boy are they in trouble now. I've heard they're worse than the Feds when it comes to issues like these.
No sig for you! Come back one year!
In October 2012 I bought a new car. it was a close decision between the VW Jetta TDI and Ford Fiesta. The slightly better highway mileage on the Jetta was the deciding factor for me.
Ford probably lost a sale because of this deception.
Learning HOW to think is more important than learning WHAT to think.
VW advertised these cars as "clean diesels"... an oxymoron that has now been shown to be a lie.
I don't read your sig. Why are you reading mine?
That VW Jetta TDI I've had my eye is about to get quite a bit more affordable.
Although the government has been saying they are still legal to drive and sell I can't see how that is true. They do not meet the requirements to be on the road and any use should be immediately prohibited with VW ordered to repurchase all affected vehicles at original price and to pay all costs for replacement transportation until impacted drivers can obtain a US-legal alternative. Only then can we discuss the punitive damages.
This was not an accident or slight disagreement. It was blatant and intentional cheating to get a non-conforming vehicle to circumvent the tests. The whole lot of these jokers has already been discovered to "pass" EU mileage standards by running the tests at high altitude, with the belts removed to reduce drag from the alternator and other equipment. They even removed seats, overinflated the tires, taped all the seams and ran the test on a hyper-smooth track. When called on it their response was, "well yes, the test definitions should be improved but it would be unfair to alter the standards without a few year advance notice."
1. Build dirty car.
2. Insert malware to pass the tests.
3. Profit!
Until #3 turns from profit into devastating loss they will keep doing it.
~~~~~~~
"You are not remembered for doing what is expected of you." - Atul Chitnis
I guessing this will put an end to hipster's prattling on and on about their TDI diesels. Or at least when they do they'll get their pontificating thrown back in their face.
everywhere, all the time.
Some unhappy intern will have to return all those Champagne bottles.
lucm, indeed.
It's not improbably that the issue (for drivers/owners) will be resolved by a software update that prioritizes emissions compliance at the cost of horsepower.
Does anyone have a link that describes how the testing operation works or some technical details on what is being tested and how?
The US has the strictest nox emissions for cars, in the industrialized world. nox emissions are tougher for diesel than gasoline engines. I figured volkswagen was good with diesel, like Toyota was good with hybrid synergy drive, so volkswagen was one of the few companies that could pull it off in the US. It turns out, volkswagen can't. I'm disappointed in them.
for being bad on purpose. It will be interesting to see the final tab.
Assuming it took 10 lines of code to do this, The $B/line is quite a lot.
For reference, BP paid more like $50-70B so far for a much worse accident.
If anything constructive comes form this, it will be a look at the EPA emissions standards.
The basic concept of percentage emissions, says if you burn more get, you get more emissions.
Perhaps absolute quantity for function is a better way.
As long as I get to keep my vehicles that actually work.
Also, the minor point of if it is reasonable to actually build a vehicle to meet the rules.
VW's coders would not have done this unless there was a strong disconnect between the rules and possibility to make a fun to drive car.
Perhaps, the rulemakers need to feel the pain of the not fun to drive owners.
EPA does not seem to be constrained by both sides of the tradeoff.
USAToday has little credibility or journalistic integrity. VW will probably get hit with a sizable fine but nowhere close to $18B.
I think we should destroy the environment, but this is ridiculous. Ever since the EPA has determined C02 is a pollutant, it has been regulating from both sides of the fence. If you want to lower C02 you have to make your cars more efficient hence the EPA MPG regulations. If you want to reduce NOx and other real pollutants you will necessarily lower fuel efficiency. I wish VW would just give a big middle finger the the USAian EPA. Tell them 'Fine if you know so much make your own dam cars!' and you can make them as shitty as only government bureaucrats knows how. VW has enough money and can sell to enough countries that they might be able to do this. If they did actually stand up to the government once, they government might change it's mind. After all government bureaucrats enjoy ridding around in nice cars. They would never be caught dead driving a Honda. Now a nice Mercedes or a VW fits the natural prestige that is only deserving of a USAian regulator.
How about it. Let's have Mercedes and the VW no longer make cars that meet emissions standards until the EPA can come up with regulations that make sense. Unfortunately USAian companies even the ones that are made outside the USA can not afford to do this. No EPA official worth his salt cares much about ridding around in a Ford or Chevy.
My 2 pennies.
If you really think C02 is a pollutant, you need to stop having kids and stop respiring.
Digging through several layers of links:
EPA and CARB uncovered the defeat device software after independent analysis by researchers at West Virginia University,
So it looks like WVU might have to bite the bullet on this one and the EPA will get off scott free. Sorry to all of you students who were hoping for your degree. After the school shuts down, maybe you can get jobs mining coal.
Have gnu, will travel.
I would assume that numerous nations as well as buyers could file suit. We must not allow any company to profit by wrong doing. The fines should be several times the profits made from such a violation.
another case of letting the hammer fall on foreign competitors in the market. Find ANYTHING to use to get at them.
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I'm a california resident. If this company was deliberately poisoning me, making my asthma worse-- this goes beyond negligence-- not only do I expect them to compensate me for all the expensive, antihistimines, prescription inhalers and steroids I've had to pay for out of pocket, but I want punitive damages.
Fuck those guys for thinking my health isn't important compared to their bottom line. If they are proven guilty, I would love to see their leaders thrown in jail for assault. I mean, what the fuck.
As a Californian, I take this INCREDIBLY seriously. Statistically, I wonder how many human deaths they are responsible for, not to mention harm to the environment generally.
The right thing to do is fix the problem and make customers whole, then prevent it from happening again and deter others from trying anything similar, without destroying the company.
To fix the problem and make customers whole:
* Recall the vehicles and correct the problem. Do this first.
* If overall the gas mileage goes UP after the fix refund the difference to each customer based on miles driven so far
* If overall gas mileage goes DOWN after the fix, refund the difference to each customer based on the "remaining mileage life" of the car, assuming (falsely, but for the sake of benefiting the customer) that each car will survive to the "95th percentile" of total miles driven before the car is trashed.
* Pay each customer $100 in cash plus $50/day that the vehicle is in for repairs, to compensate for the inconvenience (IMHO this should be standard on all car recalls that were due to manufacturer negligence or, as in this case, deliberate wrongdoing)
To prevent it from happening again and deter others from trying anything similar:
* Put the company under severe consent decrees for the next 5-10 years to make it extremely difficult for them to pull a stunt like that in the near future.
* Fine the company but cap the fine at the higher of 5% of the gross sales of the affected vehicles or twice the net profits from those vehicles. Allow the company several years to pay off the fine so they don't go belly-up, but make them suspend dividends and other payouts to stockholders and performance-bonuses to executives until the fine is paid in full.
* Go back and find all the licensed professionals who either knowingly participated in this or knew about it and had a responsibility to stop it and didn't. Refer them to their state licensing boards.
* Go back and find all of the executives who either participated in this or who knew about it and failed to stop it, and sue to "pierce the corporate veil" and hold them personally financially responsible for their actions or failures to act.
* For any licensed professional or executive who actively and knowingly participated in this scheme, see if any criminal fraud or other statutes apply and at the very least, file high-level-almost-a-felony misdemeanor charges against them and don't let them plead "no contest." Yes, it's only a slap on the wrist but with a guilty plea or jury- or bench-trial conviction for fraud against you, you will not be able to deny your guilt in subsequent civil cases.
* Revoke/invalidate any awards, certifications, etc. granted based on the false emissions results or on secondary things like "customer satisfaction." Calculate the "value" of those awards to Volkswagon's bottom line over the years and, if the other costs and fines mentioned above don't completely offset this "value," make the company disgorge any remaining unjust profits (my guess is this won't be an issue).
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
It's a fine line between "deliberately defeating a test regime" and simply optimising for a certain scenario which the government deems to be typical.
I can't understand why VW is admitting to this. Surely they could obfuscate and say it's either a bug, or it's simply the way the car performs in this particular scenario, or it's just the complex who-knows-why of the black box, that they could promise to improve upon.
At the end of the day, this is the government's fault for having such a stupid testing regime that is so easily bypassed.
To put this in perspective, $18 Billion for false marketing and emissions violations yet the Anti-competitive hiring practices in SiliconValley class action lawsuit is only $324.5 million. That seems reasonable!
http://apple.slashdot.org/story/14/09/07/0020220/silicon-valley-fights-order-to-pay-bigger-settlement-in-tech-talent-hiring-case
I wonder who at the company was aware of this. It could have been anything from a high level decision. to an overly clever firmware developer who thought he had a really clever idea.
Of course the company is responsible for their products, but it might be the difference between negligence and fraud .
Deny VW and their subsidiaries sales in America for 10 years. That will do far more to stop this than a simple fine.
I prefer the "u" in honour as it seems to be missing these days.
Ford Motor Company said they would NEVER do a diesel because it is too hard to make them clean. They say the emissions alone on the powerstroke 250/350 trucks is a $4,000 bandaid to meet emissions. Here is the one sentence that makes me believe that Jane is pissed that Sally has a hotter boyfriend so she is going to dig up some dirt on Ken and show everyone that Ken got busted as a repeat offender paying for services from prostitutes... or something like this : "EPA and CARB uncovered the defeat device software after independent analysis by researchers at West Virginia University, working with the International Council on Clean Transportation, a non-governmental organization, raised questions about emissions levels, and the agencies began further investigations into the issue. "
I bet they paid to get the cars looked at, why JUST the 2.0 TDI from 2009-2015? And I bet they had to reverse engineer the CPU instructions so that is another issue in itself.
If I were a betting man I would bet there are other skeletons in the closets of other engines...
And a LOT of tuners and tweakers of the TDI chip them so they blow all the emissions when they hot rod the cars. The diesel truck guys do the same thing. Guys with turbo charged and supercharged cars do it too as well as ALL the ricer kids with Honda's or Acura's. LOL
Your Average Joe
It optimizes for several different scenarios. I'm not sure they admitted to cheating yet. I think they've admitted that the cars do actively adjust performance/emissions.
We don't have car inspections in Florida. Sell your used one here.
I love Jesus, except for his foreign policy.
Then it follows that software controls climate change too.
Jurisdictions_requiring_periodic_vehicle_emissions_inspections
The car's clean enough not to make the person driving it sick. If everyone drove cars that cheated on emission standards, then sure, pollution would be a lot worse. But as a percentage of cars on the road, this model is a drop in the ocean. The more serious issue if you own this car is that it could cost hundreds or even thousands of dollars to make it street legal in California. If it can be made street legal at all.
Anyone recall the famous Corvette 'skip shift', where to pass the smog test it wouldn't let you use 2nd or 3rd gear?
For the record, it made you shift from 1st straight to 4th during the gentle acceleration profile of the emissions test.
It wouldn't let you on the street either, unless you accelerated just a bit harder (or unplugged the little lockout solenoid).
Don't recall GM having to pay a plugged nickel for that one.
AC
We're being ripped off by the fact that as soon as this is made an official recall, Volkswagen will have no choice but to take that *advertised* performance away from customers whether they want the service performed or not, and so customers' only recourse if they want the advertised performance will be never to take their cars to a Volkswagen dealership again, even if it needs warranty work or other recalls.
Once this becomes an actual recall (which it isn't yet), Volkswagen will not legally be allowed to turn a blind eye to the problem if the car reenters its possession, even if the consumer considers the "problem" to be a "feature". And it's doubly bad for customers such as myself who have prepaid for an extended warranty through the dealership, and now likely cannot take advantage of that extended warranty without either losing the performance we were promised (and paid for), the mileage we were promised (and paid for), or both.
We will have lesser-performing cars than those which we were sold, or we will effectively lose the balance of our warranty and any ability to have the car serviced at a Volkswagen-approved facility ever again.
Don't they have corporate lawyers?
If there is a serious risk of even half of that nonsense, they will just pull out of the U.S. completely. Remember that Volkswagen is losing money every day in the US as it is.
American companies versus foreign company. Many US regulations mostly exist to extort foreigners and even the ones that do make sense can be exploited towards the federal government budget. It's impossible to do business over there without violating a huge number of crazy and vague laws and the fines can be set almost completely arbitrary, so they usually give American companies token fines, while foreign companies get fined just below the value that would make them pull out of the country completely.
Isn't that, in itself, dishonest?
Maybe they should be forced to take a polygraph test. Those things are wonderful, even the FBI says so!
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I'm really upset about this. I have a 2014 VW Golf TDI which has been the best car I've ever owned. Diesel fuel is cheaper (here) than the cheapest gasoline, and my fuel efficiency is only marginally less than my previous car (a 2010 Honda Insight). It drives a long time on a tank, and the best part is that it's really sporty. I love the quick acceleration. I also was happy I got the 2014 Mk6 Golf rather than the 2015 Mk7 Golf because the 2015 Golf requires a urea tank whereas the 2014 does not... and to make room for the urea tank on the 2015 model, the Golf lost it's independent rear suspension in favor of beam suspension (TDI model only). But now I'm worried how the performance will feel after I take my vehicle in to get updated so that it's not cheating emissions standards. It will maybe be a bit less fun to drive. Hopefully it means I'll get better fuel economy though? Either way I feel misled by VW. Part of my decision when I bought my car was because of how it felt during my test drive, but that was a lie. I guess I should at least stop criticizing Mazda for being unable to bring their diesel Mazda 6 to the USA because of performance issues. I guess if you're not cheating, it's not so easily done.
Farfignuggen! Fine + Fix all impacted vehicles before they are allowed to sell another vehicle in the USA.
Stuff like this needs to hurt. a lot.
There are a lot of people speculating that the "defeat device" was designed to increase the vehicles performance in non test situations, and may even result in higher maintenance needs.
I speculate pretty strongly that the reason for this is not related to performance, but was a kludge designed to reduce maintenance.
I drive a Mercedes "clean diesel". These vehicles have infamous clogging problems, where carbon chokes the intakes. The usual source is soot from the EGR, as you can general see the EGR pipe full of sticky soot.
Older Passats and Jettas regular have to have the intakes removed for a serious cleaning, as do most Mercedes.
The hackers solution is to disable the EGR, to eliminate soot return to the engine. Many people fabricate a " block-off" plate for this purpose. And EGRs are often cursed in the diesel world.
It seems to me that some engineer at VW probably said, "Hey! I came up with a set of ECU parameters that eliminates EGR coking, while maintaining high performance and MPG!", and it probably made it through the development cycle.
I have been surprised, and not a little jealous, that newer VW diesels seem to no longer have the coking problem, while Mercedes continue to do so. Interestingly, the VW SUVs DO have the problem, and are not subject to this investigation, which suggests that the " hack" was not company policy, but the result of some overachieving product team, and poor oversight.
I suspect this will be the end of VW diesels in the USA, as German management tends to be quite defensive when they get their fingers burned.
When called on it their response was, "well yes, the test definitions should be improved but it would be unfair to alter the standards without a few year advance notice."
Does that say that their lawyers think there is a reading of the rules that permitted this?
Perhaps the rules do not cover this particular (aaahem) implementation.
If the cars were legal at the time thy were sold, maybe thy do not have to be recalled and reflashed.
That would be a particularly gutsy, maybe bet the company, legal strategy.
It would make for a really grumpy EPA.
Still, it might be a bargaining position to arrive at an equitable solution.
Comment removed based on user account deletion
That is their prerogative. However, if they do, they may be liable for damages to their distributorship owners and others to whom they have contractual obligations.
In any case, they are still going to be subject to lawsuits in US courts.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
$42B in costs and fines of all types so far. Their market cap is $94B today. A number of these fines and remediation funds are installment over 5 years. BP sold significant chunks of their company to pay these costs.
This was no accident. This was done intentionally. I want to know who is going to jail for this.
It seems like the obvious question, from a geek activists point of view, is: Why are the firmware components in our cars not open source? I should be able to compile and validate the loaded firmware so I (or, you know, someone who actually cares) can verify the security, legality, and safety of it's operation. It isn't even required that I be able to re-load the firmware, just that I be able to validate it.
An $18 billion dollar fine for ... misleading customers with respect to the true performance of their cars? Really? How many people lost their jobs over this? How many people were actually materially affected by it?
The fine BP faced for the Macondo (Deepwater Horizon) oil spill in the Gulf of Mexico was $18.7 billion -- pretty much identical. The environmental impacts of that incident and its ramifications in terms of real human suffering were far, far greater than this. Shouldn't that be part of the calculus in determining a penalty?
Either VW's fine is too large or BP's was too small, but the scale and significance of the offences involved are just not comparable.
licet differant, aequabitur
Damn, you reminded me I need to get a powerball ticket for the next lottery drawing!
I only look human.
My mother is a halfling and my dad is an ogre, so that makes me an Ogreling
Does the car look around with a video camera, and if it sees a bunch of nerds in white coats holding a clipboard, it decides that it's being tested for emissions and switches the engine management algorithm?
If so Volkswagen should be commended for making breakthroughs in AI and machine vision. While at the same time flogged for fraud, of course.
Thank God I don't live in that fucking shitty state... Give California back to Mexico, it's a drain on our society and on our budget.
God how I hate California. Visited many, many times and cannot find one good thing about it. Here's just another reason.
1. You can cancel extended warranties in the US on cars and get a refund (or partial refund, depending on when you do it).
2. This is what tort law is for, use it.
They've just wound up and kicked their most loyal customer base in the nuts as hard as they can.
VW diesel owners are unswervingly loyal and unswervingly proud of their purchase and the VW brand, and unanimously proud of doing the right thing ecologically, so this is like finding their wife committing adultery with their dog.
Star Trek transporters are just 3d printers.
It's a fine line between "deliberately defeating a test regime" and simply optimising for a certain scenario which the government deems to be typical.
I can't understand why VW is admitting to this. Surely they could obfuscate and say it's either a bug, or it's simply the way the car performs in this particular scenario, or it's just the complex who-knows-why of the black box, that they could promise to improve upon
It's pretty obvious that VW know they have deliberately broken the law, or they would be fighting this tooth and nail.
To have a right to do a thing is not at all the same as to be right in doing it
Volkswagen is paying the price for opening a new engine factory in Russia instead of the USA...