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VW kills the diesel engine, and opens path for electric vehicles

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Of all the questions that have been asked about the scandal surrounding Volkswagen’s cheating on vehicle emissions tests in the US – Who, what, when, how, and why – there is one that no one has come even close to answering. Why?

The facts of what happened seem pretty clear. VW deliberately installed what is known as a “defeat device” that would switch on when the software recognised it was being tested by authorities.

The purpose was to give the impression that the vehicles were a lot cleaner and more efficient than they were in reality. It happened over a period of at least five years. It disguised emissions that were up to 40 times above the legal limit. It was a fraud of massive proportions, but no one has been able to explain the reasons for it.

Clearly, someone thought there were commercial and production benefits from implementing this colossal deception. But why spend millions of dollars on a “defeat device” and the software to activate it at the right moment. Neither is a trivial piece of engineering. Why not just build a cleaner engine?

Maybe they couldn’t, at least at a price that would be attractive to consumers. Which leads to another question: Have rival car manufacturers done the same thing? The sharp falls in their share prices last week suggest that VW might be just the tip of the iceberg.

The European Federation for Transport & Environment, an NGO, says tests show clear discrepancies between laboratory emissions and real-world performance for several automakers including BMW, Mercedes-Benz and General Motors’ Opel unit, and these manufacturers might also employ similar kinds of software in Europe that VW has allegedly admitted to using in the US.

Such fears are reinforced by revelations that politicians in France, Germany and the UK went to great lengths to ensure that EU member states could not carry out the sort of “surprise checks” on the emissions of cars that the US Environmental Protection Authority is now planning.

VW may have accelerated push to hybrids and full electric vehicles

As the share price of major car-makers such as Daimler (maker of Mercedes) fell, one motor vehicle company was notable for going in the other direction: Tesla Motors. The full electric vehicle manufacturer jumped around 5 per cent late last week. Batteries are getting cheaper, diesels are not. The sort of controls that VW was avoiding cost around $US8,000 a car. And Tesla makes a valid point in this opportunistic ad.

tesla vw ad

VW’s actions, and the dirty secrets that will be revealed when we find out why it acted this way, may be used as a good reason to start shifting aggressively to vehicles that do not use fossil fuels at all. That’s a process that will be accelerated when, as many expect, the Paris climate change conference produces a framework that will guide the world towards a 2°C world, rather than the 4°C-5°C world that the planet is now heading towards.

The timing of the scandal is interesting, coming as US president Barack Obama welcomed China’s Xi Jinping, and that country’s commitment to the world’s biggest carbon trading scheme, and the US president’s continued emphasis on forceful regulation to close down, or clean up, coal-fired power stations. Add this to the visit of the Pope, and his call for climate action, and the launch of the UN’s Sustainability Goals for 2030.

As one analyst wrote: “For Volkswagen (and the auto industry), the dream of inexpensive clean diesel might be dead. Even if carmakers could deliver on VW’s false technological claims, the standard by which car companies can claim green status has shifted away from petrol-burning cars that use less fossil fuel—to an era of electric propulsion.”

vw ceoIt should be noted that VW’s eGolf was the fifth best-selling pure EV in the United States, and it has plans to release 20 different EV and plug-in hybrid models by 2020. The new CEO of VW is Matthias Müller, the former head of Porsche, which produces few diesel cars and is about to release the “Mission E” – a 450km EV whose huge battery could be charged to 80 per cent in a mere 15 minutes.

Can we trust big business in wake of VW scandal?

VW has also blown the halo of trust in which big brand names like to envelope themselves. As Will Hutton writes in The Guardian. VW’s actions are (further) proof that global business has become a law unto itself, driven by greed in a world measured only by share prices, bonuses and short-term performance targets.

“Volkswagen … became an autocratic fiefdom in which environmental sustainability took second place to production – an approach apparently backed by the majority family shareholder, with no independent scrutiny by other shareholders, regulators, directors or consumers,” Hutton writes.

“Even its unions became co-opted to the cause. Worse, the insiders at the top paid themselves, ever more disproportionately, in bonuses linked to metrics that advanced the fiefdom’s interests.”

Hutton pointed to the well-known study by Harvard and the London Business School that compared 90 American companies that took sustainability seriously with 90 that did not. Over an 18-year period, the 90 committed to sustainability delivered annual financial returns 4.8% higher than the other 90. As Hutton noted: “In order to deliver sustainability they had to organise themselves around a core purpose, and then embed checks and balances to keep themselves honest.”

Big business does not like regulation. As one software expert friend who grew up near Detroit told me this week, car manufacturer engineers resisted every little change.

“Seat belts? Too expensive; we’ll never be able to make a profit. Catalytic converters? Too expensive; we’ll never be able to make a profit. Airbags? Too expensive; we’ll never be able to make a profit.

“Every innovation for the public good was always seen as an assault on the right of private capital to make as large a profit as possible.”


Big business dos not like regulation and it does not like scrutiny. It wants to self regulate, disempower shareholders and neutralise the efforts of NGOs – the very people who discovered this fraud. And in governments, big business has a willing ally: look to the Europeans lobbying to stop the surprise tests, or the Australian Coalition government’s push to outlaw the ability of NGOs to lobby against mining and other projects not directly adjacent to their place of residence.

Indeed, the question might readily be put on the claims of fossil fuel generators to reduce emissions through various technologies, not least carbon capture and storage. Controversy rages over the amount of emissions from shale gas in the US and coal seam gas in Australia. Some developers argue that the emissions should not even be tested. There is possibly no better argument to dump fossil fuels altogether. All attempts to “clean” emissions through scrubbers, or storage will be open to doubt without the most vigorous testing.

Can VW survive the crisis?

So, what does it mean for the future of VW? It is tempting to think that the company may not survive. It has lost $40 billion in market values, faces $25 billion of fines in the US alone, and has already set aside $10 billion in its quarterly accounts. The Swiss government has banned sales of new diesels, and the company will almost certainly face countless class-action suits in US, Europe and elsewhere, or if it will face a total recall of vehicles. It does, however, have some $10 billion in free cash flow and some $40 billion in what Moody’s describes as “net liquidity”.

What does VW scandal mean for Australia?

And what does it mean for owners of such vehicles in Australia? The quick answer is we don’t know. VW has said it fitted the defeat devices in 11 million vehicles across the world, but has not said how many, if at all, in Australia. It is estimated that between 35,000 and 50,000 vehicles of the makes affected – 1.6 litre and 2 litre diesel engines in VW, Skoda and Audi (A3) cars – have been sold in Australia. The models affected in the US include the Beetle, Golf, Passat and Jetta.

In Australia, there has been no breach of regulations, because we don’t have any. Australia distinguishes itself by having no fuel economy or carbon emission limits on its cars, and its limits on nitrogen oxides and other smog pollutants trail the Europeans badly, and the US even more.

Screen Shot 2015-09-28 at 2.04.17 pm copy

But VW owners may still have reason to be pissed off. The resale value of their cars may have plummeted, and they may feel they have been conned by the promise of a “clean car”. Check out some of these ads in the US, put together by the New York Times. The Australian Competition and Consumer Commission is investigating what happened in Australia. It will be a laywers’ picnic.

Note: This article was adjusted to reflect the fact that Porsche does in fact produce some diesel motor models.  

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  • patb2009

    It’s definitely going to be a big hit. If the settlements include VW paying for thousands of DCFC stations, and giving 10,000 discounts on any german EV,

    • Calamity_Jean

      A lot of Americans who own VW diesels are mad as heck, and several of them (on another site) have suggested that VW should buy back their cars at the full original price. Sounds fair to me.

      • patb2009

        well the lawyers are going to clean up.

        • Mark Cooper

          It’s a good year for lawyers that’s for sure! First the Ashley Madison hack, now VW…

  • Warwick

    “…the former head of Porsche, which does not produce diesel cars..” http://www.porsche.com/australia/models/cayenne/cayenne-diesel/

  • Ken Dyer

    Several other manufacturers use VW diesel engines (Designated as EA189); Mitsubishi, Chrysler, Dodge and Jeep. Diesel may well be on the way out, but the possibility remains that a small diesel may still fit a hybrid solution.

    • mike flanagan

      VW also are the controlling entity that manufacture Scania and MAN trucks that we all see traversing our highways and byways; usually powered by 12-14 litre diesel motors. A clarifier from their local agents as to their compliance with local emissions laws maybe appropriate as well.

  • Ron Horgan

    There are parallels between the marketing of “clean coal”, natural gas and clean diesel
    as best practical solutions to pollution.
    In all cases the claims are defensive and overstated.
    As “clean diesel” is now thoroughly discredited electric cars will be the majority in a few years time.
    Disruptive technology what?

  • Mark Roest

    I actually have an inside scoop on the reason for
    VW’s action: in 2007, the inventor I work with saw a soot-collecting
    device stuck in the exhaust manifold of a VW Jetta. As I anticipated
    yesterday, it would need to be cleaned out periodically, and its
    existence gave the lie to VW’s claims of a clean engine at that time.
    Already. Given the inventor’s reaction of disgust, we can figure that
    many other people would make the same discovery soon enough (or their
    car’s exhaust would eventually start getting choked off as the soot
    filled and piled up on the container), and similarly be repulsed, and
    VW’s intended sales would not come to pass.

    It would apparently take VW management 2 years to get frustrated enough to drive its engineers to desperate measures, and get them properly designed. But properly designed criminality or not, they did not realize that people support NGOs who hire engineers who get nagging discrepancies stuck in their craws and won’t let go. Yay!

    And the number
    mentioned in the article, $8,000, makes it clear that it truly was a big
    deal economically. Too bad we had not made as much progress with
    batteries by then as we have in recent years. Go EVs!

    • Miles Harding

      Battery progress.. or have we?
      Most of the VeeDubs are effectively diesel powered shopping trolleys, 4-seat school buses or tiny trams, which account for about 95% of consumer use. EVs already work perfectly well in these areas, making prejudice* the principal factor.

      * Not price because VeeDub, and particularly Audi are ‘status’ vehicles in AUS, much to the amusement of Brits. If the buyers of these vehicles were less self-focused and more society and community focused, they would not be choosing such a boring way to reinforce their self-esteem.

  • Les Johnston

    Unfortunately Australia is way behind on the regulation of emissions from diesel engines of all types. This means the politicians are prepared to sacrifice heath impacts of diesel emissions. Australia now needs to jump into the 21st century and introduce forward looking emission regulation – not just diesel engines in cars. The health of Australian depends on effective action not remaining in the past.

  • Gil Davis

    I Have a large diesel engine in a vehicle. It is plated to comply with US regulations 1977. It was sold in Australia in 1994. Australian reguators do not care about emissions.

  • Professor Ray Wills

    What Exxon knew on climate in the 80’s is in general terms the same as what we know now.

    How does the deceit of Exxon misleading on climate by omission compare with the deceit of Volkswagen in deliberately cooking the data and misleading customers?

    The Trade Practices Act – and equivalents in all nations – will be brought to bear on VW for false advertising and misrepresentation. Why not on Exxon too?

    https://twitter.com/ProfRayWills/status/648320525324824577

  • wayne

    Tip of iceberg. How do you think ALL aftermarket Diesel Chip makers get 20% more power, torque and economy from factory diesels for ALL BRANDS. They use software to defeat the environnmental controls manufacturers do put in place to comply. Then go look at manufacturers. Small capacity large output diesels first 2 to 2.5l large capacity moderate output Diesels should be ok. One must wonder though about the Ranger, Mazda, Colorado ute range vss say Isuzu and Toyota who claim more moderate outputs for given capacity.

    • trackdaze

      Fact is bmw passed with more.power and torque than vw. So its achievable in fact the bmw example suggest higher state of tune is the way to go.

      Aparently the affected vw owners were experiencing improved mileage and hence better co2 emmissions at the expense of nox emmisions.

      As to Ranger/mazda have a 3.2litre 5cyl for additional 25kw/30nm pretty much comparable given capacity/cyl advantage to suggest roughly same state of tune to mux and hilux. The limiting factor for allot of diesels has been the rest of the transmissions capability to hand the torque this is more likely to be the case with the mux and hilux.

  • bedlam bay

    Power lobbyists / corporate welfare (diesel rebates for miners and farmers) and tax evasion. Also White Bay Cruise Ships to use higher grade diesel fuel 1/10/15 but other ships to continue to use low grade fuel. North America and Europe mandate high grade ship fuel

  • MaxG

    Nice article Mr. Parkinson… in particular the section “Can we trust big business in wake of VW scandal?” and more the last two paragraphs of this section — what I have been saying for years, and nobody listens or gets it.
    I will never buy a VW, not even accept it as a gift; I hope these bastards go out of business; the world would be a better place. Blatant FRAUDsters.

  • Jerome Weingart

    Diesel engines and low-sulfur diesel fuel will continue to be essential to ships and large trucks, and for locomotives. Biodiesel can help, but we will be with large diesel engines for many decades. The challenge is to run them as cleanly as possible in those applications that are essential. I think that transportation will become almost all electric, although the transition will take a half century or so.

  • Propel and Fulcrum are making biofuels for diesel engines from garbage and wood chips at prices lower than traditional diesel fuel. Why not tell people to use biofuel and free themselves from regulation?

  • Miles Harding

    I like tesla’s quip.
    I would have expected the other car makers to be doing similar with various “We don’t lie to our customers’ campaigns. Perhaps they’re keeping quiet for a very good reason…

    $8000 per vehicle would pay for the battery! Time to ditch the dirty diesel.

    Had the dino-burner out last weekend to cart some big stuff that won’t fit in the EV. There’s nothing like this to remind me why I dislike driving the thing so much.

  • phred01

    It was a fraud of massive proportions yes VW isn’t the only car maker caught Renault was sprung in 1993. Wait for the washout other car makers were up to the same tricks. The problem with electric cars is the source of electricity is generally from dirty coal

    • cliffaxe

      not if you use your solar array

  • Bob_Wallace

    “The sort of controls that VW was avoiding cost around $US8,000 a car.”

    The price of Tesla battery packs is expected to fall to $150/kWh or less with the Gigafactory running. $8,000 would pay for 53 kWh of battery storage at $150/kWh.

    The 200 mile range Bolt and Tesla Mod3 are expected to have a 50 kWh battery pack.

  • Terry

    I love my diesel and the tree huggers can get lost. I travel 100k round trip to work and no solar powered wheel chair will do it as good as the diesel.

  • Gareth Jones

    Out front I will state that I have not read the whole article. That said, it would appear that there is either a misunderstanding of the nature of the VW “scandal” or disingenuous obfuscation and blurring of the greenhouse and air pollutant issues. The VW issue, and that of other light duty diesel vehicles, is of real world NOx emissions. NOx is a human health pollutant, not a greenhouse issue, contributing to ambient NO2 pollution (the main ambient air pollution issue in Europe) which is a direct respiratory irritant and linked with child lung development problems, and is also one of the main precursors to secondary photochemical smog, characterised by ground level ozone.
    As a professional working in the vehicle emissions field, I have been following the VW “scandal”, and there has been no evidence and very little discussion regarding “cheating” of GHG emissions measurement and reporting. In fact, for one variant of the VW engines involved, the lean NOx adsorption trap (LNT), the NOx emissions cheating that VW have been engaged in would make the real world GHG emissions and fuel economy performance BETTER, not worse, and this has undoubtedly been part of the motivation in the very competitive and low margin industry of car manufacturing. LNT require periodic regeneration to release and convert the trapped NOx emissions to harmless nitrogen and oxygen. To do so the engine control system must inject diesel into the exhaust (normally via a late injection from the common rail injection system). Thus there is a fuel penalty to reduce the NOx emissions, that is variously estimated depending on duty cycle and other engine control technologies at around 5% Further on all engines there is no doubt injection timing adjustments made depending on whether the control system detects it is in a regulatory test cycle or in normal driving. More retarded injection timing reduces NOx, but increases fuel consumption.
    So the VW scandal does not reveal an underlying cheating of fuel economy regulations, and in general taking all other technological factors into account, a modern light duty diesel will be more fuel efficient and greenhouse friendly than an equivalent petrol engine. Full Stop. What we really need to be looking at is not petrol versus diesel, buta as a society what we are prepared to pay to transition to sustainable technologies such as electric, and this of course in most countries, and particularly here in Australia, also means a move away from fossil fuelled electricity generation.
    While there has been much discussion and debate from environmental and consumer groups regarding disparity between regulatory test fuel economy and real world fuel economy, this is largely due to the differences in the driving conditions in the test cycle compared to average urban driving, and there is huge variability in what is “average real world driving”. The real world fuel economy that you achieve is influenced greatly by the traffic conditions and how you drive. Just measure/observe your fuel economy on your daily urban commute compared to a steady cruise on rural highways. Yes there has been exploitation in loopholes in the regulatory fuel economy test procedures and regulations, but in general, a reduction in the regulatory test result will translate to a reduction in real world fuel economy.
    It would be really great if we could have a balanced and informed discussion based on some level of fundamental technical understanding, rather than a bandwagon diesel/VW/what ever else gets your goat, bashing.

    • Bob_Wallace

      “What we really need to be looking at is not petrol versus diesel, buta as a society what we are prepared to pay to transition to sustainable technologies such as electric, and this of course in most countries, and particularly here in Australia, also means a move away from fossil fuelled electricity generation.”

      Aren’t we lucky little critters?

      Renewable electricity will give us cheaper electricity than using fossil fuels or nuclear sources. Especially once adds in external costs.

      Driving a mile using electricity from renewable sources will cost only a fraction of what it costs to drive using petroleum. Add in the external costs of burning petroleum and the fraction shrinks even smaller.

      Even the cost of EVs is almost certain to be less expensive. We should reach purchase price parity within the next five years thanks to rapidly dropping battery prices. And then, over following years, it should become cheaper to purchase an EV than a same-model ICEV.

      Don’t think of it as “pay to transition”. Think of it as investing in a much cleaner and much less expensive future. One that will be rapidly realized.