Continued from Car Books – Second Gear
This is a car book I wanted to read even before I knew it was a car book. Ever since the story began to unfold of the Volkswagen Diesel Emission Scandal in 2015, I knew this would be an intriguing story to read. As I learned new details almost daily from my online Autoweek news magazine at the time, the fraud became even more incredible and I hoped someone would write a book. Thanks to Jack Ewing writing Faster, Higher, Farther: The Volkswagen Scandal, that book is now published and thanks to my wife’s unprompted gift of it to me for Father’s Day, I now know so much more.
I was already familiar with how Volkswagen got its start, essentially as a propaganda car company by Hitler prior to World War II so I was a little puzzled when the book traced the beginning that far back. But through an abbreviated history of the company, along with its founding of Audi in 1969 and its close relationship with Porsche, important details were provided about the automotive environment at Volkswagen. And learning about the senior management of the company and their business philosophies—their attitude of make it work or you’re fired—helped me understand how such a scandal could actually transpire.
As I read, there were several learning’s that surprised me.
Turns out, this was not the first time a car company or engine manufacturer had implemented a “defeat device” to disengage emission equipment to improve performance. In the 1990s, there were three separate cases, Cadillac, Ford, and Cummins Diesel that had programmed Engine Control Units (ECUs, the onboard computers) to disengage in certain situations. In each case, the ECU was programmed to recognize when it was undergoing testing—when the engine was driving the wheels but the steering wheel was not being turned—and employ all emission equipment to function properly during the testing. Once deceit was proven, the Cummins case alone resulted in a 1 billion dollar fine by EPA.
The introduction of the Turbo Direct Injection (TDI) Diesel by Volkswagen in 2009 supported Volkswagen’s professed goal of becoming the world dominant automaker outpacing all other car companies in numbers of sales. Diesel-power, while less common among passenger cars in the US, offered advantages of reduced carbon dioxide emissions and better fuel efficiency (relative to gasoline) and afforded Volkswagen an opportunity to compete against Toyota’s highly fuel-efficient Prius. But due to the higher operating temperature inside the cylinder, diesel engines produce much more nitrogen oxides, the gases that cause smog and have a direct link to asthma and other deleterious health issues. The challenge presented to the Volkswagen engineers in 2006 was to create a clean diesel engine for this planned 2009 launch.
Since Audi had marketed a diesel engine since 1999, the engineers looked there first to see how they had addressed emissions difficulties. When they began to examine the ECU programming, they found an unusual section of code that had been included to reduce the loud clacking noise diesel engines make when they are first started. They realized, this was a defeat device as it turned off emission equipment to reduce the noise.
When the engineers kept encountering issues achieving the clean diesel goal, it was suggested that Volkswagen use a similar defeat device to address the poor car performance that resulted when the emission equipment was fully operational. It was reluctantly pursued and since Volkswagen did not write their own ECU code, they had to instruct Bosch, the ECU manufacturer to include it, which broadened the scandal even further. As with the previous devices, these were programmed to recognize when they were being emission tested in the laboratory so that emissions would be within acceptable levels.
By mid-2015, thanks in no small part to their TDI diesel cars, Volkswagen overtook Toyota as the largest global carmaker in terms of sale volume. But interestingly, it was events in Europe that began to unravel the fraud.
Diesel cars are much more common in Europe because of diesel’s price advantage over gasoline and diesel’s superior fuel efficiency. But in spite of still meeting less stringent European emission standards, actual pollution within cites was found not to be decreasing as it should (based on calculations) but rather was increasing. The European organization similar to EPA contracted with West Virginia University (WVU) to test several diesel cars both in laboratory settings and on the road. The WVU staff just happened to test two Volkswagens and a BMW in California where the California Air Resources Board (CARB) had even more stringent requirements than EPA. The results were eye opening. While all three cars easily passed the laboratory test, only the BMW met emission requirements under actual road conditions. On the road, the two Volkswagens exceeded the nitrogen oxide limit by as much as 20 to 30 times.
Still not understanding that fraud was at play, future testing was conducted by CARB. Conflicting data continued to pile up between laboratory and on road testing. Then CARB decided to extend the standardized lab test sequence and discovered a remarkable result. One minute after the test was scheduled to end, emissions jumped dramatically on the car still rolling on the tester.
CARB first asked Volkswagen kindly for explanations but since none were forth coming, began to demand answers. No reasonable answers were provided and so in July 2015, CARB chose to use their nuclear option threatening not to certify the 2016 diesel cars that were already sitting in US ports, an act that would actually preclude their sale not just in California, but anywhere in the US.
From the time of the original WVU study in 2014 through all of the testing by CARB in 2015, Volkswagen continued to obfuscate the truth about the scandal by providing misleading and confusing answers to CARB. Volkswagen eventually admitted to a technical issue with the emission systems in early 2015 and agreed to recall and fix affected diesel cars. But following CARB’s retesting of the repaired diesel cars which still gave failing results, Volkswagen finally admitted that a defeat device had in fact been included in all 11 million diesel cars sold worldwide, a fraud on par with Enron.
The legal process that ensued was complex since it involved government regulators, states, VW dealers, and car owners. Partly due to Volkswagen’s covering up of the fraud, the legal settlement between Volkswagen, US authorities and car owners amounted to 15 billion dollars, well above the previous 1 billion defeat device fine, only to be increased by another 5 billion the following year related to another type of Volkswagen diesel sold.
While this was not the type of car story that would typically pique a car lover’s interest of cars, it was nonetheless, a very interesting tale of just how bad and how potentially unscrupulous a car company could be.