Volkswagen shares plunge on emissions scandal, U.S. widens probe

Volkswagen shares plunge nearly 20 percent after the German carmaker admitted it had rigged emissions tests of diesel-powered vehicles in the United States, and U.S. authorities said they would widen their probe to other automakers.

(VOLKSWAGEN USA) – When the International Council for Clean Transportation (ICCT) commissioned researchers at West Virginia University to test diesel car emissions in 2013, the group expected to find that diesel cars sold in the U.S. emitted fewer pollutants than cars sold elsewhere because they had to meet tougher standards, ICCT officials told Reuters on Monday. (September 21)

Instead, after testing a 2012 Volkswagen Jetta and a 2013 VW Passat, researchers were “surprised” when the results showed the opposite: the two VW models displayed much higher levels of nitrogen oxide emissions than permitted by law, while a third test vehicle, a BMW X5, generally fell within permissible limits.

“We were aware through our testing and testing that light deputy diesel, or passenger vehicles, their NOx emissions were very high in Europe. And so we thought, you know what? Let’s test a couple light duty diesel vehicles, passenger diesels, here in the United States and show that you can actually meet the standards, not only in the test, but also in real world driving conditions. We were disappointed to find out that at least for some of the vehicles that was not the case and the excess emissions were very high, between five and thirty times what the legal limits were. So that then suggested to us that we should inform the government agencies,” said Drew Kodjak, executive director of the ICCT, a non-profit independent research group with offices in Washington, San Francisco and Berlin.

In May 2014, ICCT alerted the Environmental Protection Agency and the California Air Resources Board about their findings.

“Under real world operating conditions the emissions levels were much higher than the certification levels that the manufacturers had reported to the regulatory agencies when they were applying for certification,” Interim Director of CAFEE (Center For Alternative Fuels Engines And Emissions) at West Virginia University Dan Carder said.

On Friday, EPA said VW could be liable for up to $18 billion in penalties for using software on almost 500,000 VW and Audi diesel cars that circumvented emissions regulations, unleashing a controversy that threatens long-term damage to VW’s finances, leadership and reputation.

“They know the speed and load set points that the engine or vehicle will encounter during certification testing. They know what questions basically will be on the exam before the exams happens. When you look at real world or in-use testing it’s whatever the driver is demanding so it is not set operating, a set of operating condition they may not be used to seeing. So these are conditions that aren’t normally scrutinized that then became under scrutiny,” Gardner said.

The concerns raised by ICCT “prompted CARB to start an investigation and discussions” with VW in 2014, CARB said. Nitrogen oxide emissions have been linked to smog and acid rain.

VW agreed to conduct its own tests to replicate the ICCT study, proposed a software fix to CARB.

VW has been airing TV commercials lauding its “clean diesel” cars for several years, including ads that ran last November, even as the company was aware of the emissions controversy. VW on Monday said there was no intention to misinform the public with its clean diesel ads.

In December, VW issued a voluntary recall of all its U.S. diesel cars from model years 2009-2014.

The recall didn’t end the matter. CARB, in cooperation with EPA, said it wanted to do “confirmatory” tests, and it ran those beginning in May 2015. In July, CARB notified VW that the test vehicles still showed emissions that exceeded state and federal limits. California shared those results with federal regulators.

VW attributed the excess emissions to “various technical issues” and “unexpected” real-world conditions.

It wasn’t until EPA and CARB threatened to withhold certification for the automaker’s 2016 diesel models that VW in early September revised its explanation.

“Only then did VW admit it had designed and installed a defeat device in these vehicles in the form of a sophisticated software algorithm that detected when a vehicle was undergoing emissions testing,” the EPA said in its September 18 letter to VW.

The EPA on Friday said that it “intends to compel VW to issue a recall” once the automaker has developed a satisfactory fix. But as of mid-day Monday, company and EPA officials said there was no recall.

VW executives unveiled the 2016 Passat – including a “clean diesel” version – in New York City on Monday evening. The company late Monday said the 2016 Passat diesel has not yet been certified for the U.S. by the EPA.