At some point in the not-too-distant future, we’re pretty sure business, management and media relations classes around the world will use Volkswagen and its handling of the Dieselgate Scandal as a demonstration of how not to handle a major crisis.
Now we’re pretty sure it will be an example of how not to deal with government agencies too.
That’s because we’re fast approaching April 21, the deadline given to the German automaker by a U.S. Federal District Court last month by which it must submit plans to the court to not only bring more than 580,000 non compliant diesel-engined vehicles in line with the Clean Air Act but also gain regulatory approval for those plans from the U.S. Environmental Protection Agency and the California Air Resources Board.
While EPA Administrator Gina McCarthy told reporters yesterday that it and Volkswagen are still in “really robust” talks about how to resolve the dieselgate emissions scandal, she admitted that it’s not clear yet if Volkswagen and the EPA will be able to agree on a final plan ahead of the April 21 deadline.
The deadline was given to both parties by U.S. Federal District Judge Charles Breyer last month as part of an ongoing Federal case being brought by the U.S. Justice Department against Volkswagen for purposely programming the emissions control systems of certain model-year diesel-powered Volkswagen, Audi and Porsche vehicles with a special mode designed to cheat emissions testing.
That mode, which regulators have referred to as a “cheat switch,” was designed to detect if a car was being tested on a rolling road (dynamometer) or being driven on the public highway. If the former was detected, code within the unit ensured that tailpipe NOx levels were kept within compliance with limits set by the EPA and enforced through the Clean Air Act. If the latter condition was detected, the software was programmed to bypass all emissions controls completely, emitting up to 40 times the legally allowed NOx limits in preference for improved fuel economy and better performance.
While Volkswagen initially denied the existence of such a device, it eventually admitted to CARB and the EPA that such a device did exist in certain 2.0-litre diesel-engined cars sold in both Europe and the U.S. A month or so later, it admitted a similar device existed in larger 3.0-litre V-6 TDI diesel engines used in certain model-year Volkswagen, Audi and Porsche models.
At the moment, how Volkswagen will be expected to make amends for its purposeful disregard of emission regulations isn’t entirely known. In addition to paying $46 billion in fines to the U.S. Justice Department for violated federal law, one option on the table is for Volkswagen to bring affected cars into compliance through reprogramming of their emissions control systems or retrofitting new exhaust components, buying back cars that cannot be brought into compliance due to their age or engineering limitations at full (original) sticker price.
Another option supported by Tesla CEO Elon Musk and more than 40 other business leaders across the world would be for Volkswagen to be forced to build as many electric cars as it would take to offset the carbon emissions of the noncompliant VW cars currently on the roads of the U.S. That process, which ultimately would have a lower net carbon footprint than the first, would also serve as a way to encourage more people to switch from diesel or gasoline to electric vehicles by increasing market choice and availability of plug-in cars. But as we reported earlier this year, Volkswagen doesn’t seem too keen on this particular solution, despite recently unveiling a 200+ mile electric car that we think has the capability to turn the brand’s reputation around.
While it’s not completely clear if Volkswagen will reach an agreement with the U.S. Justice Department, EPA and CARB by the April 21 deadline, we’d suggest doing so would be in Volkswagen’s best interests.
Not doing so — and continuing to delay the ultimate fix for diselgate cars — could be just another nail in Volkswagen’s coffin.
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