Dieselgate

In September 2015, the biggest car manufacturer in the world, the Volkswagen Group, was caught by the Environmental Protection Agency(EPA) using a “defeat device”, in diesel engines that could detect when

they were being tested for emissions and change their performance accordingly to improve the tests. The EPA's findings cover 482,000 cars in the US only, including the VW-manufactured Audi A3, and the VW models Jetta, Beetle, Golf, and Passat. VW admits that 11million cars worldwide are fitted with the defeat device. The EPA also accused VW of modifying the software on 3-liter diesel engines on some Porsches and Audis, on at least 10,000 other cars. VW however, denied these claims.

In November 2015, VW found irregularities in tests that measure carbon dioxide emissions that affect 800,000 cars in Europe, including petrol vehicles. Details of how their “defeat device” is unknown but the EPA has said that the engines had software that detected the speed, engine, and even the steering wheel of the car to detect the test scenarios. When the cars were put under these test scenarios in the laboratory, the defeat device would put the car into a safety mode which would cause the engine to perform with less power and worse performance in order to reduce the bad emissions, but when the cars went back onto the road the defeat device would turn off, and let the engine perform under normal power but with increased emissions.

What was the increase? An increase of emissions by 40 times above what is allowed in the US.

VW admitted the mistake and the CEO at the time, Martin Winterkorn, was forced to resign and was replaced. He said that they had “broken the trust of our customers and the public". VW recalled millions of cars worldwide and set aside $8 billion to cover the costs. This caused the company to post its first quarterly loss in 15 years of $3 billion. On top of this, the company was forced to pay a fine of $4.3 billion to the EPA. On 25th May 2020, The German Federal Court of Justice (Bundesgerichtshof – BGH) ruled that VW car owners who owned the models fitted with the defeat device are entitled to damages in the scandal. It ruled that the owners could return the car to VW and receive the price paid for the car minus a bit for using the cars in the meantime.

According to NDR (Norddeutscher Rundfunk), VW management knew about the manipulation since at least August 2015. This means that the company intentionally held back information until September 2015. A major shareholder in VW, Norway’s state fund, announced to sue the company for €680 million in compensation, while fines and compensation in the US eventually reached $15.2 billion. In November 2016, VW announced their “Transform 2025+” reform package and cut over 30,000 jobs. Ferdinand Piech, former head of VW’s board of directors, told the prosecutors that Martin Winterkorn had been informed of the manipulation before the news broke.

The ruling on May 25th, 2020, concerned a case involving Herbert Gilbert who bought a

used Volkswagen Sharan in early 2014 for approximately €31,000. In his case, Mr. Gilbert asked that VW pay him the full purchase price plus interest. Whereas, the VW group maintained that consumers did not suffer any damage from the manipulated diesel cars. The court on the 25th ruled that Gilbert be paid compensation to the tune of over €26,000, minus depreciation resulting from the kilometers he drove. The judgment also requires that those affected return their cars to the company. This ruling is very important since it paves the way for the others affected by this scandal who have pending court cases and it dictates that they will be compensated accordingly.

Dieselgate was one of Volkswagen’s biggest scandals and it very clearly dictated the death of the diesel engine was right around the corner.