In 2015, Volkswagen admitted that they had installed emissions-cheating devices in its vehicles, which cost the company a fine of over $33 billion in vehicle refits and regulatory penalties, mainly in the United States.
It all started in 2014 when the California Air Resources Board (CARB) studied emissions discrepancies between European and U.S. models of vehicles, summing up the data on 15 cars from three sources. Among those, five scientists used a Japanese onboard emission testing system and detected additional emissions during live road tests on two out of three diesel cars.
Regulators in other countries began to investigate Volkswagen, and its stock price fell in value by a third in the days immediately after the news. The scandal spread awareness over the higher levels of pollution emitted by all diesel-powered vehicles from a wide range of carmakers, which under real-world driving conditions exceeded legal emission limits
In 2015 the U.S. Environmental Protection Agency (EPA) found that in over 590,000 diesel motor vehicles, Volkswagen had violated the Clean Air Act. The cars were equipped with “defeat devices” in computer software, designed to cheat on federal emissions tests.
The notice issued by the EPA in September 2015 alleged that Volkswagen installed these devices in its 2009-2015 two-litre diesel vehicles, thereby violating the EPA’s emissions standards since these vehicles emit 40 times more pollution than the level permitted.
According to the EPA, Volkswagen had insisted that those were mere technical glitches for a year before the scandal. Volkswagen fully agreed that they had manipulated the vehicle emission tests only after confronting the “defeat device” evidence.
In January 2016, the Department of Justice filed a complaint on behalf of the EPA against Volkswagen AG, Audi AG, Volkswagen Group of America, Volkswagen Group of America Chattanooga Operations, LLC, Porsche AG, and Porsche Cars North America, Inc. for alleged violations of the Clean Air Act. In January 2017, Volkswagen pleaded guilty to three criminal felony counts and agreed to pay $2.8 billion as a criminal penalty.
Further, as separate civil resolutions of civil, environmental, customs and financial claims, the company agreed to pay $1.5 billion.
In September 2015, Volkswagen announced plans to refit up to 11 million affected vehicles, fitted with Volkswagen’s EA 189 diesel engines, including 5 million at Volkswagen brand, 2.1 million at Audi, 1.2 million at Skoda and 1.8 million light commercial vehicles.
In Europe, a total of 8 million cars were affected. 2.8 million cars will have to be recalled in Germany, followed by the U.K., with 1.2 million. In November 2015, Volkswagen announced that in addition to the US$2,000 it was offering current Volkswagen owners for trade ins, 482,000 diesel Audi and Volkswagen owners in the United States would be eligible to receive US$1,000 in vouchers.
In November 2015, Volkswagen said that approximately one-quarter of the affected vehicle owners had applied to the program, estimated to cost at least $120 million in benefits.
Seeing its admission and recall plans in the United States, Volkswagen also established similar programs in the European Union. It was estimated that 8.5 million out of the 11 million diesel cars were affected by the scandal.
The European Union warned the company in 2018 that it did not believe it was moving fast enough to issue repairs on the recalled cars and providing consumers with appropriate information on what they were doing to resolve the problem and what compensation they were offering affected consumers.
The company agreed to a €1 billion fine imposed by Germany for failing to monitor the employees that modified the software behind the scandal in 2018.
In January 2017, ARAI’s investigation into defeat devices was published and revealed that in India, Volkswagen had installed a derivation software used in the U.S. to defeat emission testing procedures in all of the Volkswagen group’s products in India with EA 189 engine series.
This included diesel engine variants across three different brands. The report called the defeat device “not a product failure but a clear case of cheating”.
Despite the scandal, one of the polls conducted for Bild suggested that most Germans (55 per cent) still have “great faith” in Volkswagen, with over three-quarters believing that other carmakers are equally guilty of manipulation.
Another U.S. survey by market researcher Auto Pacific found that 64 per cent of vehicle owners do not trust Volkswagen, and only 25 per cent of them have a favorable view of Volkswagen following the scandal.
