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Volkswagen's CEO Was Told About Emissions Software Months Before Scandal, Says Report (reuters.com)

An anonymous reader quotes a report from Reuters: Volkswagen Chief Executive Herbert Diess was told about the existence of cheating software in cars two months before regulators blew the whistle on a multi-billion exhaust emissions scandal, German magazine Der Spiegel said. Der Spiegel's story, based on recently unsealed documents from the Braunschweig prosecutor's office, raises questions about whether VW informed investors in a timely manner about the scope of a scandal which it said has cost it more than $27 billion in penalties and fines.

Responding to the magazine report, the carmaker reiterated on Saturday that the management board had not violated its disclosure duties, and had decided to not inform investors earlier because they had failed to grasp the scope of the potential fines and penalties. Citing documents unsealed by the Braunschweig prosecutor's office, Der Spiegel said Diess was present at a meeting on July 27, 2015 when senior engineers and executives discussed how to deal with U.S. regulators, who were threatening to ban VW cars because of excessive pollution levels. Diess, who had defected from BMW to become head of the VW brand on July 1, 2015, joined the July 27 meeting with Volkswagen's then Chief Executive Martin Winterkorn to discuss how to convince regulators that VW's cars could be sold, a VW defense document filed with a court in Braunschweig in February, shows.

16 of 93 comments (clear)

  1. Time to break up volkwswagen by Anonymous Coward · · Score: 2, Interesting

    I hope Germany is troubled by this and will figure out a proper punishment and corrective action. Big businesses need to be feared more than big governments

    1. Re:Time to break up volkwswagen by blindseer · · Score: 4, Interesting

      In other words VW is "too big to fail"? Where have I heard that before?

      If a company is "too big to fail" then it is too big to exist. If a nation's economy is so tied up into these large corporations then they are essentially free to break the rules as they please. Break them up into smaller companies and make them compete against each other.

      I'm old enough to remember the bailout of the "big three" automakers in the USA. Well, Ford was doing just fine economically but if the government only bailed out the other two then that might be considered some kind of violation of the law. Ford was forced to take the money. At the time Tesla was just salivating at the idea of scooping up Detroit automotive factories at fire sale prices. The workers at those factories might be out of a job for like a month or two, until Tesla was able to finalize the sale and retool for making electric cars. Well, maybe they couldn't make electric cars that quickly but those factories would be making cars under a new badge and with improved efficiency. Tesla would have made out like a bandit on the deal and they'd be on much better financial footing now.

      What killed the electric car? That's a question that's been asked many times. The answer is a government too scared to let the market forces work it's way out.

      I don't believe that electric cars would dominate today, only 10 years after this automobile industry "crisis". I do believe that we'd probably see an industry more willing to innovate past the problem of tailpipe emissions rather than trying to game the system. We'd likely be seeing more electric hybrids, more natural gas vehicles, and a healthier economy in the long term.

      --
      I am armed because I am free. I am free because I am armed.
  2. One good thing... by Freischutz · · Score: 4, Insightful

    These bozos deserve everything they get. Corporations and bankers only ever learn by losing money and in cases like this the perfect learning mechanism is being slapped with great big massive fines. One good thing to come out of VW's shenanigans, however, is that the 'using fossil fuels is patriotism' and 'there should be an environmentalist hunting season' crowd has been purged from VW leadership and replaced with people who are sinking EUR 34 billion into electric vehicle technology and are planning to take that to EUR 72 billion by 2022. Same is probably true for a whole other bunch of car companies that didn't get caught but did notice the massive fines VW got. I'm no fan of the VW leadership but at least this is a move in the right direction.

    1. Re:One good thing... by Anonymous Coward · · Score: 3, Insightful

      A fine is not enough in this case, this is massive fraud. Prison AND a massive fine, at the very least.

    2. Re:One good thing... by Solandri · · Score: 5, Informative

      The guy who orchestrated it was Ex-CEO Martin Winterkorn. He hated licensing Mercedes' diesel exhaust fluid technology (which combines ammonia with nitrous oxides to produce nitrogen, water, and CO2). So he specifically tasked his engineers with coming up with a diesel engine which didn't use DEF.*

      When he resigned as CEO, he collected a $32 million golden parachute. Fines won't solve the problem. We need jail time.

      * (To their credit, the engineers almost succeeded. The earlier 2-liter engines were a disaster - up to 5x the legal limit of NOx emissions (0.2-0.3 g/mi). But the 2015 2-liter diesel engines met EPA emissions limits without using DEF. They're just included in the scandal because they barely exceeded CARB's limits (0.05 g/mi).)

    3. Re:One good thing... by sandoval88419 · · Score: 2

      thank you for the informative links. IMHO VW fail way behind their competition. They produce the worst and the most unreliable diesel engines compared to BMW, Mercedes and PSA. That is why they resorted to cheating.

      VW is by far very overrated, they manage to sell car thanks to a very aggressive marketing and lots of product placement. They deserve to be forgotten and their management to be jailed.

    4. Re:One good thing... by greenfruitsalad · · Score: 2

      Company my friend worked for had a similar problem with cheating a standards body. In the end, company was fined and no single person/team was found guilty. Lower level employees were shifting blame one level up, upper level said it wasn't even a decision just a team issued directive to reach a milestone, programmers said it started as a test that never went away, CEO claimed he was under too much pressure from shareholders (to be able to stop it once he learned about it).

      Unless you are willing to fine shareholders who only care about quarterly results, this will keep happening. Everybody will say they were trying to protect their job.

  3. We know how high it went, now how wide? by rmdingler · · Score: 5, Insightful

    The idea that this great fraud was perpetrated by some rogue engineers never made much sense.

    Even if we assume this is an accurate depiction of when the CEO was told, there almost had to be some degree of lower management complicity in this from the outset, even if it was in the form of setting impossible goals for employees, much like the Wells Fargo fake accounts debacle.

    --
    Happiness in intelligent people is the rarest thing I know.

    Ernest Hemingway

    1. Re:We know how high it went, now how wide? by SuricouRaven · · Score: 3, Insightful

      "Credit travels upwards, blame travels downwards. That's the way it works." - The Pointy-Haired Boss, from the Dilbert animated series.

  4. Very likely he knew a lot earlier by gweihir · · Score: 5, Interesting

    The guy is an engine expert with a reputation of wanting to know all the details at all times. He could probably have looked at the AdBlue numbers and immediately know what was going on. Also has a reputation as a control freak, so nobody will have dared to make these changes without checking with him first. As basically every other car maker with diesel cars (except for the the Japanese, it seems) had this fraud-device in their diesel cars, they will have coordinated on it. Makes sense, because one brand doing much better sticks out and could raise suspicion. I expect this was a coordinated decision a year or so before they started doing it and all the CEOs did sign off on it. No paper-trail, of course.

    --
    Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
    1. Re:Very likely he knew a lot earlier by mjwx · · Score: 2

      The guy is an engine expert with a reputation of wanting to know all the details at all times. He could probably have looked at the AdBlue numbers and immediately know what was going on. Also has a reputation as a control freak, so nobody will have dared to make these changes without checking with him first. As basically every other car maker with diesel cars (except for the the Japanese, it seems) had this fraud-device in their diesel cars, they will have coordinated on it. Makes sense, because one brand doing much better sticks out and could raise suspicion. I expect this was a coordinated decision a year or so before they started doing it and all the CEOs did sign off on it. No paper-trail, of course.

      The "fraud" device is a standard part of any car, a programmable ECU (Engine Control Unit). Its due to this fantastic little device that we can use fuels of varying quality and engines can dynamically adjust timing to produce the best fuel/air mix which both reduces emissions and improves fuel efficiency. Just about every car made today will have one. The unit in question with VW's Diesels was a Bosch EDC17 ECU.

      The problem wasn't hardware, every car has a programmable ECU, the problem was software. Bosch created a test mode that was not designed to be used on production cars, that was fine. However VW needing to fool tests because they didn't want to have to license technology to reduce diesel emissions used the software in production cars to change the engine characteristics when the unit detected test conditions.

      Programmable ECU's are wonderful things, they've made cars cleaner, faster and easier on fuel at the same time, but like all things programmable they can be used for evil.

      However it's all for nought now as diesel passenger cars are failing. The tax concessions given to diesels in Europe due to the oil crisises of the 50's-70's have almost all been repealed and operating a modern diesel is no more expensive than operating a modern petrol (the petrol is often cheaper, being less complex) and doesn't have the downside of a diesel (noisy, rattly, smelly). New diesel car sales are falling month after month here in the UK.

      --
      Calling someone a "hater" only means you can not rationally rebut their argument.
  5. Re:Only two months? Bullshit by careysub · · Score: 4, Interesting

    You are most certainly correct. In reading a number of histories of geopolitical affairs (the machinations leading to WWI, Soviet decisions during the Cuban Missile Crisis, the Mideast Crisis that led to the Six Day War, the Invasion of Afghanistan) and repeatedly in Israel's nuclear weapons program, decisions were made in closed meetings with no notes taken. It was enough that the lieutants tasked with carrying out the plans and who were present, knew what that were supposed to do.

    This is certainly the case here. Top management orchestrated and approved this, but made sure no records were kept.

    --
    Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
  6. Diesel engines are the future, do the math by blindseer · · Score: 3, Insightful

    Why is there so much concern on diesel cycle engines? As heat engines go they are quite efficient devices. As far as providing a lightweight and compact power source for transportation these things are close to miraculous. So, where is the problem? It's not the engine, it's the fuel.

    Right now diesel fuel is primarily petroleum. I use the modifier "primarily" because there are places that burn bio-mass derived diesel in their engines, either pure bio-fuel or as a mix with petroleum fuel. The US Army has been burning 20% bio-diesel in their trucks on bases all over the world for at least a decade. I can say that because I saw the fuel pumps on an Army base while serving and I have a friend that works for the National Guard. The trucks the Army uses on bases at home and in "friendly" nations are just commercial off the shelf stuff. The battlefield vehicles though will run on just about anything. I had a conversation with someone about this and he told me those Army helicopters will run on just about anything that is liquid and flammable. I asked if that included Wild Turkey and cheap perfume, he said it might not like it but that will get you home if you are in dire need.

    I hear people claim that electric cars are the future, charged up by electricity from wind, water, and sun. But has anyone done the math on what it would take to make that happen? It turns out that people have and the math does not work out for such a world.

    Here's how we start with that math. The world uses about 2.3 TW of electricity. That's the consumption if we were to average out all the use in the world. Citation:
    https://en.wikipedia.org/wiki/...

    In 2008, the world total of electricity production was 20.279 petawatt-hours (PWh). This number corresponds to an average power of 2.31 TW continuously during the year.

    So, let's do the math on everyone in the world driving an electric car. First thing is to do the math on how much in resources we'd need to just make up for the electrical use right now and replace that with wind, water, and solar. Looking at the page I linked to above we see that we are about 1/4 the way there, with most of that in water. A common one megawatt windmill takes one ton of rare earth elements in its magnets. Does it have to use rare earth metals? No, but then it's not as efficient, will need more copper and steel to make, and therefore will not be as cheap as it is now with rare earth metals. Windmills don't run all the time at maximum output, in real life they produce maybe 30% of their maximum rated output. So we don't need 2.3 TW of wind to replace what we need, we'd have to start with 3 times that, 7 TW. But, as I pointed out before, existing renewable energy has 1/4 of the total electrical supply already so, in round numbers we'd need about 5 TW of new wind, water, and sun to replace the coal, oil, natural gas, and nuclear (if you believe nuclear is "bad").

    Go figure out how much rare earth metals we'd need in windmills to replace even half of the current electrical production, assuming that solar and hydro would make up the rest. Then add in the rare earth metals needed for those electric cars. Then add in the steel and concrete needed, because those windmills need something to hold them up. Then do the math on how much silicon we'd need for the solar panels. Then compare all of this to current production of these materials worldwide. There simply is not enough of current production to switch over to anything "green", except nuclear power.

    Can we improve our output of things like rare earth metals, concrete, steel, copper, silicon, and whatever else we might need? Sure, given enough time I would expect that to happen. Here's another thing to add to your calculations, how much dirt would we have to dig up, sift through, and process, to get these materials we need? You think mining for coal and uranium is bad for the environment, how muc

    --
    I am armed because I am free. I am free because I am armed.
    1. Re:Diesel engines are the future, do the math by blindseer · · Score: 2

      Production follows demand. As we start building more windmills, more rare earth will be mined. It's not like it's actually rare.

      This is where it gets funny. The earth is 7.3% silicon, you know.

      Yes, I know that. These are exceedingly common elements. Now, tell me, just how much dirt would we need to dig up and sift through to get these metals? I am truly curious. I've seen the math done before but I'd like to see you verify these numbers yourself and see how they match with other computations.

      While digging up these metals there will be the stuff left over. These leftovers will have some very toxic elements in them, and having dug them up we've introduced them to the environment. What do we do with those?

      A nuclear power plant takes no more resources to build than a coal or natural gas plant. The fuel for a nuclear power plant is part of the "leftovers" from mining the rare earth elements we need for things like windmills and electric cars. It's essentially a fuel we don't even have to mine, because it comes up as a byproduct of rare earth mining we already do. China and Australia mine a lot of rare earth elements, and they use the uranium that comes up as fuel for nuclear reactors. The Australian government has a ban on nuclear reactors of their own but they sell the uranium to other nations for their nuclear power plants.

      We, in the USA, could mine rare earth elements but disposing of the uranium and thorium that is in the ore makes it very expensive under current law. If there was a sufficient market for this uranium and thorium, such as for nuclear power plants, then this problem solves itself and we'd have plenty of cheap rare earth elements. This would mean domestic sources of rare earth elements, domestic sources of electricity, and quite likely all kinds of cheap electric cars running on plenty of cheap electricity from nuclear and wind energy.

      Did you do the math before you replied to me? I'm quite certain that you had not.

      --
      I am armed because I am free. I am free because I am armed.
    2. Re:Diesel engines are the future, do the math by blindseer · · Score: 2

      Okay, here's some more math. Picking up where I left off we would need 5 TW of electricity production capacity from wind and solar to merely replace the current production from coal, natural gas, oil, and nuclear. Wind power requires 1 ton of rare earth metals per megawatt of capacity, assuming we use current windmill technology and not older less efficient types that do not make use of rare earth elements. Solar PV requires 5 tons of silicon per megawatt of capacity. Wind requires 500 tons of steel and 1000 tons of concrete per megawatt of generation capacity, again this assumes efficient rare earth based windmills. One TW equals 1,000,000 megawatts, and we need to see at least 5 TW just to meet current demand.

      Annual silicon production is about 7.2 million tons, and this is already not enough. Annual concrete production is now 4 billion tons. Steel production is 1.7 billion tons. Rare earth production about 100,000 tons. We'll need millions of tons of rare earth elements, on top of what is already consumed for current electronics and electric cars. We'll need tens of millions of tons of silicon, on top of the millions consumed per year already. These PV panels do not last forever so even if we meet current demand the old panels will need to be replaced, and recycling old panels takes more resources than mining new silicon.

      Did I do enough math for you now? This does not add up to a bright future for wind and solar energy.

      --
      I am armed because I am free. I am free because I am armed.
    3. Re:Diesel engines are the future, do the math by thegarbz · · Score: 2

      Why is there so much concern on diesel cycle engines? As heat engines go they are quite efficient devices.

      Yes, very efficient at producing NOx emissions in confined living spaces for many.

      If it surprises you that there's more to life than CO2 and fuel economy it's probably from lead exposure from cars when you were younger.