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Automobile industry

Volkswagen's Diesel Deception: A $18 Billion Fine Looms

Strategic Insights

— 1 min read

Volkswagen, the world's largest automaker, faces a crippling scandal after admitting to systematic cheating on U.S. air pollution tests. The company's "clean diesel" vehicles, which have been a key component of its U.S. strategy, have been found to pollute up to 40 times the legal limits. The Environmental Protection Agency (EPA) has announced that Volkswagen will face up to $18 billion in fines, and its executives may face criminal charges.

Key Takeaways:

  • Volkswagen sold over 482,000 diesel vehicles in the U.S. with software that turns off pollution controls during normal driving, resulting in emissions that are 10 to 40 times the legal limits.
  • The scandal involves Volkswagen's top-selling diesel models, including the Beetle, Golf, Jetta, and Passat, which account for more than a quarter of the company's U.S. sales.
  • The EPA has announced that Volkswagen will face up to $18 billion in fines, which could be the largest fine ever levied by the agency.
  • Volkswagen's executives may face criminal charges, including prosecution under the Clean Air Act's provisions against tampering with monitor devices and making false statements to the EPA.
  • The scandal has raised questions about the reliability of auto emissions data, with other carmakers facing scrutiny over their own emissions claims.
  • A consumer class-action lawsuit has been filed against Volkswagen in a federal court in San Francisco, alleging that the company's defeat device has caused vehicles to lose value and may require costly modifications to comply with emissions standards.
  • Volkswagen's U.S. sales have fallen 2.8% this year, and the company's targets are at risk due to the scandal.

Statistics:

  • 482,000 diesel vehicles sold in the U.S. with cheating software
  • Up to $18 billion in fines levied against Volkswagen
  • 40 times the legal limits that Volkswagen's diesel vehicles pollute during normal driving
  • 63% of diesels sold in the U.S. are from Volkswagen, including diesel models from its Audi and Porsche brands
  • $100 million civil penalty paid by Hyundai and Kia in 2014 to settle Clean Air Act violations
  • 2009-2015 diesel Volkswagen and Audi cars are affected by the scandal

Sources:

  • Bloomberg News
  • Environmental Protection Agency (EPA)
  • Justice Department
  • Volkswagen AG's release
  • Kelley Blue Book
  • Transport & Environment
  • University of Richmond in Virginia

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