Volkswagen Is Ordered to Recall Nearly 500,000 Vehicles Over Emissions Software

[SageBrush]

I've lost track of all the lawsuits ...

Does this agreement in Breyer's court resolve the possible EPA fines ?

 

[mspohr]

Lots of articles coming out today stating VW will buy back up to 500,000 TDI's plus pay $5000 on top of that.

It's been reported that there's a cap of $1 billion on payouts and 500,000 cars so that works out to only $2,000 per car... I guess some might get more, others less?

 

[gene]

I believe was somebody's misreporting. I have read $10,000,000,000 which makes more sense.

 

[FlatSix911]

Judge: VW owners can pick buybacks, fixes in emissions deal

An agreement will give consumers who bought nearly 600,000 Volkswagen vehicles rigged to cheat on emissions tests the option of having the automaker buy back the cars or fix them, a judge said Thursday. Senior U.S. District Judge Charles Breyer did not give details on how much car owners would be paid but said the deal between Volkswagen, the U.S. government and private lawyers would include "substantial compensation."

The agreement will include a fund for corrective efforts over the excess pollution, and Volkswagen will be required to commit other money to promote green automotive technology, said Breyer, who has not formally signed off on the deal yet. The judge did not reveal whether it included details on how the company planned to repair the vehicles.

Volkswagen would spend just over $1 billion to compensate owners but did not include plans on a vehicle fix in the agreement, a person briefed on the matter who asked not to be identified because the deal had not been made public said Wednesday. Those plans, and the cost of the fixes, apparently are still under negotiation.

With $1 billion to spend, it works out to about $1,700 per car. But some owners of newer models who get just a software fix may receive little. About 325,000 owners of older cars that require more extensive repairs likely will get more, because the repairs could affect mileage and performance. The vehicle owners and the U.S. Department of Justice sued the company after it acknowledged in September that it intentionally defeated emissions tests and put dirty vehicles on the road.

Analyst Marc-Rene Tonn at Warburg Research estimated the direct financial impact on Volkswagen from the emissions scandal worldwide at 28.6 billion euros ($32.3 billion). The company also faces losses from declines in market share and having to lower its prices to keep customers. Any U.S. settlement could influence what happens in Europe and in other countries, he said. "Very generous payments to U.S. customers may add to some greediness here, too."

Shares in Volkswagen were up 5.6 percent in early trading in Europe on news of a deal with the government. Volkswagen told its shareholders last year it had set aside $7.3 billion to help defray the potential costs of a recall or regulatory penalties. Most outside observers have said that figure is likely far too low. The company faces as much as $20 billion in fines for Clean Air Act violations alone, before paying to fix the cars or compensate their owners.

The court hearing Thursday also was expected to touch on a request to add the Federal Trade Commission to the case. The FTC has sued Volkswagen alleging deceptive advertising.The owners' lawyers also are seeking documents that Volkswagen provided to the law firm Jones Day, which the company has hired to investigate how the cheating happened. The judge had threatened a trial this summer if the company did not meet his Thursday deadline to detail the timing of the repairs.

 

[jgs]

Judge: VW owners can pick buybacks, fixes in emissions deal

So many widely varying reports (some of them above, some not). I think it'll be impossible to know what's happening until the details of the deal are released. The story you quoted doesn't cite $5000 compensation per owner (in addition to fixing or repurchasing the cars) but other stories have done. And as the story you quoted points out, $1B is a lousy $1700 per owner on average. It's hard to parse that as "substantial compensation", or as being anything close to a sufficient budget to even fix 600k cars, much less repurchase any substantial proportion of them (and most stories are reporting they won't be able to fix any of the small diesels, the ones they can't even get to comply with Euro rules, and that's something like 340k cars, which if you assume they're only worth $10k apiece is still way more than $1B), much less do both of those things plus pay owners off to avoid lawsuits.

Finally, I wonder what's going on with the $18B in EPA fines VW was reported as being potentially liable for when the story first broke. I presume those are still on the table, the equivalent of a regular human offender being subject to both civil ("wrongful death", etc) and criminal ("murder", etc) penalties.

 

[gene]

That $1 billion that has floated around was meant to be $10 billion by what other articles have stated. The potential fine is up to $81B not $18B.

 

[SageBrush]

Finally, I wonder what's going on with the $18B in EPA fines VW was reported as being potentially liable for when the story first broke.

I looked into this out of curiosity. The EPA civil fine question remains to be determined, as do individual state civil penalties other than California.

Somewhat tangentially, two interesting questions are now mostly answered:

1. Why did VW take on this faustian bargain ?
2. Are other diesel manufacturers in line to be caught; or alternatively how did they manage what VW could not ? And why didn't they expose VW ?

This week a UK agency reported that all 37 diesel models they tested from a variety of manufacturers emit real-world emissions 5-10x higher than EU standards allow, but only VW "cheated." It turns out that they all turn off the emissions controls at ambient temperatures below 20C (68F) to "protect the devices." The regulatory agencies allowed the temperature control and it was disclosed, so it is not cheating. But the exemption is ridiculous. Below 20C !? What is that, 75% of the on-road time in Europe ? This is not just a case of using less urea; it means that the assortment of control devices have a very short useful life.

In summary, the diesel manufacturers across the board have not solved the emissions problem in a way that is effective, reliable, and cost competitive. That is the real story, and while in hindsight not too surprising, it is now exposed. Now the Europeans have a choice: do they accept the high NOx emissions from diesel, or phase diesel cars out ? The notion that diesel emissions can be controlled cost effectively has been debunked.

Dirty diesel it was, and dirty diesel it remains.
Of no concern to me but of much concern to VW and associated vested interests, is whether VW can slow down the inevitable long enough to transition from a core diesel company to an electrified one. They actually are trying, but the rear guard actions are *cough* *cough* expensive.

 

[mspohr]

I looked into this out of curiosity. The EPA civil fine question remains to be determined, as do individual state civil penalties other than California.

Somewhat tangentially, two interesting questions are now mostly answered:

1. Why did VW take on this faustian bargain ?
2. Are other diesel manufacturers in line to be caught; or alternatively how did they manage what VW could not ? And why didn't they expose VW ?

This week a UK agency reported that all 37 diesel models they tested from a variety of manufacturers emit real-world emissions 5-10x higher than EU standards allow, but only VW "cheated." It turns out that they all turn off the emissions controls at ambient temperatures below 20C (68F) to "protect the devices." The regulatory agencies allowed the temperature control and it was disclosed, so it is not cheating. But the exemption is ridiculous. Below 20C !? What is that, 75% of the on-road time in Europe ? This is not just a case of using less urea; it means that the assortment of control devices have a very short useful life.

In summary, the diesel manufacturers across the board have not solved the emissions problem in a way that is effective, reliable, and cost competitive. That is the real story, and while in hindsight not too surprising, it is now exposed. Now the Europeans have a choice: do they accept the high NOx emissions from diesel, or phase diesel cars out ? The notion that diesel emissions can be controlled cost effectively has been debunked.

Dirty diesel it was, and dirty diesel it remains.
Of no concern to me but of much concern to VW and associated vested interests, is whether VW can slow down the inevitable long enough to transition from a core diesel company to an electrified one. They actually are trying, but the rear guard actions are *cough* *cough* expensive.

I think VW has effectively killed the diesel car.

 

[mspohr]

As many have speculated, the emissions scandal is spreading with news that Porsche, Volkswagen, Audi, Opel and Mercedes diesel cars will be recalled as part of a clampdown on nitrogen oxide emissions. In addition Mitubishi has admitted cheating on fuel economy tests.
Can we now say that "everybody does it" and that we can't trust any automaker (except Tesla, of course, since they produce only electric vehicles)?

Here's a good summary of recent issues from The Guardian:
Diesel crisis deepens as German brands recall 630,000 cars
Diesel crisis deepens as German brands recall 630,000 cars

 

[BluestarE3]

I think VW has effectively killed the diesel car.

I see a new documentary film coming, centered on VW's diesel-gate but also covering the larger issue of how the promise of "clean diesel" was used as a diversion to delay or stymie the development and adoption of EVs.

 

[SageBrush]

I think VW has effectively killed the diesel car.

In a sense, since they were caught by being the most arrogant, but I think the larger story is the more interesting one, that diesel does not appear to be able to compete legally in the US -- VW or otherwise.

And if the EU decides that Euro6 will actually mean something other than a rubber stamp from the testing lab, then diesel is dead in Europe too.

 

[SageBrush]

I see a new documentary film coming, centered on VW's diesel-gate but also covering the larger issue of how the promise of "clean diesel" was used as a diversion to delay or stymie the development and adoption of EVs.

Yup

 

[brianman]

An agreement will give consumers who bought nearly 600,000 Volkswagen vehicles rigged to cheat on emissions tests the option of having the automaker buy back the cars or fix them, a judge said Thursday

I'd like to see a 3rd option:
Buyback my car when I take delivery of my Model 3.

This would allow owners to use the vehicle in the interim as a loaner-of-sorts until Model 3 is available.

 

[jgs]

I'd like to see a 3rd option:
Buyback my car when I take delivery of my Model 3.

This would allow owners to use the vehicle in the interim as a loaner-of-sorts until Model 3 is available.

Given that one of the government's major interests in this debacle is to get the polluting cars off the streets, it's hard to see that one flying. I think forcing a fair buyback at all (assuming they have, let's see the details) is already pretty good on the consumer protection front.

That said, at least one report has said owners will have like two years to decide whether to take advantage of the buyback. So depending on how far M3 slips or doesn't slip, you might get your wish.

 

[brianman]

That said, at least one report has said owners will have like two years to decide whether to take advantage of the buyback. So depending on how far M3 slips or doesn't slip, you might get your wish.

Perfect.

 

[omarsultan]

Next....

Mercedes-Benz Faces Federal Investigation Over Alleged Diesel Emissions Cheats

 

[FlatSix911]

VW scandal settlement: Owners can choose a fix or a buyback
VW scandal settlement: Owners can choose a fix or a buyback

Volkswagen has reached deal to repurchase or fix nearly 500,000 diesel cars that cheat on emission tests, giving car owners the choice of what to do. No matter what they choose, owners will also receive "substantial" cash compensation for their trouble. Federal Judge Charles Breyer ordered the automaker not to disclose how much money owners will receive while final terms of the deal are being hammered out, but there are widespread reports that the sum is $5,000.

The automaker, which admitted to cheating on emissions tests, said the preliminary agreement was reached in round-the-clock negotiations with U.S. environmental regulators, the Justice Department as well as attorneys for the car owners. "VW is committed to winning back the trust of its customers, its dealers, regulators and all Americans," VW attorney Robert Giuffra told the court. "We think [the deal is] good for the consumers, the environment, and good for Volkswagen."

Volkswagen so far has only given owners $500 in cash and $500 in store credits. It's also hired attorney Kenneth Feinberg to run a compensation fund for owners. But details of that compensation plan have yet to be decided. But many owners, and even members of Congress, have called on the automaker to buy back the cars from unhappy owners. "Finally, Volkswagen appears to have a proposal to take care of customers who purchased its polluting diesel vehicles," said Michelle Krebs, senior analyst with AutoTrader. "It's a critical first step to move Volkswagen forward from this debacle."

Last fall regulators announced that VW's diesel cars had software that cheated on emission tests and let cars dump up to 40 times the allowed level of pollutants into the air. VW's CEO and head of its U.S. operations both quit as a result. There are about 11 million of the cars worldwide. VW faces massive fines that could exceed $18 billion for violating the U.S. Clean Air Act, as well as criminal probes and a suit by federal authorities charging it with deceptive advertising that touted "clean diesel" cars. VW is still negotiating with a number of government agencies as to how much money it will pay in fines.

The cars covered by this agreement have 2-litre engines and include the VW Jetta, the Beetle and the Golf from model years 2009 through 2015, the Passat from 2014-2015 as well as the Audi A3, model years 2009-2015. The Audi luxury brand is owned by Volkswagen Group (VLKAY).
The are also about 90,000 cars with 3-litre diesel engines that aren't covered by this agreement. They include the 2014 VW Touareg, the 2015 Porsche Cayenne, also owned by VW, as well as the 2016 Audi A6 Quattro, A7 Quattro, A8, A8L, and Q5. Breyer said that he anticipates a deal for how to handle those 3-litre cars can be reached "expeditiously." He said he also expects a quick agreement on government fines.

 

[mspohr]

The Guardian is reporting that 97% of new diesel cars in the UK don't meet emission standards:
Revealed: nearly all new diesel cars exceed official pollution limits

Health experts lambast ‘deceitful’ carmakers as data suggests 97% of vehicles fail to meet NOx emissions standards in real-world conditions

(Ironically, new VWs did better than many others... but still a fail.)

 

[mspohr]

Looks like consumer lawsuits are gaining ground in Europe:
Lawyer Takes Aim at Volkswagen in Europe Over Emissions Scandal

 

[RubberToe]

Beginning to look like one of the growth industries in the near term will be either auto junk yards, or scrap metal recycling. Maybe VW group should expand into that line of work. Offset some of their diesel losses.

RT