Volkswagen turmoil: Volkswagen Emissions Scandal
Published: September 21, 2015
Volkswagen turmoil: Volkswagen Emissions Scandal, Volkswagen’s shares plummeted Monday as investors digested the news of the U.S. Environmental Protection Agency’s investigation into how the German auto maker cheated on emissions tests. Volkswagen halted American sales of popular diesel-powered cars and issued a sweeping apology over the weekend for violating customers’ trust. Here’s a look at what we know so far about the scandal.
What Does the EPA Claim?
According to the EPA, Volkswagen deployed a sophisticated software algorithm on some cars that detects “when the car is undergoing official emissions testing, and turns full emissions controls on only during the test.” The effectiveness of the cars’ emissions-control devices is “greatly reduced during all normal driving situations.” The Volkswagen software is a “defeat device” as defined by the Clean Air Act, says the EPA.
••How Dirty Are Volkswagen Diesel Cars?
Volkswagen’s software ensures that cars meet emissions standards in the laboratory or testing station, but during normal operation they emit nitrogen oxides, or NOx, at up to 40 times the standard, the EPA says.
•Which Cars Are Affected?
The allegations concern around 482,000 Volkswagen diesel cars made since 2008: four VW models-Jetta, Beetle, Golf and Passat-and the Audi A3.
•What Are the Health Risks?
The EPA says NOx pollution contributes to a range of pollutants that are a public-health problem, though the violations at Volkswagen don’t in themselves represent a safety hazard. The cars remain legal to drive and resell.
•What Is Volkswagen’s Response?
The auto maker made a number of moves over the weekend. Chief Executive Martin Winterkon made a public and personal apology. The company has commissioned an external investigation. It has halted the sale of the cars incriminated by the EPA.
•What Is the Impact on Volkswagen?
Investors wiped more than â‚¬15 billion ($16.5 billion) off the market value of Volkswagen judged by the more-than-20% plunge in the value of the auto maker’s nonvoting preferred stock. That is in line with estimates of the maximum $18 billion fine that Volkswagen might face. The scandal raises longer-term issues: the reputation of the car maker’s top management; its image in the U.S., where VW sales are weak: and the credibility of the auto industry at large.
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