VW was caught flagrantly cheating on emission requirements for their 2.0 four-cylinder diesel since 2009. This engine was used in nearly a quarter of all VWs sold in the U.S. and is also used in the Audi A3. A total of nearly 500,000 cars have been sold with this intentionally defective emission scheme.
http://www.detroitnews.com/...
This is not a case of the manufacturer pushing the boundaries on legal emissions limits and slipping over the line in some situations or a case of production tolerances varying from the engineering specs causing failures. This is VW intentionally designing their engine control software so that the only time it would operate within the legal emissions limits was when the engine computer detected it was connected to an external diagnostic source. This means when a car is taken for an emissions test, and the technician plugs the test equipment into the car, the VW computer would switch to its emission compliant setting. At all other times it would operate under a completely different engine control scheme which has been shown to increase certain emission types from 10 to 40 times the legal limit. This is legally defined as a “defeat device.”
VWs reasons for doing this are not know yet, but speculation is that this cheating improved fuel economy and/or it allowed VW to avoid having to use certain other more expensive emissions controls and reduce warranty claims.
VW has told its dealers to stop selling any 2015 models currently in inventory and the I understand the EPA has refused to certify 2016 VWs with the 2.0 diesel. Not only will VW be on the hook for expenses incurred to fix this problem, VW faces fines of up to $37,500 per vehicle, for a total of nearly $18 billion! Of course, those fines are theoretical. A lower negotiated fine seems to be the typical outcome in these cases. However, this is not a typical case as it was a deliberate act by the company.
That brings up the political part. A few weeks ago the New York Times had an article about a new Justice Department initiative to prioritize prosecution of individual employees in cases of corporate crime.
http://www.nytimes.com/...
The new rules, issued in a memo to federal prosecutors nationwide, are the first major policy announcement by Attorney General Loretta E. Lynch since she took office in April. The memo is a tacit acknowledgment of criticism that despite securing record fines from major corporations, the Justice Department under President Obama has punished few executives involved in the housing crisis, the financial meltdown and corporate scandals.
“Corporations can only commit crimes through flesh-and-blood people,” Sally Q. Yates, the deputy attorney general and the author of the memo, said in an interview on Wednesday. “It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.”
The initiative probably had Wall Street and banks in mind, but the VW case at hand seems to fit the concept. I understand that the notice VW received from the EPA on Friday was CC’d to the Justice Department. Messing with the air we breathe should be something that the Justice Department takes seriously.
I’ll also add that VWs stock has lost 20 percent ($17 billion) of its value today on the European Stock Market in response to this scandal. This scandal is certainly going to leave a mark on VW.