Volkswagen has admitted that 11 million of its cars worldwide were designed to cheat emissions testing, in an escalating scandal that has loaded pressure on the wider motor industry.
Campaigners have long claimed engine emissions figures under laboratory tests are far exceeded in real-life conditions, and experts have said thousands of premature deaths could be averted by ensuring cars meet their legal limits.
The German carmaker’s chief executive apologised but remained in his post on Tuesday, despite its shares slumping and government calls for a European commission inquiry, in what analysts described as a Libor moment for the motor industry.
VW revealed that it had put aside €6.5bn (£4.7bn) to deal with the potential costs of the crisis, although it could still face fines of up to $18bn in a criminal investigation in the US, as well as possible charges for its executives and legal action from customers and shareholders.
The US justice department has reportedly already begun an investigation into the alleged cheating. The House oversight and investigations subcommittee announced Monday it planned to hold a hearing in coming weeks and New York attorney general Eric Schneiderman has his own investigation underway. “No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods,” he said in a statement.
Volkswagen recalled 482,000 VW and Audi brand cars in the US after the Environmental Protection Agency (EPA) found models with Type EA 189 engines had been fitted with a device designed to reduce emissions of nitrogen oxides (NOx) under testing conditions.
The company’s chief executive, Martin Winterkorn, defied claims he would be forced out, releasing a video statement saying he was “endlessly sorry we betrayed the trust of customers”. He pledged: “We are going to clarify the background unsparingly, and at this very moment, everything is being put on the table as quickly, thoroughly and transparently as possible.”
He added: “The irregularities with these engines contradict everything for which Volkswagen stands. To make it very clear: manipulation at VW must never happen again.”
About €25bn, or a third, has now been wiped off the value of Volkswagen’s shares in the two days of trading since the scandal erupted. Shares in other car makers have also fallen heavily, with Peugeot down 7%, BMW down 5% and Daimler, the owner of Mercedes-Benz, also down 5%. German chancellor Angela Merkel demanded “complete transparency” from Volkswagen to clear up the crisis. Her transport ministry is sending a fact-finding team to examine if the vehicles were built and tested according to German and European rules.
Britain and France called for a European inquiry into the motor industry’s testing. Transport secretary, Patrick McLoughlin, said: “We are closely monitoring the situation and have been pushing for action at a European level for more accurate tests that reflect driving on the road.
“It’s vital that the public has confidence in vehicle emissions tests and I am calling for the European Commission to investigate this issue as a matter of urgency.”
About one-in-10 new cars sold worldwide is a Volkswagen. With the other brands in its group, including Audi, Seat and Skoda, VW manufactured one-in-five new cars sold in the UK last year. The vehicles identified in the US under the EPA investigation included the Audi A3 and the Golf – two of the top 10 bestselling car models in the UK.
The Italian government has launched its own investigation into VW’s emissions testing regime, while the French carmakers association backed a call by the finance minister Michel Sapin for a broad inquiry into the industry, saying it would “confirm that French manufacturers respect all test proceedings existing in all the countries where they operate.”
However, a commission spokesman said it was “premature to comment” on whether the EC should investigate.
British carmakers said that there was no evidence of manufacturers attempting to cheat the European system, but agreed that the system of testing needed reform. Mike Hawes, the chief executive of the UK Society of Motor Manufacturers and Traders, said:
“The EU operates a fundamentally different system to the US, with all European tests performed in strict conditions as required by EU law and witnessed by a government-appointed independent approval agency. There is no evidence that manufacturers cheat the cycle. Vehicles are removed from the production line randomly and must be standard production models, certified by the relevant authority – the UK body being the Vehicle Certification Agency, which is responsible to the Department for Transport.
“The industry acknowledges, however, that the current test method is outdated and is seeking agreement from the European Commission for a new emissions test that embraces new testing technologies and is more representative of on-road conditions.”
But campaigners claim that, even without such brazen “defeat devices” installed, the testing system is not fit for purpose. A Brussels-based group, Transport & Environment, said millions of cars exceed the legal limits. Jos Dings said: “Our latest report demonstrated that almost 90% of diesel vehicles didn’t meet emission limits when they drive on the road. We are talking millions of vehicles.”
The rigging of emissions tests may have added nearly a million tonnes of air pollution by VW cars annually – roughly the same as the UK’s combined emissions for all power stations, vehicles, industry and agriculture. According to a Guardian analysis, the 482,000 non-compliant US vehicles would have released between 10,392 and 41,571 tonnes of NOx annually at an average US mileage, rather than the 1,039 tonnes the EPA standards would imply. Scaled to the 11m global vehicles, that would mean up to 948,691 tonnes of NOx emissions annually. Western Europe’s biggest power station, Drax in the UK, emits 39,000 tonnes of NOx each year.
The findings will give fresh urgency to calls to clamp down on diesel vehicles. Despite moves to make diesel engines cleaner, with a new Euro 6 standard implemented for new vehicles claimed to reduce emissions by 90% compared to the oldest cars, the VW scandal will further undermine trust in diesel as air quality worsens. An ultra-low emissions zone planned for London, whose NO2 levels are the highest in the country, will not come into effect until at least 2020.
Professor Martin Williams at King’s College London said that emissions from diesel cars cause roughly 5,800 premature deaths in the UK each year. “If you were to make the cars emit at the legal limit you could reduce those deaths by at least a factor of two and maybe more. Maybe a factor of five.”
Catherine Bearder MEP, a lead negotiator on the EU’s new air quality laws, said: “Manufacturers in the US have been caught out, but we know that pollution limits are also being breached in Europe ... Unless we take action, thousands of lives will continue to be tragically cut short by air pollution.”
Consumer groups said that they believed there were issues with testing beyond NOx pollution. BEUC, the European consumer organisation, said: “The VW scandal has compounded our concern that underhand tactics are also being used in fuel consumption and CO2 testing programmes in Europe.”
Steve Gooding director of the RAC Foundation, said: “Diesel technology has certainly improved over recent years but the question is: by exactly how much? This fiasco shows how urgently an overhaul of testing is needed if trust is to be restored.”
City firm Bernstein predicted that the scandal could be the beginning of the end for diesel cars in Europe. Analyst Max Warburton said that the VW revelations would hasten the tightening rules on NOx and particulate emissions and make the cars uncompetitive: “Regulators will now be much more conservative about what they permit and much tougher real world tests may prove either too difficult – or too expensive – for diesel to meet.”
While the effects on British motor manufacturing, which was led by tax incentives to promote diesel as the government tried to meet CO2 emissions targets from Kyoto, would be substantial, campaigners for clean air would welcome the quicker elimination of diesel. Despite the scandal having broken in the US, only around 3% of passenger cars there use diesel, compared with almost half in the EU.
This article was written by Graham Ruddick, Gwyn Topham, Karl Mathiesen and Arthur Neslen, for theguardian.com on Tuesday 22nd September 2015 19.10 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010