The Emissions Cheating Scandal goes Deeper than You Think

Summary

The video delves into the 'Dieselgate' scandal, detailing Volkswagen's emissions cheating and the subsequent fallout, including massive fines and recalls. It contrasts VW's hefty penalties with those of other automakers like Fiat Chrysler and Mercedes, who faced lesser consequences for similar malpractices. The video explores the scale of VW's deception, the political climate's impact on legal actions, and the broader implications for the auto industry and public health. It concludes with a look towards a future where electric vehicles may mitigate such scandals.

Takeaways

• 🚗 'Dieselgate' refers to the emissions scandal involving Volkswagen, where they were found to have cheated on US emission standards.
• 🌟 Despite the scandal, Volkswagen was not the only automaker caught using similar technology to cheat emissions tests; other major manufacturers like Chrysler, Mercedes, Nissan, and Opel were also implicated.
• 💸 Volkswagen faced massive fines, recalls, and penalties totaling around $35 billion, including a $4.2 billion criminal fine and $1.2 billion to compensate US dealers.
• 🔍 The International Council on Clean Transportation discovered in 2014 that Volkswagen diesel engines performed differently during emission testing than on the road.
• 🛠️ Volkswagen's 'clean diesel' technology was found to be a facade, as the company programmed engines to switch into a low emissions mode during tests, which was not representative of real-world driving conditions.
• 🌍 The scandal had global implications, affecting about 11 million vehicles worldwide, including those from VW's subsidiaries Audi and Porsche.
• 🏢 The repercussions of the scandal were severe, leading to the resignation and charges against Volkswagen's CEO, Martin Winterkorn, and significant job losses within the company.
• 💡 The scale of Volkswagen's deception, the blatant disregard for emissions standards, and the timing of the scandal during a more environmentally focused administration contributed to the severity of the penalties.
• 🔄 The auto industry has since seen a shift towards electric vehicles, with Volkswagen announcing a phase-out of gas vehicles in Europe by 2035, reflecting a broader industry trend.
• 🌿 The health and environmental consequences of emissions cheating are significant, with studies linking excess pollution to premature deaths and increased cases of respiratory and heart diseases.

Q & A

What is 'Dieselgate'?

'Dieselgate' refers to the scandal involving Volkswagen, where the company was found to have installed software in its diesel vehicles that allowed them to cheat on emissions tests. This software made the cars perform differently during tests compared to real-world driving conditions, leading to much higher emissions than allowed by regulations.

How was Volkswagen caught cheating on emissions tests?

Volkswagen was caught when scientists from the International Council on Clean Transportation discovered that the emissions from Volkswagen diesel engines were much higher on the road compared to lab tests. This was confirmed through additional testing by the California Air Resources Board and the EPA.

What were the consequences for Volkswagen after the Dieselgate scandal?

Volkswagen faced severe consequences, including $35 billion in fines, penalties, and other costs. The company's CEO resigned, several executives were charged, and Volkswagen had to recall millions of vehicles. The company also suffered a significant drop in stock value and had to pay compensation to dealers and eliminate thousands of jobs.

Why did Volkswagen receive harsher penalties compared to other car manufacturers involved in similar scandals?

Volkswagen's penalties were harsher because of the scale of their deception, with over 11 million affected vehicles worldwide. They also flagrantly and explicitly evaded emissions standards, with cars exceeding limits by about 4,000%. Additionally, Volkswagen was the first to be caught, which made them a target for setting an example.

Which other car manufacturers were involved in emissions cheating scandals?

Other manufacturers caught in emissions cheating scandals include Fiat Chrysler, Daimler (Mercedes), Nissan, and Opel. These companies were found using similar technologies to cheat on emissions tests but faced less severe penalties compared to Volkswagen.

What was the environmental impact of Volkswagen's emissions cheating?

The environmental impact included higher emissions of nitrogen oxide, which is linked to health issues such as asthma, bronchitis, emphysema, and heart disease. One study estimated that the excess pollution caused by Volkswagen's cheating could lead to 59 premature deaths and result in 45,000 disability life years.

How did the Dieselgate scandal affect Volkswagen’s business and workforce?

Volkswagen had to pay significant fines, compensate dealers, and conduct a massive vehicle recall. They also eliminated 30,000 jobs and faced numerous lawsuits and ongoing legal challenges. The scandal severely damaged the company's reputation and financial stability.

What role did politics play in the varying penalties for emissions cheating across different car manufacturers?

The penalties for emissions cheating varied due in part to the political climate. Volkswagen's scandal occurred under the Obama administration, which had a strong environmental focus, leading to tougher penalties. Subsequent scandals occurred during the Trump administration, which took a more business-friendly approach and was less inclined to impose severe punishments.

What measures did Volkswagen take after the scandal to address the cheating issue?

Volkswagen admitted to the cheating, recalled millions of vehicles, and agreed to spend billions on repairs and settlements. They also made plans to transition away from diesel vehicles, aiming to sell only electric vehicles in Europe by 2035, with similar phase-outs planned for the U.S. and China.

What are some of the broader implications of the Dieselgate scandal for the automotive industry?

The Dieselgate scandal highlighted the widespread issue of emissions cheating in the automotive industry and led to increased scrutiny and testing by regulatory bodies. It also accelerated the push towards electric vehicles as companies seek to avoid similar scandals and meet stricter emissions standards.

Outlines

00:00

🚗 Volkswagen’s Dieselgate Scandal: A Deep Dive

The paragraph introduces the notorious 'Dieselgate' scandal involving Volkswagen, emphasizing its massive impact on the automotive industry. It highlights the stark contrast between Volkswagen’s severe punishments and the comparatively minor consequences faced by other manufacturers like Chrysler and Mercedes for similar emissions cheating. The introduction sets the stage for exploring why Volkswagen was singled out with such harsh penalties.

05:02

💥 The Fallout from Dieselgate

This paragraph dives into the specifics of Volkswagen's deception, detailing how the company programmed its diesel engines to cheat emissions tests. It covers the discovery of the scheme, Volkswagen's slow response, and the eventual admission of guilt. The narrative explores the extensive financial and legal repercussions, including CEO Martin Winterkorn's resignation, billions in fines, and significant job losses, painting a picture of the scandal's far-reaching consequences.

10:03

🚨 The Broader Industry Impact and Why Volkswagen Was Hit Hardest

This paragraph examines the broader implications of Dieselgate, revealing that other car manufacturers like Fiat Chrysler, Nissan, and Daimler also engaged in similar emissions cheating. Despite their actions, these companies faced much lighter penalties compared to Volkswagen. The discussion also touches on the role of politics, particularly the difference in regulatory responses between the Obama and Trump administrations, and the significance of Volkswagen being the first to be caught, which led to harsher punishment as an example to others.

🔍 The Real-World Consequences of Dieselgate

The final paragraph reflects on the human and environmental toll of Volkswagen's deception, citing studies that link the excess pollution from the scandal to premature deaths and widespread health issues. It acknowledges the challenges in addressing the fallout, including the difficulties in disposing of recalled vehicles. The paragraph concludes on an optimistic note, discussing the potential for electric vehicles to prevent such scandals in the future and reduce environmental harm.

Keywords

💡Dieselgate

Dieselgate refers to the 2015 emissions scandal in which Volkswagen was found to have installed software in their diesel engines that manipulated emissions tests. This term is central to the video as it explores the implications of Volkswagen’s actions and the fallout from this scandal. The video contextualizes 'Dieselgate' as a massive corporate deception that caused significant financial, legal, and environmental consequences.

💡Volkswagen

Volkswagen is the primary car manufacturer implicated in the Dieselgate scandal. The company used deceptive software in its diesel engines to pass emissions tests while actually exceeding legal nitrogen oxide limits by up to 40 times in real-world driving. Volkswagen's role in the scandal and its subsequent punishment forms the core narrative of the video.

💡Emissions testing

Emissions testing refers to the regulatory process by which car engines are evaluated for their environmental impact, specifically the levels of pollutants they emit. In this context, Volkswagen’s diesel cars were programmed to switch into a low-emission mode during these tests but performed differently under normal driving conditions, making emissions testing central to the cheating mechanism.

💡Nitrogen oxide

Nitrogen oxide (NOx) is a pollutant that contributes to air quality issues, such as smog and acid rain, and poses health risks. Volkswagen’s diesel engines emitted far higher levels of nitrogen oxide than legal standards allowed, which became one of the critical environmental violations in the Dieselgate scandal. The video uses this term to highlight the harmful effects of the company's cheating.

💡Clean diesel technology

Clean diesel technology was a marketing term used by Volkswagen to describe their supposedly environmentally-friendly diesel engines. The video points out the irony of this term, as Volkswagen's 'clean diesel' engines were central to the cheating scandal, and the emissions they produced were far from clean.

💡Recall

A recall refers to the process by which a company must repair or replace defective products that pose a risk to consumers or the environment. Volkswagen issued a massive recall of around 500,000 cars in the U.S. as part of its response to the Dieselgate scandal, costing the company billions. The recall plays a significant role in the financial impact discussed in the video.

💡EPA

The Environmental Protection Agency (EPA) is a U.S. government agency responsible for enforcing environmental laws, including vehicle emissions standards. The EPA's investigation into Volkswagen’s emissions cheating was pivotal in exposing the Dieselgate scandal. The video frequently mentions the EPA as a key player in holding Volkswagen accountable.

💡Fiat Chrysler

Fiat Chrysler is another car manufacturer mentioned in the video for being involved in a similar emissions cheating scheme, though they faced less severe penalties compared to Volkswagen. This comparison is used to highlight the disproportionate nature of the punishment Volkswagen received in contrast to other companies.

💡Penalties

Penalties in the context of the video refer to the fines, legal consequences, and other financial repercussions that Volkswagen faced as a result of the Dieselgate scandal. Volkswagen was penalized much more heavily than other car manufacturers who engaged in similar practices, with total costs amounting to over $35 billion. The video explores why these penalties were so steep.

💡Obama administration

The video mentions the Obama administration as being environmentally focused, which contributed to Volkswagen receiving harsher penalties. The timing of the Dieselgate scandal under Obama is contrasted with the more lenient stance toward environmental violations seen during the subsequent Trump administration. This political context is key to understanding the regulatory environment in which the scandal occurred.

Highlights

Dieselgate scandal sends shivers down the spines of car executives, highlighting the severity of cheating US emissions standards.

Volkswagen's 'Clean Diesel' technology was revealed as fraudulent after emissions testing showed diesel engines emitted 40 times the legal nitrogen oxide limit.

Volkswagen programmed their engines to switch into a low-emissions mode during tests, allowing them to cheat emissions regulations.

Volkswagen was fined a total of $35 billion for its role in the Dieselgate scandal, a figure that includes fines, penalties, and recall costs.

Despite Volkswagen's hefty punishment, other car manufacturers like Chrysler and Mercedes faced significantly lower fines for similar offenses.

The environmental and health impacts of Volkswagen's deception included premature deaths and increased health risks due to heightened nitrogen oxide levels.

Volkswagen's CEO, Martin Winterkorn, resigned and faced fraud charges as a result of the scandal, signaling high-level accountability.

Volkswagen admitted to installing the emissions cheating software in 11 million vehicles worldwide, affecting both Audi and Porsche models.

The EPA expanded vehicle testing following the Dieselgate revelations, uncovering that Fiat Chrysler, Nissan, and other manufacturers had also cheated on emissions tests.

Volkswagen lost 46% of its shareholder value in just two months after the scandal broke, marking one of the most severe financial impacts in automotive history.

Volkswagen's scandal sparked a wave of legal challenges, including one from the State of Ohio, and more lawsuits are expected.

Politics played a role in the differing responses to emissions scandals, with Volkswagen punished more severely under the Obama administration compared to other companies during the Trump era.

Volkswagen, BMW, and Mercedes colluded to limit diesel emissions technology, though Daimler (Mercedes) avoided fines by reporting the scheme.

Dieselgate emphasized the consequences of environmental cheating, with real-world health impacts, and serves as a warning for future automotive regulatory breaches.

Volkswagen announced plans to phase out gas vehicles in Europe by 2035 as part of its shift toward electric vehicles, aiming to regain trust in its environmental commitments.

Transcripts

- "Dieselgate". (heavy suspenseful music)

The very mention sends shivers down the spines

of car executives across Germany.

But we're in America,

and we didn't make headlines

for cheating US emission standards.

So, no need to fear the fall-out

from a scandal, right?

Not the billions of dollars of fines

or the massive recalls

or the prison time for company execs, right?

But what if Volkswagen was just the start?

(upbeat music)

What if, after their cheating scheme was discovered,

other major manufacturers were caught

using similar technology?

Companies you know and love

like Chrysler and Mercedes

and oh boy, if you thought

they threw the book at Volkswagen

with those massive penalties,

just wait until you see what happened

to those other guys.

You will be extremely underwhelmed.

Yep, despite the deep crud VW got themselves into,

this wasn't some horror movie

where the killer is always on the lookout

for the next victim.

It turns out none of the companies

that did basically the same stuff as Volkswagen

got in all that much trouble.

Today on Wheel House,

why was Volkswagen's punishment so steep?

Was what they did really that bad,

or does someone just hate Jettas that much?

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Now let's pour into this episode.

(atmospheric music)

- "Dieselgate". No, it's not the entrance

to Vin Diesel's mansion.

Well, it's not just the entrance

to Vin Diesel's mansion.

It was also a huge scandal.

It all started back in 2014 when scientists

at the International Council on Clean Transportation

discovered that several Volkswagen diesel engines

performed differently during emission testing

than they did on the road.

At the time, VW was really pushing an alternative

to hybrid vehicles that they called

"clean diesel technology".

"Clean diesel", which is kind of an oxymoron

since diesel fuel inherently burns sootier

than regular gasoline.

(car engine revving)

Diesel engines technically release less CO2 per mile

than gasoline engines,

but diesel emits more nitrous oxide

and particulate matter,

both of which are very bad.

Volkswagen claimed to have developed

a nitrogen oxide trap

that helped their engines get good gas mileage

while meeting ever tightening emissions standards.

International Council of Clean Transportation scientists,

who had been commissioned

by the California Air Resources Board,

discovered that during road testing,

VW's diesel engines exceeded

the US nitrogen oxide emission standards

by up to 40 times.

So much for "clean diesel".

The ICCT's initial results were so crazy

that the scientists literally thought

they had screwed up the testing,

but the results held on subsequent tests.

So, in May of 2014,

the California Air Resources Board and the EPA

opened an investigation into Volkswagen.

What the heck was going on?

Well, it turns out,

the system didn't actually work.

What Volkswagen actually did

was had the engine programmed to switch

into a low emissions mode

when it detected an emissions test situation.

When driving normally,

the computer switched back to a separate mode

with significantly different fuel pressure,

ignition timing and exhaust gas recirculation.

Volkswagen was slow to respond to the accusations.

Then in December of 2014,

the company announced it had fixed the problem

and would be recalling 500,000 affected vehicles.

But CARB continued with additional testing.

And in 2015, a German magazine reported

that at least 30 people

at management levels in Volkswagen

had known about the emissions cheating scheme for years.

Finally, after months of VW

trying to dodge responsibility,

no pun intended,

the EPA decided several of the company's diesel models

would not be certified for American sales in 2016.

And that was the straw

that finally broke Vin Diesel's gate.

Volkswagen admitted to having knowingly installed

a quote "sophisticated software algorithm"

that could sense test scenarios by monitoring speed,

engine operation, air pressure,

and the position of the steering wheel.

Between 2009 and 2015,

the software was installed

in about 11 million vehicles worldwide

split between VW and two of its subsidiaries,

Audi and Porsche.

Now, Volkswagen's execs and stockholders

were about to pay the price.

Volkswagen CEO, Martin Winterkorn,

was quickly forced to resign

and eventually charged in the United States

with fraud and conspiracy.

In April of 2016,

the company announced plans

to spend $18 billion dollars

on repairing the affected cars.

Nine months later,

Volkswagen pled guilty to criminal charges

brought by US Attorney General Loretta Lynch,

and was fined $4.2 billion dollars.

To date, Volkswagen has paid

around $35 billion dollars total in fines,

penalties, financial statements, and buyback costs.

And while it's difficult to calculate

the total effect on stock prices,

in the scandal's first two months,

the company lost 46% of its shareholder value

for about $42.5 billion dollars. Damn.

There was also the damage done to dealers.

Volkswagen paid its US dealers $1.2 billion

to compensate them for losses.

But again, the total impact can't really be calculated.

And then there's the 30,000 jobs

that Volkswagen eliminated

in the wake of the scandal.

There's no reason to think

the penalties are over, either.

In September of last year,

German prosecutors announced charges

against eight more employees.

Winterkorn's trial hasn't even begun yet.

And a couple of months ago,

Volkswagen lost a ruling in court

that clears the way

for them to be sued by the State of Ohio.

Volkswagen admitted that they had been basically treating

EPA regulations as a suggestion to be ignored.

Like a sign that says

"Employees must wash hands".

So it makes sense

that the government decided

it might be time for a crackdown.

The EPA massively expanded its vehicle testing.

And, as I so expertly foreshadowed,

it turned out Volkswagen wasn't the only cheaters.

(upbeat music)

In January of 2017,

the FEDs issued a notice of violation

against Fiat Chrysler,

alleging that over a hundred thousand

of their diesel SUVs and trucks

were also using software

to exceed nitrogen oxide limits.

Similar cases were found in diesel cars

made by Nissan and Opel.

And Daimler admitted just last year

that some Mercedes diesel vehicles

also had been programmed

to cheat emissions tests.

Volkswagen even bumbled their way

into another scandal

when it was revealed that they had colluded

with Mercedes and BMW

to limit diesel emissions treatment technology.

In simple terms, the three German companies

agreed to use technology

that met the minimum legal environmental standards,

but it was not as good as it could have been.

Probably to save money.

Hyundai and Kia were fined

for overstating the gas mileage

on 1.2 million vehicles.

Ford is currently facing

a $1.2 billion dollar lawsuit

for lying about the fuel economy

of the Ranger and the F-150.

Yep, the auto industry

is just like the Chris Evans - Scarlett Johansson

cinematic classic, "The Perfect Score",

in which they steal the SATs.

Pretty much everyone is cheating on their tests.

But remember the 35 billy that it cost Volkswagen?

Fiat Chrysler's scandal cost it

a comparably small $800 million dollars

in fines and recalls.

And meanwhile, Daimler paid around $2.2 billion

for their emissions cheating scandal.

And they didn't have to pay anything at all

in the collusion case

because they were the ones

that ratted out BMW and Volkswagen,

and it was barely a blip in the news.

So, why did Volkswagen take such a huge punishment

while the auto world's many other uber polluters

got off fairly scot-free?

Fair or unfair,

there are actually a bunch of reasons.

First and most important

was the scale of Volkswagen's shenanigans.

In 2013, VW-owned brands

sold over a hundred thousand diesel cars and SUVs

in the US, more than 75% of the diesel market.

So they face stiffer penalties

based on the sheer number

of offending vehicles on the road.

That number also made their recall cost a lot more

and increased their liability and lawsuits.

Volkswagen was also pretty darn flagrant

in breaking the rules.

Other companys' cars didn't run as differently

during testing as Volkswagens did.

So, the penalties they faced weren't as bad.

Meanwhile, Volkswagen was explicit

in their attempts to evade emission standards,

and they did it by about 4,000%.

It's like the difference in punishment

between a guy who steals the Mona Lisa

and a guy who steals a poster of the Mona Lisa.

Politics also played a role here. Surprise.

Volkswagen's scandal happened primarily

during the more environmentally focused Obama government,

while subsequent scandals happened

mostly during the Trump administration

when the EPA made a sharp pivot

to business friendly and climate skeptical positions.

The Trump administration was, unsurprisingly,

less inclined to punish corporations.

A final big difference, Volkswagen was first.

"Dieselgate" was a headline-grabbing scandal.

"Fiat Chrysler gate" isn't even a word.

It makes sense that the authorities

would use Volkswagen to set an example,

especially when it's the American government

going after a foreign company.

I can already hear some of you guys

in the comments being like "Oh, so what?

Who cares about any of this? This is my 402nd day of asking

for up to speed on the unicycle."

But this stuff has real world consequences.

Nitrogen oxide has been linked to asthma,

bronchitis, emphysema, and heart disease.

A study published in 2015

estimated the excess pollution

caused by Volkswagen's phony "Clean Diesel" vehicles

would cause 59 premature deaths.

Another study calculated the cost

at 45,000 disability life years,

which is a measure of years lost due to illness,

disability, or early death.

But here's the thing.

There's no easy solution to any of this.

Volkswagen's shenanigans were discovered,

400,000 cars were forced off the road.

That's good. But about three quarters

of those cars are still sitting in parking lots

around the US waiting to be disposed of.

That's not exactly an environmentally friendly alternative.

Luckily though, the future of green cars

looks pretty bright.

Thanks to new, tighter EU emissions regulations,

even VW themselves announced

that they'll no longer sell gas vehicles

in Europe by 2035,

with phase-outs in America and China to follow.

I think a scandal like this

will be less likely in the future

as more automakers switch to electric power.

We all know that electric cars are zippier

than most gas cars anyway.

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