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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."
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!
Operative words there are 'so far'. This is some Dr. Evil style stuff, intentionally being criminal on a massive scale for profit, and if Volkswagen does it and gets away with it this long, other car companies must surely ask what they have to do in order to compete in the market with this sort of monster.
Race to the bottom (in diesel cars): they ALL have to start lying like rugs and making computers that cheat on tests, as much or worse than VW was doing.
That's unfettered market capitalism, and that is what you get. Alternative is regulation and holding somebody accountable.
"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.
That's unfettered market capitalism
Since when has the US and Europe had unfettered market capitalism? Hell, even in the 1800s there were all sorts of market protection laws and government grants to business.
Alternative is regulation and holding somebody accountable.
You forgot bribery and Communism.
"I don't know, therefore Aliens" Wafflebox1
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?
They do not meet the requirements to be on the road and any use should be immediately prohibited
You realize a turn of the PREVIOUS century model T ford a meets the requirements to be on the road, and their idea of emissions control amounted to having the exhaust exit outside the vehicle instead of inside. There is a big difference between 'legal to drive on the street' and 'legal to register as a new vehicle'. And lots of cars that would NEVER EVER EVER pass modern rules for emissions, for safety, for anything are still perfectly legal to operate.
And hundreds of thosuands of vehicle owners have bought a new car, and then promptly had it retuned for performance. (One guess what that gain was at the expense of!) And in jurisidicitons where they need to get it tested periodically they'd even install switches to cut it back over for the test, to make sure they'd pass, then after exitting the test facility flip it back to fast+dirty.
Hell, you can buy aftermarket kits for this. And people 'chipping' their cars... etc, etc...
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
Impacted drivers, by and large, probably want their TDI left exactly the way it is. TDI owners buy them for the excellent fuel efficiency and decent performance.
If there was a button in the car where they could push "better mileage, worse emissions" I'd bet most of them would have pushed it.
VW deserves to get slapped hard for this, what they did was brazen and deceptive... but lets not go off the deepend. They aren't gong to be hit for $37,000 per vehicle... at worst they'll settle for buying some extra carbon credits to offset the extra pollution they've caused, plus some punitive damages.
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."
Yup, gaming the testing standards is par for the course in every industry ever. And yes, the onus is on the regulatory body to change the test standards (or clarify them); and yes, a couple years lead time is both normal and the way it should be.
If there was a button in the car where they could push "better mileage, worse emissions" I'd bet most of them would have pushed it.
if the button told the truth and said "markedly reduced engine life" would people still be pushing it?
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.
if the button told the truth and said "markedly reduced engine life" would people still be pushing it?
Cite for that? Retuning for emissions vs torque or mileage doesn't automatically imply reduced engine life.
Engine life is more determined by things that determine bearing wear... oil quality; seals maintenance, etc... these days, failures in the electronics/accessories are probably going to render the car scrap long before the engine wears out.
The fan bearings in the air conditioning sieze, the power door locks, trunk release, power windows, and random bits of plastic trim etc... at least that's my experience.
My old 80s 911 only needed regular engine maintenance (which wasn't cheap, but wasn't exorbitant either, and it was all scheduled and regular, along with brakes and tires) and it was clocking 120,000 miles.
The maintenance expense was the all the stupid crap ... horn switch, signal lights, power locks, door handle, power mirrors, trunk release, power seat switch, air conditioning, sun roof motor, etc... staying on top of that is what was expensive.
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.
If you have to press the gas harder to get the same performance (which you would if there is all this emissions gear on), then the emissions gear is making the engine life worse, and VW did the owners a favour. Nothing about emissions standards is there to improve engine performance whether it be power nor engine life.
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.
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.
Oh Please... Sure just throw people under the bus... I own one of the impacted vehicles. A 2014 Passat TDI with the urea injection system. It has a 5 gallon urea tank under the trunk, which gets sprayed into the exhaust stream to mitigate oxides of nitrogen (NOx). VW does tell you anything about it, they fill it when you do the ~10k mi service interval. The injection is roughly 2 - 6% of the fuel burned. We made it the 10k service without adding any "DEF" urea solution. We did the 20k a bit early and had some electrical issues serviced, this resulted in a software flash of the PCM, etc... I got a "DEF" warning at 24k miles. So I'm left with two thoughts:
1. They didn't fill the tank at the 20k service.
2. Based on the 2% lower limit, and my 40+ mpg fuel economy, they more than doubled the injection rate when I had the 20k service done. 2% = ~10k miles.
For the new vehicles, this is a software issue. You can fix it in a patch. For the older vehicles, it's still likely a software patch. Add a pre-injection pulse to preheat the air on compression, and lower the overall combustion temps. This will likely affect power & fuel economy, those buyers will have a case. I likely do not. Either way... No need to disrupt a couple million people's lives.
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
All of those chips, mods, "performance tunes" are illegal unless they have been approved by the EPA or CARB such that they do not increase the car's emissions.
Yes.. and.. ? They still exist and are installed by the hundreds of thousands, if not millions. Clearly the owners are willing to chance it.
It is actually a big selling point for aftermarket performance parts if they have such approvals.
For sure. But for every such part, there's another guy who has his catalytic convertor set up so he route past it with a straight pipe between emissions tests...
And as for "its OK if you can game the test" - that's the same excuse as "whatever I do is OK if I don't get caught" -- when you do get caught that defense doesn't hold up.
No. They were full on violating the rules, and got caught.
The test-gaming i was referring to was stuff like taping the doors shut, and leaving the removable SUV back seat out, along with any other detachable bit of trim, floor mats, etc... for the mileage test.
VW got caught -- there's another saying which applies now, "Don't do the crime if you can't do the time".
Agreed. But they their penalty isn't going to be $18B; that's just news-porn for bad journalists. VW would have to play its cards pretty spectacularly badly to be fined the maximum penalty per vehicle... its just not going to happen. And journalistic masturbating over the maximum theoretical penalty of every regulartory infraction is just pointless clickbait.
Firstly this is not unfettered market capitalism ( you have government regulation you can not have unfettered market capitalism with government regulation)
Secondly computers can not cheat they can only operate with in a defined set of parameters The computer did its job perfectly and as a matter of fact I applaud the VW engineers to have been able to build a system that is capable to knowing when the vehicle is in a situation that requires it to perform with in a specific parameters and pass with out human intervention.
Look at it this way the Government Created the test that supposedly simulates real world driving. So when the car detects a situation that equals the simulated real world scenario it goes into the super emission friendly mode. As this is a computer and it is defined by specific perimeters I can only asmuse that the government simulated test it a load of bullshit and does not simulate any real world scenarios. If it did the VW would automatically enter the super enviro friendly mode when driving in the real world. ( of course this is assuming this is not a mode specifically turned on by a VW engineer prior to test.)
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.
Even worse, what if the better mileage part of that actually improved the overall emissions when measured "per mile travelled" (European standard), even though it harms the "per gallon" emissions (US standard)?
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?
Buy Mazda then. They have clean diesel (SkyActive) that isn't a f*ing lie.
They are clean diesels. A diesel eninge is far cleaner than a petrol engine by design, just not in every aspect. Every technology has tradeoffs. The problem is that US regulations are very strict in the only emission category in which a diesel engine performs significantly worse than a petrol engine (while being relatively lax in others). In practice, no manufacturer can truly meet those requirements without seriously sacrificing fuel efficiency and engine lifespan.
Apparently, they got their cars US-approved by pulling tricks that make the cars meet the requirements only under certain circumstances. If that was done on purpose, then I agree that was a bad thing to do and they should stop selling these cars until the regulations change or a new technology appears that makes it possible to meet current regulations. However, it does not change the fact that these engines are very clean compared to almost anything on the US market today.
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.
or just get TSLA.
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.
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.
Anybody that bought a 'vette with an automatic deserved this and worse.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
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
Your cite is the EXACT opposite of what is needed, for an unrelated case entirely. You show an EPA recall made changes to IMPROVE emissions at the expense of engine life.
The OPs post says that given a button that gave improved performance and worse emissions such a button should be labelled that it would reduce engine life.
I doubt it would, and if anything your cite is suggestively in agreement with me. (Your cite shows that improving emissions reduces engine life; that's the opposite of what this hypothetical button does.)
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.
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
If you have to press the gas harder to get the same performance (which you would if there is all this emissions gear on), then the emissions gear is making the engine life worse, and VW did the owners a favour. Nothing about emissions standards is there to improve engine performance whether it be power nor engine life.
It is precisely for this reason that you need legislation over emissions in the first place. Neither the manufacturers nor most consumers would choose to have worse mileage, less power and decreased engine life otherwise.
To have a right to do a thing is not at all the same as to be right in doing it