Source: Hemera Technologies / Getty
On Tuesday Volkswagen AG’s smog-test scandal escalated as the company acknowledged the placement of stealth software in millions of vehicles worldwide. VW has already lost more than 24 billion euros ($26 billion) in market value as a result of the crisis.
Volkswagen, the world’s top-selling carmaker now admits to 11 million of its diesel vehicles containing software that evades emissions controls. Well over 482,000 cars have been identified by the U.S. Environmental Protection Agency as violating clean air laws.
Volkswagen set aside an initial 6.5 billion euros ($7.3 billion) to cover their attempt to “win back the trust” of customers. CEO Martin Winterkorn apologized for the deception under his leadership and pledged a fast and thorough investigation; however he gave no indication regarding his possible resignation.
Winterkorn became CEO in 2007 and the software was installed starting with 2009 models. VW has yet to explain who installed the software, under what direction, and why.
On Friday the EPA said that VW faces potential fines of $37,500 per vehicle, and that anyone found personally responsible is subject to $3,750 per violation. The penalties could total $18 billion or more, although in the U.S. companies rarely pay maximum fines.
Volkswagen blamed unrelated issues for more than a year while the EPA and California regulators asked why its cars were running much dirtier on the road. The agencies refused to approve 2016 models without an answer.
That’s when VW acknowledged that their software switches its engines to a cleaner mode during official emissions testing. The EPA said the “defeat device” then switches off again, which gives the cars more power while emitting as much as 40 times the legal pollution limit during actual driving.
The head of Volkswagen’s U.S. division, Michael Horn, said Monday while unveiling a new Passat model in New York “Let’s be clear about this. Our company was dishonest. With the EPA, and the California Air Resources Board, and with all of you. And in my German words, we have totally screwed up.”
Germany’s Daimler AG, the maker of Mercedes-Benz cars also said new vehicles with EU 6 diesel engines currently on sale in the European Union comply with legal requirements and environmental standards. The results of the internal investigations hasn’t been revealed by the company beyond announcing the much wider impact on Tuesday.
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