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."

Comments

23% of the company

[crow]

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.

Re:23% of the company

[lucm]

The $18B doesn't cover the cost of 500,000 customers who not only got ripped off, but also were exposed to dangerous levels of harmful fumes. This is a torts lawyer wet dream.

Re:23% of the company

[fuzzyfuzzyfungus]

Plus, aren't all those customers now stuck with cars that are either not street legal(I know that pre-emissions-standards vehicles were grandfathered; but these aren't) or will absolutely suck once they get reflashed so that the 'clean' ECU parameters run all the time, rather than just during testing(I'm assuming that something about the test-mode parameters was lousy, or they would have had no incentive to try this little trick)?

That seems like the sort of thing that might make them justifiably unhappy, and in a way with a relatively large, and relatively easily quantified, dollar value attached.

Re:23% of the company

[FranTaylor]

most European standards are STRICTER than the American ones.

Not for diesels, which is what we are talking about here. In this case the American standards are stricter. You have to pull out some massive engineering mojo to make a diesel passenger car that's street legal in the US. Apparently VW doesn't have what it takes.

Re:23% of the company

[mrbester]

€ € € you mean. Germany hasn't used Deutchmarks since 1999.

Re:23% of the company

[Calydor]

According to the previous article about this, the cars are still LEGAL, they are just nowhere near as clean as they claim. It's not a "clean" or "dirty" question, all cars are dirty to a certain extent.

Re:23% of the company

[FranTaylor]

According to the previous article about this, the cars are still LEGAL, they are just nowhere near as clean as they claim. It's not a "clean" or "dirty" question, all cars are dirty to a certain extent.

they are only legal because the alternative would be chaos

Re:23% of the company

[drinkypoo]

Not for diesels, which is what we are talking about here. In this case the American standards are stricter.

The American standards are different. They focus on emissions per gallon burned, not per mile traveled. I have yet to see a study which shows that this actually produces less pollution than the european standard, but I would be interested in such a thing.

To me, this is like the argument over THC and driving. OK, criminalize use before/while driving... if you can show that it causes accidents. Well, is this actually causing more pollution?

Re:23% of the company

[TwoUtes]

Which Beetles are you referring to? The older first gen beetles, with the air cooled flat four chirped because the stock exhaust pipes had perforated baffles that whistled as the exhaust gas flowed through. Replace those tailpipes with, say straight pipe, and the chirp went away. My dad's '61 didn't chirp after he put on some flared stainless pipes. Valves faces and seats aren't lubricated by oil. The valve guides and stems are, but the faces are not. Unless the piston rings are bad. You may be referring to the cylinder behind the oil cooler, which I believe is number 3. It would starve for cooling air and the exhaust valve would eventually fail, popping the valve head off the stem and frag the cylinder. My '70 did that. Good times.

Re:23% of the company

[Anonymous Coward]

According to the previous article about this, the cars are still LEGAL, they are just nowhere near as clean as they claim. It's not a "clean" or "dirty" question, all cars are dirty to a certain extent.

Uh, no.

During normal driving situations, the controls are turned off, allowing the cars to spew as much as 40 times the pollution allowed under the Clean Air Act, the E.P.A. said.

Re:23% of the company

[doctorfaustus]

The cars may be legal, but the sale of them, the misrepresentation involved in the sale was a fraud. Consumers paid their money for cars of a certain performance grade, and to make the cars legal will significantly lower that grade. Expect a very costly class action from customers who didn't get what was promised.

Re:23% of the company

[nomadic]

Not really. The US actually has stricter regulations than the EU across a number of major areas, like air pollution standards for power plants (definitely not a "tiny, select area[]" by anyone's definition), The US' Endangered Species Act is stronger and more comprehensive than the EU's. Even where standards are technically higher under EU directives than US federal environmental policy, such as in drinking water, failure to meet those standards is rampant, particularly in Eastern European countries.

Re:23% of the company

[Z00L00K]

Then you have misunderstood the EGR. What the EGR do is to recirculate some exhaust lowering the oxygen content in the combustion chamber, which in turn lowers the combustion temperature and result in a lower NOx level. The EGR gases are usually also cooled down before entering the intake.

The downside with a lower combustion chamber temperature is that the engine will provide less power as well, all according to the ideal gas law. To compensate for this the boost pressure through a turbocharger is pretty high - newer engines conforming to the latest emission standards have a higher boost than previous generations - even up to 4 bar (4 atmospheres) boost. (way more than what a gasoline engine have)

On a diesel there's a catalytic converter to take care of some HC that may remain, but the primary objective is that there's a particle filter that catches most particles - where the majority are soot particles. This filter has to be regenerated at regular intervals which is done by injecting some additional diesel into the filter where it's ignited. However since the soot isn't entirely clean there's an accumulation of ash residue that requires a replacement of the filter at regular intervals - usually >= 100000 km.

In order to lower the NOx even more there's also on modern vehicles also an injection of a selective catalytic reagent (SCR), often named AdBlue or Diesel exhaust fluid (DEF) (which is a clear water-based liquid containing urea) into the exhaust system that combines with the NOx and other compounds in the exhaust fumes to produce nitrogen, carbon dioxide and water.

Re:23% of the company

[muecksteiner]

(ironic that anti-Americanism sells cars in the US.)

The U.S. car industry worked long and hard to achieve this elusive goal.

Re:23% of the company

[AK Marc]

Maybe if the shareholders were held responsible for things like this, then they'd pick managers less likely to endorse such behavior.

Re:23% of the company

[swb]

If stockholders held any actual power in a company, I'd be fine with making fines punitive for stockholders.

But we live in a world where senior management in collusion with the board have essentially stripped shareholders of any power. Most shareholder initiated proxies are non-binding, when they're allowed at all. Boards routinely rubber stamp management decisions-- mostly because they are so often comprised of managers from other companies (boards have more recursion than CompSci 3104).

The idea that officers don't know what might be happening seems a practical truth, but it flies in the face of stratospheric executive salaries justified with the general logic that CEOs and senior management are geniuses, singularly responsible for the success and advancement of their organizations. If they want to get paid as if that was true, they should face the concomitant assignment of responsibility.

Saying "they didn't know" seems to be a failure of management (the verb) -- failure to setup adequate reporting and oversight processes.

Further, in this specific case it seems unlikely that a rogue employee or even rogue engineering group would have been unlikely to be solely responsible. The scale of risk, cost remediation and fixing the problem (emissions) correctly seems to have been something that would have naturally bubbled up through management.

"could face up to $18 billion in fines"

[Nutria]

And a civilization-killer asteroid *could* crash into the Earth this evening. They're both equally unlikely.

Hang 'em high...

[fuzzyfuzzyfungus]

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.

Re:Hang 'em high...

[FranTaylor]

What CRIMINAL FRAUD?

people were sold automobiles that were claimed to be street legal, but they are not.

Re:Hang 'em high...

[Salamander]

Yes, there is such a law. 40 CFR 86.1809-10 - Prohibition of defeat devices. So much for the "if it's legal it's wonderful" pseudo-argument.

Re:Hang 'em high...

[gman003]

18 USC section 1031 would apply if Volkswagen obtained any EPA credits or other direct gain as a result of this testing.

I skimmed through the Federal Test Procedures, and didn't find an explicit rule saying "car should be in normal operating mode", however, I did not search exhaustively, and this is a SECRET mode. It isn't a turbo switch you push, it's picking up on the exact sequence of RPMs performed during FTP. It definitely violated the intent of the EPA regulations, which were explicitly stated to be "accurately simulating real-world conditions". There is no reason for this to exist except to sell cars that violate EPA regulations, and I don't think "you didn't write a law specifically against it" should stop them from getting fined.

Re:Hang 'em high...

[drinkypoo]

We have algae that can turn cellulose grown on scrubland into a direct substitute for gasoline (butanol), we can make biofuel substitute for diesel. But there is no serious investment that way, only token efforts.

No, it's worse than that; Butamax, a holding company owned by BP and DuPont, managed to get a patent on the process for efficiently producing butanol and are now actively preventing Gevo (a GE energy ventures subsidiary) from making butanol fuel and selling it to the public, which they would like to be doing right now — on a small scale at first, but ramping up over time.

BP, some of the most evil fucks ever, and DuPont, more of the most evil fucks ever, are actively preventing us from having the best biofuel we could be burning.

Re:Hang 'em high...

[Darinbob]

Legislating clean air has worked. Check out the air in Los Angles now versus 30 years ago.

California investigating

[thoughtlover]

"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.

Will other automakers sue VW?

[chill]

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.

Re:Will other automakers sue VW?

[vux984]

Jetta TDI vs Fiesta? Yeah, you probably ended up with the much better car regardless of the outcome of this issue.

Re:Off the roads, now!

[vux984]

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.

I hope ...

[PPH]

... Volkswagen slaps the EPA with an $18 Billion DMCA suit for reverse engineering their software.

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.