The ‘Dieselgate’

Paolo Pane

23 November 2020

I. Introduction and Initial Analysis

Volkswagen (VOWG.DE) is a German company that concentrates on manufacturing and sales of vehicles (Reuters, Company Profile for ${Volkswagen}, 2020). The company produces, distributes and sales different segments of cars; passenger, commercial, and power engineering (production of engines, compressors and turbines for third party companies) (Volkswagen Group, 2020). Furthermore; Volkswagen owns several other vehicles manufacturing companies such as, Audi, Skoda, Seat, Lamborghini, Porsche, Bugatti, Ducati, Scania and Man (Volkswagen Group, 2020).

Throughout the last decades the company has seen a great increase in sales and overall company increase; thanks to its reliability, services, and “low and friendly emissions” (Statista: Volkswagen, 2020). However in 2015, the United States Council on Clean Transportation came to the conclusion that the german automotive produces diesel vehicles, discovering alarming details in regards to the emissions of such vehicles (Hotten, 2015).

The United States is one of the most polluting countries of the world especially in regards to vehicles emission (UCSusa, 2020), thus its regulations have started to become stricter every year (Hotten, 2015). The US vehicle market is predominant on gasoline vehicles which are more polluting and less efficient than diesel ones, thus the US was eager to introduce diesel vehicles in the market trying to reduce emission. “Our happiness was, Wow, we are going to be the first guys to test diesel cars on the road” (Arvind Thiruvengadam, Head of research at Council of Clean transportation, 2019). Though the details results of tests done weren’t what they were expecting to see.

II. Diesel-gate Crime Details

In 2015, before introducing the Volkswagen diesel vehicles to the US market, which would have been a perfect alternative to gasoline and hybrid vehicles to lower emissions; the US Council of Clean transportation was in charge to test these vehicles. The test comprehended in testing two Volkswagens and one BMW for the emissions of NOx (nitrogen oxides) (Linkov, 2015).

The first results were completely off scale for the Volkswagen while the BMW showed zero emission, the test was repeated several times with always the same results, leading to the conclusion that there was something wrong with the cars it self. “ And then, I mean, we did so much testing that we couldn’t repeatedly be doing the same mistake again and again…”(Arvind Thiruvengadam, Head of research at Council of Clean transportation, 2015). After the reports of the test done in the US it was discovered that the every other test for vehicle emission was done on test benches and never on roads (Linkov, 2015).

Starting from this assumptions in the Volkswagen manufacturing process, engineers implemented in the vehicle’s control unit a small chip with a code that understands when the car is being “tested” on a testing bench and thus reduces the emissions in order to be in the terms of the regulations (Blackwelder, 2016). This chip inserted in the control unit understands that the vehicles is on a testing bench by seeing which part of the vehicle is using turning the tires, (on testing benches only the tires of the anterior of the car rotate for all Volkswagen models, while the posterior tires are firm), therefore engineers under authorisation of the board of Volkswagen, simply modified a small code in the control unit (produced by Bosch) of it vehicles in order to produce cars that followed the emission regulations, but only while the vehicles were tested ( Blackwelder, Coleman, Colunga-Santoyo, Harrison, Wozniak, 2016).

The small change in the code, which affected 11 million vehicles around the world sold between 2009 to 2015 (both by Volkswagen and its subsidiaries companies) not only caused an incredible increase in the emissions of NOx; which was up to 40 times more than the allowed from the regulations for each vehicle (Quirin, 2015), but also made the company completely unreliable and lost millions of customers’ trust including the entrance in the US market. (Hotten, 2015).

III. Legal Trial

As soon as the scandal started to come to surface, Volkswagen was already at the centre of the attention of the media and public all around the world, that had put the company on its knees. The company has started to receive lawsuits and complaints from every angle, starting from January 2016 from the Department of Justice which filed a complaint to Volkswagen and most of its subsidiaries companies for the alleged violations of the Clean Air Act.

The following year in January 2017, Volkswagen officially pleaded guilty to three of the several felonies they were accused of and agreed to pay a fine of $2.8 billion and $1.5 billion for the resolutions of civil and environmental damages (O’Kane, 2019). Furthermore; Volkswagen had to start to recall starting from 2016 all the “modified” vehicles and thus it had put aside $6.2 billion to cover the costs, resulting in the company’s first quarter loss of $2.2 billion since 2000. (Volkswagen Konzern – AR 2016 – Consolidated Financial Statements, 2016).

The fines, payments, and the scandal itself had serious repercussions on the company also leading its public offer price to plummet from $200,00 to $120,00 (Reuters, 2020).

The final charges to the company came in 2019, causing the company to pay fines and settlements totalling over $30 billion since the scandal was discovered and multiple executrices part of the board of directors, engineers, and employees have been forced to fire themselves or arrested.

IV. Analysis

It can be concluded that, the Volkswagen Diesel Gate scandal of 2015, raised some questions, most prominently in the areas of environmental problems; continuing with the compliance of regulations and fraud issues. Furthermore; it can be analysed that, as discussed in the essay, some laws and regulations weren’t correctly followed by Volkswagen and its subsidiaries. Due to gaps in the Clean Air Act, where vehicles are not mandatory supposed to be tested for emissions in outer spaces but only on testing benches. The gap in the Clean Air Act, gave the opportunity for companies such as Volkswagen, to “cheat”; thus faking their results in order to follow the regulations.

The incorrect compliance of such laws, lead to an increase in emissions of NOx severely damaging and worsening the current environmental situation, as the 11 million of vehicles produced by Volkswagen emanated up to 40 times more Nitrogen Oxides than the regulation permitted (Quirin, 2015). There may have been a reason for the Clean Air Act to have such gap permitting to fake the emissions results, which could’ve been in the interest of many since it reduced the price of production of vehicles, therefore increasing possible profits.

Through the research done and discussed in this essay; it can be concluded that the environmental safety, critical thinking of consequences, and ethical board areas of Volkswagen need improvements. Moreover, the regulations on vehicles emissions (ex. Clean Air Act) have to be improved majorly, in order to avoid future scandals leading to incalculable environmental damage, loss of money for the company, and loss of trust from customers and the public, possibly completely destroying a company’s reputation.

It is now up to us, as the new generation, to keep with traditional but not environmentally harmful ways, to increase growths, or to insist on change for a better collective and friendlier environment in every possible sector.