Since the confession made by Volkswagen engineers at the beginning of October 2015, the group has been under the spell of the ‘diesel gate’. The ball got rolling when in September 2015 a non-profit organization started recording emissions values of Volkswagens in field tests, in order to compare them with the official values set by authorities on the test bench. These diverged so much that the alarm was raised, fraud appeared and the diesel gate was a fact. But that is not the end of the matter, because in November 2015 the diesel gate was succeeded by the CO2 gate, in which fraud appeared to have been committed with petrol models. What is the diesel gate and how did Volkswagen get into such trouble? What about claims for Volkswagen and what does the CO2 gate entail?
The dieselgate
The diesel gate is a scandal in which Volkswagen was caught fraudulent with the emissions of their diesel cars. Software was built into the cars that could recognize the conditions of a test situation on the roller bench. In such a situation, the car switched to a special economical mode with which it consumed less. For example, a car that emitted too much could still meet the requirements of the law. In this way, Volkswagen claims to have unlawfully passed around 11 million vehicles through the diesel emission tests. The fraud has been established by the US Environmental Protection Agency (EPA). The software, it became known in 2016, was supplied by Bosch and is probably also installed by many other car companies. Bosch claims that the software is designed purely for testing purposes.
Emissions of what?
It is normally dust for technicians and enthusiasts, but in the dieselgate it makes sense to take a closer look at the pollutant emissions. For the tests, the substances can be divided into two categories, the substances around which the diesel gate is all about are printed in italics.
Greenhouse gases such as:
- carbon dioxide (CO2)
- methane (CH4)
- nitrous oxide (N2O, also known as nitrous oxide)
Emissions harmful to humans and the environment such as:
- nitrogen oxides (NOx)
- carbon monoxide (CO)
- hydrocarbons (HC)
- particulate matter (PM10)
The diesel gate therefore mainly concerns nitrogen oxides (NOx) and to a lesser extent carbon dioxide (CO2). In real field tests, NOx values were found for diesel engines that exceeded the legal maximums by six to ten times. Nitrogen oxides cause smog and stimulate ozone formation, both of which are harmful to health.
The difference between the US and Europe
The fact that the diesel gate started rolling in the United States is probably due to the fact that diesels are hardly used in the United States. Logically, the difference in emissions between petrol engines and diesel engines is therefore more readily apparent. That’s the case, diesels emit a relatively high amount of nitrogen oxides (NOx), while petrol engines score particularly high on carbon dioxide (CO2) emissions. In the United States, people are therefore very upset about the high NOx values, while there is no mention of the CO2 values emitted by petrol cars.
Affected models
According to Volkswagen, these are diesels of the Euro 5 TDI type, officially named EA189, a type of engine that was installed from 2009. The fraudulent versions of diesel engines include at least the 1.6L and 2.0L diesels. According to the Environmental Protection Agency (EPA), Volkswagen has also tampered with the 3.0TDI engines. They measured emissions in test situations that were nine times higher than permitted. At the beginning of November, the EPA announced that it would start an official investigation into this 3-liter diesel engine.
The 11 million cars previously identified by Volkswagen include some 5 million passenger cars, including the full production of the Golf VI, Passat VII and Tiguan I. About 1.8 million of the commercial vehicle models are suspected, including mainly Caddy’s. and Transporters. The other contested diesel models are located at subsidiaries Audi, Seat and Skoda. This includes types such as the Audi A3, A4, A6 and Q5 and the Skoda Octavia and Superb. The sale of all diesel cars suspected of fraud has been suspended for the time being.
Volkswagen top: heads roll
On September 22, 2015, Volkswagen CEO (of the US) Michael Horn apologizes at a press conference from Volkswagen for the fraud. Later, on October 8 of that year, he would do so again in front of the United States Congress, where his speech garnered a lot of skepticism. On September 23, 2015, CEO of Volkswagen AG Martin Winterkorn draws his conclusions and resigns. Matthias Muller, CEO at subsidiary Porsche succeeds him there. Michael Horn, CEO of Volkswagen’s US division, also resigned in March 2016. His duties are provisionally supervised by Hinrich J. Woebcken, second man in the division.
Claims
Soon after the release of the dieselgate, – mainly American – government agencies and private individuals pushed to make their claims against Volkswagen.
Government
The aforementioned American environmental institute EPA estimated at the beginning of October 2015 that fines for VW could amount to about 18.5 billion dollars. The maximum fine is in fact $ 37,500 for every car equipped with cheating software. Also, VW and its directors are facing criminal prosecution, which the company can buy through a settlement. At the beginning of October 2015, 40 cities and states had already filed a claim.
Individuals
At the beginning of November 2015, it was announced that private American VW owners could receive an allowance of 1000 dollars, half of which is free to spend. In the same month, reports also surfaced that European Volkswagen owners are not being compensated. Later in 2016, a $ 14.7 billion settlement was cleared by the United States court. Of this amount, 10 billion dollars is intended to compensate consumers and to take off the road cars of the group that are equipped with fraudulent software.
Investors
Investors also felt misled by Volkswagen. The stock market price plummeted after the release of the dieselgate and they want to be compensated for this, the Dutch investor association VEB told the company. Volkswagen was insensitive to investors’ claims. That is why, at the beginning of September 2015, the investors united under ‘consumer claim’ decided to file a collective claim against the company.
Credit cut
At the beginning of November it was announced that credit rating agency Fitch has lowered Volkswagen’s credit rating from A to BBB +. The reduction may result in Volkswagen having to pay more interest on future loans.
Consequences Volkswagen: the recall
The recall that Volkswagen is organizing for their diesel cars is extensive. In November 2015 the company came up with a solution for the 1.6L diesel engines. She also hoped to quickly come up with a solution for 1.2L diesel engines. The car company expects the recall for cheat diesels to last throughout 2016.
United States: Cars get new catalytic converters
Volkswagen announced in January 2016 that new catalytic converters will be installed in 430,000 US cheat diesels. With this, the company wants to ensure that the cars still pass the emissions test. It will be the case that car owners can choose between having their car modified or having it bought back by the company. The compensation comes to around $ 1,700 per customer with the free repairs. The bill for repairs in America alone is expected to reach $ 1 billion. About 580,000 Volkswagen diesels drive around the country.
In Europe: Large-Scale Recalls
During the first months of 2016, other car manufacturers, such as Renault, were also the subject of investigation. At the European level, Volkswagen has indicated that it will recall 8.5 million cars, almost a third of the diesels sold between 2009 and August 2015. In addition to Volkswagen, Audi, Porsche, Mercedes and Opel are also participating in recalls. In the neighboring country of the Netherlands, some 160,000 diesels from the Volkswagen group will be recalled. These are Volkswagen and Audi cars.
Also tampered with CO2 values
In the meantime, another problem loomed for Volkswagen in that same November, the CO2 gate. According to sources, this would be about 800,000 cars worldwide. This concerns both diesel-powered cars and cars with petrol engines. Models to which this news related were Volkswagen’s, Seat’s, Audi’s and Skoda’s with 1.4 liter, 1.6 liter and 2.0 liter engines, built from 2012 onwards. The 1.4 liter petrol engine of, for example, the Volkswagen Polo also gave wrong results. This would concern 98,000 cars. Volkswagen has confirmed that the stated emissions values were presented too rosy and has meanwhile set aside an extra $ 3 billion to face claims.