After years of self-denial, Volkswagen has finally admitted that it equipped 11 million vehicles with software that was used to cheat during emission tests. Once this software sensed that a car was being tested, it would activate specially prepared equipment that reduced emissions and made the models pass emissions tests. During regular driving, this software would turn down this equipment to improve acceleration and torque as well as to save on fuel. However, doing this increased emissions above legal limits.
These special components work by recycling exhaust gases like nitrogen oxide (NOx) which is harmful to human health. This gas can cause various respiratory diseases including bronchitis and emphysema.
Effects of the emission cheat
According to a research done earlier, the affected models in the US alone are emitting 10,392 tons to 41,571 tons of harmful nitrogen oxide into the air annually compared to only 1,039 tons they are supposed to emit had VW complied with federal pollution standards.
This means the models are emitting around 40 times beyond the federal standards. Worldwide, all the 11 million affected models could be emitting between 237,000 tons and 948, 500 tons of NOx annually.
Last month, the American government reached a deal with the automaker who agreed to compensate around 500,000 customers with the 2.0 L, diesel models. Exact details are not yet out but according to reports, the automaker will either buy back the models or fix them to meet emissions standards. In addition, the automaker will provide substantial compensation to owners of the cars.
However, we understand that the agreement does not apply to 90,000 owners of models with the 3.0L diesel engine. However, these might still get recourse as there are other lawsuits by owners and dealers all over the world. The agreement might, however, give an indication to what the automaker might do with affected buyers in Europe and the rest of the world. The deal with the American government is set to be finalized in June and analysts observe that the deal will cost the company around $10 billion.
Norway’s pension fund which is the largest sovereign fund in the world has said it is planning to join a class action lawsuit which has been brought about by private investors in Germany. These investors are looking to recover their losses because of the scandal. Prior to the scandal, the fund had invested around $ 1.2 billion in the German company making it the 4th largest stakeholder in the automaker.
Impact on the automaker
Ever since the news of the violation broke out in September last year the, company’s stock value has declined by over 40%. The scandal has even affected the automaker’s objective of becoming the largest automaker by 2018.
According to reports, the automaker is not even paying much attention to the US market until the issue is resolved. Prior to the out of court agreement with the United States government, the US department of Justice had already sued the automaker on behalf of EPA. Following the cases of Toyota and GM scandals, Volkswagen could have been fined up to $37,500 for every car totaling to around $18 billion. VW seems to be well prepared to handle the situation as the company has already set aside $ 18.2 billion to cover costs related to fines, recalls and regal fines.
However, analysts argue that the figure could be inadequate with the US government deal set to cost around $ 10 billion leaving the automaker with only $8 billion to cover around $10 million cars worldwide.
Blow to the diesel market
The Volkswagen diesel scandal has left many people with a bad taste of diesel powered automobiles. Before the scandal emerged, diesel vehicles were experiencing a sharp decline in demand.
The scandal has now made the situation even worse for diesel cars. In the US, diesel cars are now accounting for only 1% of all new car sales and the demand is projected to decline over the coming months. The future of diesel vehicles has also been cast into doubt after scientific studies revealed that diesel vehicles are not all that friendly to the environment as earlier believed. In fact, some cities are moving to limit the number of diesel cars on the streets.
Europe is still more receptive to diesel powered models but a revelation that almost all diesel-powered vehicles are flouting emission standards is also set to affect diesel sales over there. In addition, there have been calls to revise European testing regulations as many automobile analysts argue that they are a bit relaxed compared to those of the U.S.A.
Cars with scandal affected engines
Cars that as a drive unit use 2.0 TDI and 3.0 TDI engines found themselves under attack of strict regulations on environment protection. We give you a list of some of the cars that drive these motors.
2014–2016 Audi A6 3.0 V-6 TDI
2014–2016 Audi A7 3.0 V-6 TDI
2014–2016 Audi A8 3.0 V-6 TDI
2014–2016 Audi Q5 3.0 V-6 TDI
2009–2015 Audi Q7 3.0 V-6 TDI
2010–2015 Audi A3 2.0 TDI
2013–2016 Porsche Cayenne Diesel 3.0 V-6
2009–2015 Volkswagen Jetta 2.0 TDI
2009–2016 Volkswagen Touareg 3.0 V-6 TDI
2010–2015 Volkswagen Golf 2.0 TDI
2012–2015 Volkswagen Beetle 2.0 TDI
2012–2015 Volkswagen Passat 2.0 TDI