REV Asia Network

FINANCE (HTTP://WWW.BUSINESSINSIDER.SG/CLUSTERSTOCK/)

Heres what Volkswagen did and how they got

caught
BEN MOSHINSKY (HTTP://WWW.BUSINESSINSIDER.SG/AUTHOR/BEN-MOSHINSKY/)
FINANCE (HTTP://WWW.BUSINESSINSIDER.SG/CLUSTERSTOCK/)
(/HERES-WHAT-VOLKSWAGEN-DID-AND-HOW-THEY-GOT-CAUGHT-2015-9/#COMMENT-)

SEP. 23, 2015, 8:15 PM

Thomson Reuters

Volkswagen Chief Executive Winterkorn speaks at Porsche

during the annual meeting in Stuttgard

Volkswagen is facinghuge fines, its reputation in tatters and a CEO on the edge.
(http://uk.businessinsider.com/report-volkswagen-ceo-is-out-2015-9)
The company cheated US diesel emissions tests for seven years.
It did so througha clever piece of software that could identify when it was being
tested andreduce harmful exhaust so it looked like the cars met requirements,
when in fact they didnt.
Volkswagen was caught out by independent testing carried out by a clean-air
advocacy group, called the International Council on Clean Transportation
(http://www.theicct.org/about-icct), which tested the cars themselves because they
thought they were sucha great example of how diesel can be a clean fuel.
Heres a rundown on what happened and when.

In 2008, tougher emissions rules come in to force.

Most car manufacturers use a urea-injection system, often calledAdBlue, which
uses a chemical catalyst to make sureunburnt fuel doesnt get into the exhaust.
But VW says it can meet the regulation without the AdBlue system on many of its
cars.

In 2013, the International Council on Clean Transportation teams up with West

Virginia University for a study on the Volkswagen diesel cars.
We had no cause for suspicion, John German, from the ICCT, said in an
interview with Bloomberg (http://www.bloomberg.com/news/articles/2015-0919/volkswagen-emissions-cheating-found-by-curious-clean-air-group). We
thought the vehicles would be clean.
The study teststhree cars in real-world conditions a 2012 VW Jetta, a 2013 VW
Passat and a BMW X5 SUV,under both laboratory and road conditions, finding
huge differences in the amount of harmful emissions.
The group testsoneonnearly 4,000 kilometresof highway driving
betweenCalifornia and Washington State.

The tests find that the VolkswagenJetta exceedsnitrous oxide capsby 15 to 35

times, with the Passat exceeding emissions caps by5 to 20 times.
Meanwhilethe BMWmet all the standards under normal driving conditions.

The two groups alert the California Air Resources Board and Environmental
Protection Agency in 2014.
The EPA and CARB put the findings to Volkswagen.
The company disputes the test results citing various technical issues but
implement avoluntary recall of nearly 500,000 cars inDecember 2014 toput ina
software patch they claim will fix the issue.
It doesnt and CARB and the EPA keep pushing to find out why the cars own

diagnostics systems dont register the high emissions under test conditions.

Volkswagen says the study is flawed, blaming various technical issues for the
results.
Volkswagen dispute the test results but implement avoluntary recall of nearly
500,000 TDI cars inDecember 2014 toput ina software patch they claim will fix
the issue.
It doesnt and CARB and the EPA keep pushing to find out why the cars own
diagnostics systems dont register the high emissions under test conditions.

The tests find the root cause of how Volkswagen got its cars to pass the tests
discovering the software called the switch.
The switch is clever. Ittracks the position of the steering wheel, vehicle speed, how
long the engine is on and barometric pressure.
(http://www3.epa.gov/otaq/cert/documents/vw-nov-caa-09-18-15.pdf) If these
inputs match the ones commonly found in vehicle testing, the software cut harmful
emissions to pass the exam.
If it sensed that the car was being driven on a road rather than in a lab, it switched
to a separate callibration which turned off the exhaust controls.
People have speculated this was done to keep the cost of the cars down, tricking the
testers into thinking they were fine without the AdBlue systems used by other

manufacturers.

Volkswagen finally admits the scheme on September 3 to the EPA and CARB.
The company was confronted by the authorities with evidence of the software
scam. Running out of excuses, the company admits to gaming the tests.

On September 18, the EPA go public with the findings of their Volkswagen tests.
Using a defeat device in cars to evade clean air standards is illegal and a threat to
public health, says assistant administrator for the Office of Enforcement and
Compliance Assurance Cynthia Giles.
The fine could be as high as$37,500 per vehicle for the violations, a total of more
than $18 billion ((11.8 billion). The U.S. Justice Department and German
authorities also begininvestigations.

When markets open on the following Monday, Volkswagen stock plunges more
than 20%

Volkswagen experiences its biggest one-day drop in six years as the potentially
huge fine spooks investors.
CEO Martin Winterkorn releases an apology, sayingI personally am deeply sorry
that we have broken the trust of our customers and the public.

On September 22, Volkswagen admits the emissions scam is far more

widespread, saying it could affect 11 million cars.

Once again, the shares go into meltdown and another 20% is wiped off the value of
thecompany.

Volkswagenissued a profit warning

(http://www.volkswagenag.com/content/vwcorp/info_center/en/news/2015/09/Ad_h
setting aside 6.5 billion (4.7 billion) to cover the necessary service measures

and other efforts to win back the trust of our customers. They add: discrepancies
relate to vehicles with Type EA 189 engines, involving some eleven million vehicles
worldwide.

Volkswagen CEO Martin Winterkorn appears in a video saying hes staying at the
company, after German press reports state his last day is September 25.

The statement comes after Tagesspiegelreports that Winterkorn was going, and to
be replaced byPorsche CEO Matthias Muller.
The Tagesspiegel report cites sources close to the companys 20-person supervisory
board, which is having crunch talksthis week on how to respond to the scandal.

Share
367

Tagged In
Car (/tag/car/)

Finance (/tag/clusterstock/)

investors (/tag/investors/)

How To (/tag/how-to/)

Office (/tag/office/)

interview (/tag/interview/)

uk (/tag/uk/)

Promoted Stories

Why your childs

preschool teacher
matters
The Asian Parent

You are not a true

coffee expert until
you read this!
NESCAF Dolce
Gusto on Yahoo
(http://sg.theasianparent.com/whySingapore

your-childspreschool-teachermatters/)

Why hedge fund

returns are expected
to improve when
interest Templeton
Franklin
rates rise
Investments

First look: Samsung's

new high-end tablets,
the Galaxy Tab S2
Android Central
series

Why the A. Lange &

Sohne's Zeitwerk
Minute Repeater is
one Peak
The
of haute
Singapore

(http://www.androidcentral.com/first(http://thepeakmagazine.c
(https://ad.doubleclick.net/ddm/clk/295211616;122192023;q)
look-samsungsperfect-tune-a(http://sg.featured.yahoo.com/post/128683684004/younew-high-endlange-sohneare-not-a-truetablets-galaxy-tabzeitwerk-minutecoffee-expert-untils2-series)
repeater/)
you-read)

Promoted Stories

More from Business Insider

Samsung Galaxy Note 5: Five KILLER Features

A high-end call girl answers questions about her job,

Detailed Know Your Mobile

her clients, and her business model

(http://www.knowyourmobile.com/samsung/samsunggalaxy-note-5/23133/samsung-galaxy-note-5five-killer-features-detailed)

(http://www.businessinsider.sg/a-high-end-callgirl-answers-questions-2015-5/)

What's next for the cars of tomorrow? Campaign Asia

system and theres a new number one

The 20 most important cities in the global financial

(http://www.campaignasia.com/Article/401962,Putting+the+customer+in+the+drivers+seat.aspx)
(http://www.businessinsider.sg/best-cities-forglobal-finance-gfci-index-for-2015-2015-9/)
Thinking of going for a road trip to Malaysia and
Thailand soon? 7 rules for a fun and safe drive Audi

Groupon is laying off 1,100 employees and shutting

on The Straits Times BrandInsider

down its operations in 7 countries

(http://brandinsider.straitstimes.com/audi/7(http://www.businessinsider.sg/groupon-layingroad-trip-rules-for-a-fun-and-safe-drive/?
off-1100-employees-and-shutting-downutm_source=outbrain&utm_medium=article3&utm_campaign=Q7&utm_content=Thinkingofgoingforaroadtrip)
operations-in-7-countries-2015-9/)
Over One in Six Singaporeans Feel They Will Never

Uber Gave A Woman 20 After A Driver Asked To

Be Able to Fully Retire. So Plan for the Future, and

Perform Oral Sex On Her

(http://www.businessinsider.sg/uber-gives(https://ad.doubleclick.net/ddm/clk/293815829;120898733;x)
woman-20-after-driver-asks-to-perform-oralsex-2014-12/)
Singapore: 10 totally free things you did not know
Plan Smart. HSBC Singapore

about! Skyscanner

This 19-year-old model is the new face of Victorias

(http://www.skyscanner.com.sg/news/top-10Secret (http://www.businessinsider.sg/taylor-hillfree-things-do-singapore?
victorias-secret-angel-biography-2015-7/)
associateid=PCP_TRA_00137_00006&utm_source=outbrain&utm_medium=paidcontent-promotion&utm_campaign=sg-travelpp&utm_content=native-top-10-free-things-dosingapore&utm_term=5310659)
Recommendedby

Discuss

SPONSORED

1.
New Earning Loophole Finally Leaked a year ago tradingfor-newbies.com Trading for Newbies (sponsored)

2.
Dreaming of Earning BIG Cash? a year ago trading-fornewbies.com Trading for Newbies (sponsored)

0 Comments
Recommend

Business Insider Singapore

Share

Sort by Best

Start the discussion

Be the first to comment.

Subscribe

Login

Add Disqus to your site

Privacy

Get Business Insider Emails

Subscribe (http://www.businessinsider.com/register?IR=T&action=newsletters&first=newsletters&newsletters[]=Busin

Business Insider Singapore

Contact
Editor
(/contacteditor/)

Got A
Story Tip?
(/tips/)

Report
Issue
(/report/)

(https://www.facebook.com/pages/Business-Insider-Singapore/57410340
(https://twitter.com/BusInsiderSG)
(https://plus.google.com/107992266753428460873)

Most Commented
(http://www.businessinsider.sg/joe-weisenthal-microphone-taken-during-live-hit-2015-7/)
Greek bystander steals Bloomberg anchors mic on live TV (http://www.businessinsider.sg/joe-weisenthalmicrophone-taken-during-live-hit-2015-7/)
(http://www.businessinsider.sg/mixpanel-ceo-suhail-doshi-and-max-levchin-2015-3/)
How a PayPal Mafia member helped this 26-year-old build an $835 million startup
(http://www.businessinsider.sg/mixpanel-ceo-suhail-doshi-and-max-levchin-2015-3/)