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Did Volkswagen Just Kill the Diesel, Again?

Did Volkswagen Just Kill the Diesel, Again?

By Christian Wardlaw, September 22, 2015

While Americans were learning how to do the hustle just like Tony Manero, and the Bee Gees were wailin’ about stayin’ alive, General Motors was rolling out a new diesel V-8 engine for its full-size cars. This 5.7-liter diesel was, to put it politely, garbage, and its willingness to quickly self-destruct tainted the image of the diesel engine for decades.

Twenty years later, Volkswagen had begun selling its turbocharged direct-injection (TDI) diesel engines in the U.S. Efficient and rich with torque, the Volkswagen TDI engines slowly rekindled interest in diesel, especially after the automaker began touting them as “clean diesels” able to meet strict California air pollution regulations.

Now, West Virginia University and the International Council on Clean Transportation has discovered that Volkswagen Group’s turbocharged, 2.0-liter 4-cylinder “clean diesel” engine may actually produce up to 40 times the amount of nitrogen oxides allowed by law. An investigation by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) has confirmed that VW TDI engines are anything but clean.

What is a Volkswagen TDI Engine?
For the 2009 model year, Volkswagen Group debuted its new 2.0-liter “clean diesel” TDI engine, installing it in nearly half a million Audi and Volkswagen models sold in the U.S. through the 2015 model year.

The critically acclaimed engine combines an abundance of torque for responsive acceleration and a seemingly effortless ability to return the fuel economy of some hybrid cars. An expensive option, the engine provides a unique driving character and remarkable driving range, and in recent years it has proven critical in accelerating Americans’ acceptance of diesel-powered passenger cars.

Models affected by the EPA/CARB investigation include Audi A3, Volkswagen Beetle, Volkswagen Golf, and Volkswagen Jetta sold for the 2009-2015 model years, as well as the 2014-15 Volkswagen Passat.

Why is Volkswagen in Trouble?
The results of the EPA/CARB investigation determined that Volkswagen had manipulated the emissions systems of the affected models in order to pass emissions tests, a direct violation of U.S. regulations.

Nitrogen oxide (NOx) exhaust emissions are the problem. Sam Abuelsamid, a senior research analyst at Navigant Research’s Transportation Efficiencies program, explained to Autoblog Green that this engine employs a nitrogen oxides trap to clean NOx from the exhaust before it exits the tailpipe. Other diesel engines from German automakers employ urea injection to treat NOx.

Apparently realizing that its new “clean diesel” engine might not be so clean, Volkswagen illegally installed a “defeat device” to ensure that the engine would pass inspection. Software detects when the car is being tested for emissions and fully activates the emissions controls in order to pass the test. When the cars are not undergoing emissions testing, they do not meet emissions standards because the emissions controls operate at a greatly reduced level of effectiveness.

How did Volkswagen React?
On the Monday morning following the revelations, Volkswagen Group CEO Martin Winterkorn issued a statement addressing the situation. In addition to announcing that Volkswagen will conduct an external investigation into the matter, highlights included the following quotes:

“I personally am deeply sorry that we have broken the trust of our customers and the public.”

“We do not and will not tolerate violations of any kind of our internal rules or of the law.”

“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.”

What is Happening Now?
From lost sales for dealerships to lost resale value for current owners of TDI-equipped vehicles, the damage is potentially considerable.

Automotive News estimates that 22% of all new Volkswagen models sold in the U.S. are equipped with a TDI engine, and the company has issued a stop-sale order on all 2015 model-year TDI vehicles currently in dealer inventory. Furthermore, the EPA refuses to certify 2016 model-year TDI vehicles for sale until Volkswagen resolves the problem. Winterkorn’s statement appears to promise that Volkswagen will make things right with dealers.

While owners of affected vehicles will not pay for the repairs required to bring their vehicles into compliance, the situation could negatively impact the resale value of their TDI models, which cost more than their gasoline equivalents to purchase when new. Again, Winterkorn’s statement appears to promise that Volkswagen will make things right with consumers.

Shareholders, however, may have an even larger beef with the automaker. On the Monday morning of Winterkorn’s official statement, Volkswagen Group stock sank up to 23% on the German stock exchange, diminishing the company’s value by $17.6 billion in a single day.

By September 22, Volkswagen admitted that up to 11 million Audi and Volkswagen vehicles around the world might contain software designed to provide false results during emissions testing. Volkswagen had set aside $7.3 billion to fix the problem, and the EPA had opened investigations into additional Audi and Porsche models employing Volkswagen Group diesel engines.

What is Next?
The situation with Volkswagen’s TDI engine problem is fluid, and changing every day. Among the events likely to occur next:
  • Volkswagen Group faces a reported potential fine of $18 billion, though analysts doubt the punishment will be anything close to that severe
  • The U.S. Justice Department is expected to open a criminal investigation against Volkswagen
  • Governments from around the world are likely to launch investigations related to the crisis. Germany, the European Union, and South Korea already had as this article was written
  • The EPA says that it now plans to examine diesel models sold by other automakers to ensure that they are in full compliance. The BMW X5 had already passed new testing as this article was written
  • Winterkorn, having recently survived an ouster attempt by now departed VW Group chairman Ferdinand Piech, is widely expected to lose his gig as CEO
  • Automotive News reports that owners are reportedly eager to join class-action lawsuits against Volkswagen

Did Volkswagen Just Kill the Diesel, Again?
While U.S. car sales have rebounded in recent years, Volkswagen sales have flat-lined. The company does not offer a competitive range of crossover SUVs, and efforts to make popular sedans like the Jetta and Passat more competitive have not been as successful as the automaker once anticipated.

Until this past week, Volkswagen was positioned to turn the corner on sales. The redesigned 2015 Golf is a hit, a refreshed Passat is coming for the 2016 model year, and a trio of new crossover SUVs will arrive starting with a new Tiguan next year.

Unfortunately, people tend to form long-lasting impressions that are frequently based on a minimum of information. You can almost hear the neighborly advice now: “Oh, I heard those Volkswagen diesels pollute the environment, and the company lied about it. Don’t get one of those.”

In this case, Volkswagen deserves to be remembered for illegally programming the emissions systems of its vehicles and getting caught. The automaker’s diesel engine, however, is a durable, efficient power plant, and diesels employing urea injection to clean NOx from the exhaust are, at this point anyway, clean enough to meet strict standards. In theory, switching to urea injection will solve the problem.

Nevertheless, what people are likely to remember from this affair is that diesels are dirty, that diesels pollute the environment, and that diesels are therefore bad. By seeking to give the diesel engine a reputation for clean exhaust and emissions, Volkswagen may have actually sacrificed the diesel engine by cheating the system.

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