VW Presentation in ’06 Showed How to Foil Emissions Tests

Article by Jack Ewing, Summary by Murray Manley

Recently, during an on-going investigation to find out more details about VW’s emissions scandal, a powerpoint presentation was uncovered that described “in detail how an automaker could cheat on emissions tests in the United States.” Although VW has admitted that nearly 11 million cars are fitted with the technology to cheat on emissions tests, the power point presentation may in fact be the most poignant evidence that has been uncovered. Although investigators do not yet know the breadth of the circulation of the powerpoint, the fact that the document exists at all is incriminating enough. Clearly, the deception was extremely calculated. Evidence shows that even after VW was under close scrutiny by government officials in 2014, they continued to deliberately install software to cheat the emissions tests, and clearly undeVWrestimated the potential costs and fines of being discovered. In a note from an American lawyer hired to examine the potential fines and losses for cheating emissions tests, VW was informed that the highest known penalty for cheating was $100 million. At this point in time, the costs of cheating must not have outweighed the benefits considering the small estimate of potential losses, a cost that VW easily could have paid with little or no effect on the company that had revenues of about $240 billion. In addition to the relatively low costs of cheating, VW was assured by engineers that detection would be nearly impossible. They were wrong, and in 2014, West Virginia University identified the first inconsistent data in emissions testing. As we discussed in class last week, Volkswagen recently announced that it has suffered losses of 6.2 billion dollars, and has allocated another 18 billion to cover various damages costs.

 

Source: <a href=”http://www.nytimes.com/2016/04/27/business/international/vw-presentation-in-06-showed-how-to-foil-emissions-tests.html?ref=automobiles&_r=0″>NY Times article</a>

4 comments to VW Presentation in ’06 Showed How to Foil Emissions Tests

  • frankn18

    What concerns me within this whole scandal is all of the car companies not under investigation. I’m not quite qualified to make assumptions but I’m going to based on gut feelings. I would assume that other companies must be using techniques to produce similar results as VW. This trend is seen too often outside of the auto industry. We talk about the financial crisis of ’08.. every bank on Wall Street was invested in sub prime bonds, not just a single company, taking out the whole industry. It seems too good to be true that only VW has been falsifying emissions tests.

  • cranea18

    I agree with Nate here; every time I hear about the VW scandal, I think to myself, how do we know other companies are not doing similar things? I know Mitsubishi was recently accused of something similar to this as well. In Murray’s blog, she talks about how VW was informed that the “highest known penalty for cheating” was $100 million; many of the large car manufacturers can easily pay this, so if they do not think they will get caught, what is stopping them from cheating on these tests in a similar fashion?

  • adamsm19

    What I find most interesting about this story is the calculation VW apparently made that the possible penalties did not outweigh the benefits of cheating. This raises serious questions about the penalties levied on companies for cheating on emissions tests. In the future the government will obviously need to do more to discourage cheating.

  • Barrett Snyder

    Playing devil’s advocate here, but if faced with the decision of costly redesign late in production in order to meet regulations, wouldn’t you choose to take that option over a lesser fine? If under pressure from top management to sell cars and make the most money possible doing so, the last thing you would want to tell your boss is we are going to have to spend a lot more money (potentially taking losses on a vehicle line) to be able to meet regulations because we miscalculated projected emissions.

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