Friday, March 18th, will mark six months since the news that Volkswagen deliberately circumvented U.S. EPA emissions laws on so-called "clean diesel" models sold from 2009 through 2015.
That news hit the automotive world like a bombshell, and led to consequences for VW Group that are still unfolding.
Executives have resigned, a fact-finding effort by a legal firm will report next month, dozens of government agencies are investigating, and unhappy owners have filed hundreds of lawsuits.
VW Group has since taken all diesel vehicles, both new and Certified Used, off sale in the U.S. No new diesel vehicles are now offered by Volkswagen, Audi, or Porsche.
DON'T MISS: How Will VW Fix My Diesel Car, And When? A List Of All Models
Volkswagen shares instantly lost more than a fifth of their value the following Monday, and VW later set aside $7.3 billion (€6.5 billion) for costs related to the effects of the scandal.
[NOTE: We originally published this article on Monday, September 21, the first business day after the EPA announced that VW had admitted to cheating on its diesel emissions. We've updated the article to reflect new information after six months.]
Here's what we know to date. We've put it in the form of 10 questions, and then answered them based on information as of the start of business on Monday morning.
2014 Volkswagen Jetta Sportwagen 4-door DSG TDI Grille
(1) Which vehicles are affected?
The initial batch of cars affected were sold by Volkswagen and Audi between 2009 and 2015, and powered by a 2.0-liter turbocharged diesel engine.
That earned them the designation "TDI" following the model name.
The highest-volume model is the Volkswagen Jetta TDI, but VW also offered TDI versions of the Passat, the Golf, the Jetta SportWagen, and the Beetle.
The recall will also apply to the Audi A3 TDI, in two generations: both the one sold from 2009 through 2013, and the new version introduced for 2015.
But across those models there are actually two engines in three versions. The most common is the 140-hp "EA188" 2.0-liter turbodiesel four introduced for 2009.
2009 Volkswagen Jetta Sedan 4-door DSG TDI Engine
That same engine in the Passat TDI was fitted with Selective Catalytic Reduction (SCR), also known as urea aftertreatment, starting in 2012.
Finally, a new generation of 2.0-liter diesel engine, known as EA288, is fitted to various VW vehicles (the Golf TDI, for instance) starting with the 2015 model year.
While Volkswagen, Audi, and Porsche vehicles with larger 3.0-liter V-6 diesel engines were not affected initially, they were subsequently investigated and found to include "defeat device" software as well.
Those include TDI versions of the Audi A6, A7, A8, Q5, and Q7; the Porsche Cayenne Diesel; and the Volkswagen Touareg TDI.
(2) What should owners of 2009-2015 Volkswagen, Audi, and Porsche diesel engines do?
In the short term, nothing.
Volkswagen later expanded the statement it issued on Friday, September 18, to include the following information:
Volkswagen is committed to fixing this issue as soon as possible. We want to assure customers and owners of these models that their automobiles are safe to drive, and we are working to develop a remedy that meets emissions standards and satisfies our loyal and valued customers.
Owners of these vehicles do not need to take any action at this time.
This means that the vehicles in question will all be recalled so VW can attempt to modify them in a way that would make them legal.
Until a remedy is devised, tested, approved by the EPA and CARB, and distributed to dealers, however, owners should simply keep driving their cars.
A proposal to update the cars that was submitted in January by Volkswagen was rejected by the EPA and the powerful California Air Resources Board (CARB) for not containing sufficient detail on how the changes would affect fuel economy and performance.
Volkswagen is trying again; a judge, meanwhile, has set a date of March 24 for a response, saying, "six months is enough."
2010 Volkswagen Golf TDI
(3) What longer-term risks are there to owners?
The 580,000 owners of 2009-2015 Volkswagen , Audi, and Porsche diesel models face some potentially significant longer-term challenges, however.
First, the value of their vehicles as used cars may well fall.
They paid more for their cars: Premiums over comparable gasoline models range from $1,000 on Golfs with mid- and high-level trims to $6,855 on top-level Passat models. While used diesels historically were worth more on the used-car market, that may not prove to be the case going forward.
Second, if VW is able to develop a fix and get it approved, the performance and fuel efficiency of their cars might fall. That's more likely if the fix is only a software update, which would be far cheaper for Volkswagen.
If VW ends up having to make software changes and retrofit an entire SCR system to 2009-2014 cars other than the Passat TDI and the V-6 models—something that would likely cost it thousands of dollars per car—performance would likely be unchanged, but interior volume might be reduced to accommodate a liquid-urea tank and associated plumbing.
Third, and most worrisome for owners in California and some other states, they may not be able to re-sell or even re-register their vehicles until they are fixed by Volkswagen.
That's because the vehicles were apparently "non-compliant," or illegal to sell in the first place as they now stand.
2009 Volkswagen Jetta TDI
Before the vehicle can be re-registered, the strict CARB may require the car to be made legal. As of today, we have no inkling of how long that could take.
In suspending its Recommended rating on the diesel Jetta and Passat, Consumer Reports notes:
While it is legal to sell the car, CARB and the California Department of Motor Vehicles may not allow the buyer to register the vehicle, and current owners may not be allowed to renew their registrations, until all the emission recall work has been completed.
Some states that follow California emission standards (so-called Partial Zero Emission states) also have rules in place that require all emissions-related recalls to be completed before periodical emission testing. If the recall is not completed, the vehicle cannot pass the inspection, and the state will decline renewal of the vehicle registration.
(4) What exactly did VW do?
Volkswagen has admitted that it equipped the control software for its 2.0-liter TDI diesel vehicles with a "defeat device" that detected when the car was undergoing emissions testing and significantly changed the operations of its powertrain to reduce emissions during the tests.
That detection was likely based on a combination of sensor data from the car, which might include steering angle (since cars on dynamometer tests don't make turns), front-wheel versus rear-wheel rotation speed, and a variety of other factors.
The emission test cycles that were developed in the early 1970s are far less aggressive than virtually any real-world driving 40 years later.
It appears that a combination of the factors above plus extremely gentle acceleration and braking might alert the car that it wasn't on the road but being tested in a lab.
Diesel engines are known to generate nitrous oxides (NOx), as do gasoline engines, but in greater quantities due to their higher operating temperatures.
Based on discussions with knowledgeable sources, we surmise that once an emissions test was detected, VW got the affected TDI engines to meet the Tier 2, Bin 5 NOx limits by reducing the fuel flow rate.
This would reduce performance, but most likely not to the point where the car couldn't complete the emission cycles.
Lowering fuel flow would also reduce combustion temperatures and/or the duration of high-temperature operation enough to keep NOx emissions barely within EPA limits.
If the car detected that it was no longer in "testing mode" but had returned to "driving mode," it would restore fuel flow to the regular level--which would send NOx emissions soaring.
The odd thing is that this software feature seems to have persisted into the company's newest generation of 2.0-liter TDI diesels, a heavily revised design known as EA288, which was intended to be fitted with urea aftertreatment systems--which allow other makers to meet the NOx limits under all circumstances.
The situation is slightly different with the V-6 diesels. They turned out to contain several undisclosed "auxiliary emission control devices," essentially software routines that temporarily limit the emission controls to preserve the engine under transitory extreme operating conditions.
Those are legal, but must be disclosed to the EPA, which they had not been. One of those routine qualifies under arcane EPA definitions as an illegal 'defeat device."
(5) How was it discovered?
This is one of the more interesting parts of the story: It wasn't discovered by the EPA at all, but by a clean-air group that tested VW diesel models to confirm its hypothesis that the latest diesel cars complied with all emissions standards while remaining much more efficient than comparable gasoline cars.
As recounted by Bloomberg, the International Council on Clean Transportation (ICCT) had studied European diesel cars and discovered that the on-road emissions of some models were notably higher than those measured in lab testing.
So the group decided to replicate its tests in the U.S., which then had much stricter emissions limits (known as Tier 2, Bin 5) than the Euro 5 standards in force in the European Union until this year.
They tested the cars on a dynamometer, or "rolling road," then measured their emissions in real-world use with a variety of speeds, road types, and demands on a road trip from San Diego to Seattle.
“We had no cause for suspicion,” John German, the ICCT's U.S. co-lead, told Bloomberg. “We thought the vehicles would be clean.”
The U.S. models too proved to have on-road emissions far higher than the maximum legal limits, so high that German termed the results "shocking."
On the open road, a Volkswagen Jetta TDI blew through the U.S. nitrogen oxide (NOx) emissions limit by 15 to 35 times. A VW Passat TDI (with urea aftertreatment) was 5 to 20 times the maximum.
A BMW X5 xDrive 35d diesel crossover equipped with urea aftertreatment and tested at the same time, however, met the emission limits under all circumstances.
The U.S. EPA and CARB opened a joint investigation into the cars in May 2014, but it was not publicized.
In December 2014, VW recalled nearly half a million cars for a software patch to fix the problem--but CARB found it didn't enable the cars to meet the regulations. Matters came to a head in July 2015, when CARB informed the EPA and VW of its findings.
2009 Volkswagen Jetta TDI
Last September, the EPA refused to certify VW's 2016 TDI models for sale, based on its real-world testing of the vehicle's emissions--which exceeded the legal limits, even though its lab tests didn't.
In a meeting on September 3, Volkswagen finally admitted that it had installed the "defeat" software. The EPA went public inside three weeks, during which time Volkswagen tried unsuccessfully to cut a deal with the angered regulators.
The full, formal six-page EPA letter sent Friday, September 18, is available here; it's worth reading for the details of VW's admission of guilt.
(6) Why didn't the EPA discover it before now?
The U.S. Environmental Protection Agency doesn't test every new car for emissions compliance every year. Most buyers don't know that, though, since the EPA's name is on the official ratings.
Instead, manufacturers "self-certify" and submit their data to the EPA. The agency tests about 15 percent of the new cars that go on sale each year, but it simply doesn't have the resources--in staff or in funds--to test every new car.
It's worth noting that in the wake of fuel-efficiency rating reductions by Hyundai and Kia, and then by Ford (twice), the EPA has said it will step up its verification and may require manufacturers to confirm their lab results with on-road testing.
But that's in the future. The VW trickery was discovered by a third party, which then passed it along a chain of contacts until it reached CARB and the EPA.
(We've heard through the grapevine that ICCT shared its results with a Detroit Three automaker, which was actually the tipster to the EPA, but we've not been able to verify that--so treat it as rumor until proven otherwise.)
(7) What has VW said so far about the charges?
The company issued numerous statements, initially one from its U.S. arm and one from its German headquarters.
The U.S. statement, issued and updated on September 18, the day the EPA went public, said:
Volkswagen Group of America, Inc., Volkswagen AG and Audi AG received today notice from the US Environmental Protection Agency, US Department of Justice and the California Air Resources Board of an investigation related to certain emissions compliance matters. As environmental protection and sustainability are among Volkswagen's strategic corporate objectives, the company takes this matter very seriously and is cooperating with the investigation.
Volkswagen is committed to fixing this issue as soon as possible. We want to assure customers and owners of these models that their automobiles are safe to drive, and we are working to develop a remedy that meets emissions standards and satisfies our loyal and valued customers. Owners of these vehicles do not need to take any action at this time.
The German statement, issued two days later by the CEO of Volkswagen AG, Dr. Martin Winterkorn (who resigned the following week) read:
The trust of our customers and the public is and continues to be our most important asset. We at Volkswagen will do everything that must be done in order to re-establish the trust that so many people have placed in us, and we will do everything necessary in order to reverse the damage this has caused. This matter has first priority for me, personally, and for our entire Board of Management.
Thus far, no mention of any contact with the 480,000 owners of the affected vehicles has been released. It may be months before details of a specific fix are available.
2009 Volkswagen Jetta TDI
(8) What's been the impact on the company?
Severe, and continuing.
When the European financial markets opened on September 21, VW Group shares lost more than 20 percent of their value. That's the best indication of how bad the damage from this could get.
The Los Angeles Times published a scathing editorial on Sunday, September 20, and more followed.
The timing is awkward: Some commentators have expressed dissatisfaction that the GM ignition-switch scandal, which killed more than 100 people, was recently resolved with a fine lower than Toyota's and no individuals held criminally culpable.
Volkswagen's CEO issued a rare weekend statement--very unlikely for a German company--that was as contrite as we've seen in years. That didn't prevent him from resigning just days later; he has not so far been charged with any wrongdoing.
Over the longer term, this event could set back VW's aspirations in North America by a decade or more, just as the so-called "sudden acceleration" fiasco did for Audi in the mid-1980s.
Volkswagen has struggled for years to understand the U.S. market and launch appropriate models.
More than two decades after the SUV boom began, it remains largely car-based and its Tiguan compact crossover--the hottest market segment today--is old, too small, and expensive. A mid-sized SUV concept, the CrossBlue, remains in the future more than three years after it was first shown.
And diesels were one of VW's few distinguishing points. They made up 22 percent of its 2014 sales, and 23 percent of its August 2015 sales.
The restrictions on all diesel vehicle sales by VW, Audi, and Porsche (see below) have hurt Volkswagen's U.S. sales totals in a growing market. Some customers for non-diesel vehicles have likely turned away owing to the perception of corporate malfeasance.
In short, VW is facing severe and painful challenges in the U.S. market for many years to come, not to mention a recall for half a million cars that could prove breathtakingly expensive if a suitable fix can't be accomplished in software.
Multiple class-action suits have already been filed, and were consolidated not in Detroit—where VW preferred them to be heard—but in the considerably tougher California district.
Total potential fines could reach $40 billion or more, including a U.S. maximum of $37,500 for each non-compliant car sold. VW Group's entire 2014 global profit was only $14.25 billion.
(9) Can you still buy a new Volkswagen or Audi with a diesel engine?
No. Over the weekend, VW issued a "stop-sale order" on all remaining new 2014 and 2015 TDI models with 2.0-liter diesels on its dealer's lots; Audi followed suit as well.
Similar orders followed a few weeks later for VW, Audi, and Porsche vehicles fitted with the larger 3.0-liter V-6 diesel engine.
The brands also told their dealers not to sell any of the affected vehicles as Certified Used cars, though they cannot regulate the sale of non-certified used models.
It is still possible to find (heavily discounted) used diesel vehicles from the three makers, both at dealers and third-party sellers.
All of those vehicles remain in limbo until the details of a recall are announced and approved.
(10) What does this all mean--for owners, for Volkswagen, and for diesel cars in North America?
In our view, this will not end well.
The deliberate attempt by VW to deceive regulators, flout emissions rules, and sell cars it knew to be illegal will hurt TDI owners, the company itself, and very likely the prospects for diesel passenger vehicles in the U.S. market.
Unlike the GM ignition-switch case and the Toyota acceleration case, this involves a company that set out deliberately to circumvent regulations and did so successfully for eight years.
And it's not as if the cars were slightly out of compliance: At one point, one model emitted 35 times the permissible limit of highly-harmful nitrous oxides (NOx).
We suspect the EPA will want to put Volkswagen's rotting head on a pike on the walls of the town, to discourage the blatant, flagrant arrogance that the company appears to have displayed.
Over the intervening months, no fewer than four friends of this site have contacted us for advice about car-buying.
One intended to buy a 2016 Jetta TDI, and now won't; another plans to dispose of his 2014 Jetta TDI SportWagen and will no longer buy VW products. All of them remain in limbo.
We think this story has only started.
_________________________________________________
