VW Finally Pleads Guilty To “Dieselgate” Scandal

When Volkswagen’s lawyers walked into the United States District Court in Detroit Friday they probably thought that the Dieselgate scandal would, at last, be behind them in the U.S.A. After all, the ostensible reason for the visit to Judge Sean Cox’s courtroom was to plead guilty to three felony counts and agree to terms of the $4.3 billion settlement negotiated early this year.

The world’s largest automaker did plead guilty to the felony counts; one for conspiracy, one for obstruction of justice, and introducing imported merchandise into the United States using false statements.

Judge Accepts Pleas

Judge Cox accepted the pleas which settled claims by the Environmental Protection Agency (EPA) and U.S. Customs and Border Protection relating to the automaker’s importation of 590,000 rigged turbodiesels.

But, rather than finalizing the settlement, Judge Cox said he needed more time to look more closely at the agreement’s provisions given what the jurist termed the “serious nature” of the crimes, according to Automotive News. The judge’s decision came after a 70-minute hearing. Judge Cox has set a sentencing hearing for April 21. As Dieselgate Winds Down, Many Ask When Will It End?

Announced in January, the settlement includes $4.3 billion in penalties. It also calls on the automaker to continue its full cooperation with state and federal investigators. And, VW will be overseen by an independent monitor, for at least three years. There were also some concessions to ensure that the automaker will abide by the law.

Friday was an important day for the automaker. It marked the first time the world’s biggest automaker has admitted guilt in any court anywhere, a spokesman told Reuters. If the automaker had not agreed to the settlement, it could have faced between $17 and $34 billion in additional fines and penalties.

VW Tells Court Of Regret

In a statement to the court, the automaker said that it “deeply regrets the behavior that gave rise to the diesel crisis. The agreements that we have reached with the U.S. government reflect our determination to address misconduct that went against all of” Volkswagen’s core values. It further said that it “is not the same company it was 18 months ago – the change process underway is the biggest in our history. We have taken significant steps to strengthen accountability, increase transparency and transform our corporate culture.”

The charges to which the automaker pleaded guilty arose from a diesel emissions rigging scheme that began more than a decade ago. At that time, the automaker was developing a new engine – the EA 189 – for service in 2008 when new U.S. nitrous oxide (NOx) emissions were set to go into effect. The turbodiesel four, initially set up to use Mercedes-Benz developed BlueTec catalyzing agent to handle remnant NOx emissions, and then burning it up in a catalyzing process.

For political reasons, VW opted out of the development project. The manager who had led the effort, initially, a transplant from another automaker, left Volkswagen and the project reverted to in-house engineering, where soon another plan was developed.

The automaker’s engineering staff determined a plan that used NOx trapping and re-burn at the exhaust was the way to handle things. An old technology, its use dates to the first pollution control systems. The results achieved have varied. The automaker’s engineers, though, knew that in this particular use, it was unlikely to succeed.

Engine A Key Powerplant

Since the EA189 was critical to Volkswagen’s new marketing push in the U.S., where the automaker wanted to make diesel technology the heart of a push toward increasing VW’s market presence, the engineers knew that they had to be able to pass new diesel emissions guidelines that were to go into effect in 2008. And, knowing the new powerplant, at that time, couldn’t make it, they determined that another way was needed.

That way was the “defeat device” developed by Volkswagen engineering and Robert Bosch. The “device” was a software branching routine that looked at the sensors and control modules in the vehicle to determine whether the VW was running in dynamometer or “road test” mode.

The vehicles had to look as if they were passing, no matter what the real output from the tailpipe. The results were vehicles that were emitting up to 40 times the allowable limits of emissions. The Volkswagen products involved included the Jetta TDI, Golf TDI, Passat TDI and VW Beetle TDI.

In addition to the 2.0-liter series of engines, another series of engines was involved in the emissions scam, VW’s 3.0-liter V-6, used in luxury sedans and crossovers like the Audi Q5 or Q7 TDI or the Porsche Cayenne, for example. The difference here was the manner in which the software worked. The difference was also in the degree of emissions. The V-6 emitted about nine times the limits.

”Defeat Device” VW-Only Secret

The “defeat device” remained a Volkswagen-only secret until researchers from West Virginia University, who were researching VW’s turbodiesel program, as well as engines used by Audi and BMW. The researchers discovered the enhanced emission levels. The research team initially presented the results to VW. The automaker attempted a fix, but it did not work. Next, the Environmental Protection Agency (EPA) received the results and initiated an investigation.

It took more than a year for the investigation to proceed to the point where Volkswagen admitted that it was an emission cheat. On Sept. 15, 2015, the story broke, and the rest is history. The scandal that blew up has ended up costing the automaker $24 billion, just in North America. About $10.03 billion of those costs relate to buying back about 475,000 2.0-liter turbodiesels that were involved in the scam.

As of Feb. 18, said Automotive News, quoting the most recent reports available, 137,985 vehicles had been repurchased by VW at a cost of $2.89 billion. The automaker is plowing through about 15,000 repurchases a week. It is a rate that they expect to continue.

Volkswagen, as part of its plea agreement, must continue to work with ongoing probes. The Justice Department acknowledged the automaker was cooperating fully.

VW managers are expected to discuss the ongoing scandal when the automaker holds its annual press conference next week.

Sources: Automotive News, Reuters