Monday, 21 September 2015

VW on the ropes as 'cheating' issue grows

Volkswagen shares fell some 18 per cent on the first full day off trading following the EPA finding that algorithms on some VW Group cars could manipulate emissions limits.

The US Environmental Protection Agency (EPA) has discovered, thanks to researchers, that software in several Volkswagen diesel-powered cars could deceive regulators and ordered the German carmaker to recall nearly half a million cars.

It is being speculated that in addition to the cost of recall, VW faces fines that could add up to billions of dollars as well as criminal charges for VW executives.

At the opening of the Frankfurt auto show only last week, Volkswagen Group chief executive officer, Martin Winterkorn, extolled the virtues of the Group as it moved forward to 2020.

Now Winterkorn has had eat his words and apologise for the ‘defeat device’ event. But is he apologising that it has happened, or that VW has been found out fitting ‘defeat devices’?

"I personally am deeply sorry that we have broken the trust of our customers and the public," he said, adding that he has launched an investigation into the software that allowed some VW Group vehicles to emit lower emissions during EPA tests than they would while driving normally.

"We do not and will not tolerate violations of any kind of our internal rules or of the law," Winterkorn added.

Question arise: Who, in the VW Group, would sanction the incorporation of the "defeat device" in the company’s diesel cars, including Audi A3, VW Jetta, Beetle, Golf and Passat models? Who would initiate the development of clever algorithms able to instruct the car's engine management system that the vehicle is being tested by the EPA for emissions. And where was the idea generated and for what reason. What would be their real motive? Is this an undercover software specialist seeking to harm VW? Is the corporate action to falsify one that is deliberate or is it an 'accident'?

If it is deliberate, how far up the VW Group’s powertrain chain of command does the sanction to explore and implement ‘defeat devices’ go?

The benefits of such a measure vary according to model, but triggering the algorithm into the ‘off’ position can potentially improve fuel economy, and delay the point at which the owner has to top up the Adblue now a requirement in modern diesel cars.

AdBlue is a high quality urea solution that is the registered trademark for AUS32, or Aqueous Urea Solution 32.5 per cent used with the Selective Catalytic Reduction system (SCR) to reduce emissions of oxides of nitrogen from the exhaust of diesel vehicles.

According to German newspaper Bild, the German government has ordered an "extensive" examination of VW's diesel cars.

It is understood that VW has halted sales of the relevant diesel models in the US, where diesel cars account for about a quarter of sales.

According to the EPA, the fine for each vehicle not complying with federal clean air rules could be up to $37,500 (£24,000). With 482,000 cars sold since 2008 involved in the allegations, fines could reach $18bn.

The EPA’s tests are predictable and recognisable by the vehicle’s on-board computer. The engine management system can then temporarily switch on a system to cut emissions, making the engine as much as 40 times cleaner.

Environmental groups have made the point that they believe the gases emerging from the tailpipe of a diesel-driven vehicle when performing on the road, do not appear to resemble results obtained in laboratory tests. Indeed, at least one has said there is a "very wide gap" between the two sets of results.

Added to which, there are frequent complaints that fuel economy figures advertised as being achievable by passenger cars are not realisable on the road by owners.

And could the same ‘cheating’ devices be fitted to the new vehicles emerging onto European roads as those sold in North America? If so, how and why? And also, if so since when and by which manufacturer? Is VW Group falsifying only what others have been doing for years?

The UK’s Society of Motor Manufacturers and Traders claims: "The EU operates a fundamentally different system to the US - with all European tests performed in strict conditions as required by EU law and witnessed by a government-appointed independent approval agency."

Mike Hawes, SMMT chief executive, added: “The industry acknowledges, however, that the current test method is outdated and is seeking agreement from the European Commission for a new emissions test … more representative of on-road conditions.”
Meanwhile, the EPA and the California Air Resources Board (CARB) will carry out investigations while the EPA reports that it will begin testing other diesel-driven vehicles, as the German government too also says it will check whether it is happening in Europe.

Interestingly, the ‘defeat device’ scandal surfaces five months after former chairman Ferdinand Piech left Volkswagen following disagreements with Winterkorn.

The VW board is due to meet on Friday to decide whether to renew the chief executive's contract until 2018.

Inevitably, some analysts speculate that Winterkorn could be on his way out.

"No question that this is a big problem for Volkswagen and could lead to [the chief executive] losing his job," said Professor Christian Stadler of the Warwick Business School, who compared the scandal to Toyota having to recall nine million cars between 2009 and 2011.

"To some extent, the cheating by Volkswagen seems more blatant, but the numbers are lower and there are no fatalities involved,’ he said.

"This suggests that in the heat of the moment the long-term effect on Volkswagen maybe overstated. Sure it will hurt, but maybe not quite as bad as we expect right now," he added.

"This disaster is beyond all expectations," noted Ferdinand Dudenhoeffer, head of the Centre of Automotive Research at the University of Duisburg-Essen.

US lawyers Hagens Bermand is understood to be launching a class-action suit against Volkswagen Group on behalf of those who purchased the relevant cars which includes: Jetta (2009 - 2015); Beetle (2009 - 2015); Audi A3 (2009 - 2015); Golf (2009 - 2015); and Passat (2014 - 2015)

"While Volkswagen tells consumers that its diesel cars meet California emissions standards, vehicle owners are duped into paying for vehicles that do not meet this standard and unknowingly pay more for quality they never receive," the law firm has alleged.

Meanwhile, today, a great many questions will have been asked within the automotive industry on both sides of the Atlantic, some no doubt seeking re-assurance.

1 comment:

Alan Bunting said...

Observers of truck and bus powertrain technology will get a feeling of deja vu as they read about the so-called emissions scandal affecting VW passenger cars on the US market. Back in the 1990s, the practice of 'cycle beating' was prevalent in the heavy-duty diesel sector. In 1998, all truck engine makers then in the North American market - Cummins, Detroit Diesel, Caterpillar, Mack, Navistar, Volvo and Renault - were found guilty of manipulating emission rules and were heavily fined. The EPA laid down certification test cycles, initially based only on a TRANSIENT test procedure, supposedly simulating typical driving conditions, including hard acceleration and cold-start phases.
That procedure contrasted markedly with the corresponding tests demanded in Europe. The EU's emission test data was based on thirteen STEADY-STATE running conditions.
It became apparent that both the EPA and EU test methods had glaring loopholes which allowed engine control electronics to be programmed to effectively by-pass the requirements under real-life mainstream truck operation. In Europe Scania notably was forced to re-programme its engine control ECUs.
The legislative authorities on both sides of the Atlantic endeavoured to put their respective houses in order by adding the procedure used across the pond. That is to say a combination of TRANSIENT and STEADY-STATE test cycles were adopted.
That appeared effectively to close the loophole; things have been quiet on the 'cycle beating' front for a decade or more.
The key question nevertheless arises: WHY did those truck diesel makers push their luck almost 20 years ago and why has, seemingly, VW now attempted the same skulduggery on its car diesels?
The necessary technology to keep the emissions 'legal' is there, but to bring down the crucial oxides of nitrogen (NOx) further means either increasing EGR rates and/or SCR AdBlue consumption, or possibly retarding net injection timing. And all three of those measures critically damage fuel consumption.
But in the US car market, where diesel power is chosen by only a minority of buyers, the motivation has to be fuel economy on high-mileage running. The point then arises as to whether a VW Passat buyer who opts for diesel rather than gasoline power in the expectation of improving consumption from say 35 to 50mpg would be any less motivated if cleaner, ie legal, emission compliance made the diesel Passat say 1 or 2mpg thirstier.
Many will think that VW's cycle-beating wasn't worth it, even before the EPA caught up with the German car maker.