FAQ: Dieselgate in detail

Dieselgate is one of the more extreme cases of the automotive industry's corporate shenanigans uncovered in recent times, and it has been widely reported on TV and in print media right across the globe.

Yet many people don't fully comprehend the situation and nor do they appreciate the ramifications – for consumers and car companies generally.

So let's start with the basics.

What, in brief, is 'dieselgate'?

Back in 2014, Volkswagen was exposed by researchers in the USA for developing a 'cheat' for diesel-engined vehicles sold around the world by VW and at least three other VW-owned brands – Audi, Skoda and Porsche.

Firmware installed in vehicles' engine management systems between the years of 2008 and 2015 could detect a test situation – with the vehicle on a rolling-road dynamometer used to record emissions.

In that situation, the vehicles would run in a special operating mode to lower Nitrogen Oxide (NOx) emissions below the ceiling figure mandated by the US EPA (Environment Protection Agency).

Outside the laboratory, the firmware would switch operating parameters back to a 'street' mode to optimise performance and fuel economy. In this mode, the resulting NOx emissions would be substantially higher than permitted by local law.

An unknown number of Volkswagen employees were apparently actively involved in the development and implementation of this so-called 'defeat device' strategy.

These VW employees were reportedly concerned the company's diesel vehicles could not meet the standard required in accordance with American emissions legislation, known as Tier 2 / Bin 5. The defeat device concealed each vehicle's inability to pass the emissions test.

When American researchers discovered that Volkswagen diesels were more efficient in the laboratory, but less efficient on the road, they reported the results to the American EPA, which consequently launched legal action against Volkswagen.

Investigations indicated that the defeat device was not just some unforeseeable accident of software engineering. It was developed as a specifically calculated means to fool emissions testing authorities.

As the news spread around the world, the scandal snowballed, with other jurisdictions – including Australia – holding Volkswagen and its subsidiary brands legally accountable.

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Is my car affected?

Volkswagen Australia has announced a recall for vehicles sold in Australia with the defeat device firmware installed. Around 100,000 VW, Skoda, Audi and Porsche vehicles are subject to the recall here.

The engine code for vehicles sold in Australia with the defeat device firmware installed is EA189. This engine was fitted to a host of vehicles sold between the years of 2009 and 2015.

These vehicles include Golf, Polo, Jetta, Passat CC from 2008 (and later model CC from 2011), Passat, Eos, Tiguan, Caddy, Amarok, plus Porsche's Cayenne, Audi's A1, A3, A4, A5, A6, Q3, Q5 and TT, and Skoda models including Octavia Yeti and Superb.

Volkswagen Australia has set up a web page for owners to determine whether their car is subject to the recall. Owners are invited to copy the vehicle's identification number (VIN) and paste into a field on the page. Owners can also check the VIN through Volkswagen Australia's customer service number, 1800 504 076.

What are the options for owners?

It is already established that Volkswagen vehicles fitted with defeat device technology do not comply with the relevant Australian Design Rule (ADR 79).

For that reason, Victorian registration authority VicRoads has threatened to take non-compliant cars off the road if owners refuse to have the defeat device firmware removed by Volkswagen Australia.

Media outlets are also reporting that the ADR-compliant fix means vehicles suffer a drop in performance and fuel economy. But the recall is to be enforced anyway, authorities say.

Owners left out of pocket after selling an affected vehicle may be compensated through the courts if class-action proceedings result in a favourable outcome for the vehicle owner.

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When did dieselgate kick off?

American investigators believe that Audi engineers began developing a 'defeat device' for a diesel V6 as long ago as 1999. Such defeat devices may have been manipulating the engine-management parameters in European cars even earlier.

The idea apparently flourished within Volkswagen's halls of power and flowed through to diesel-engined VW products sold in America from around 2008. It's believed that the decision to employ the defeat device for common-rail diesel vehicles sold in the USA was made within Volkswagen in 2006.

According to Volkswagen, the current crop of diesel vehicles sold in America truthfully meet the obligations imposed by US emissions legislation and all its models have complied with US legislation since 2015.

Why did it take so long to catch out Volkswagen?

As far back as the late 1990s, European researchers were warning of a major discrepancy between the nitrogen oxide (NOx) emissions of diesel-engined vehicles in daily use and the emissions from the same vehicles in laboratory testing.

America's EPA had arrived at similar conclusions around the same time, according to a report later published in the Washington Post. The EPA's test regime postulated real-world NOx emissions between 10 and 20 per cent higher than laboratory test results, but the test program was abandoned in 2001.

A decade later, the European Commission's Joint Research Centre (JRC) embarked on a new testing program and published a 2013 report that reiterated the US EPA's earlier findings.

NOx emissions were higher in the field than in the laboratory for diesel-engined vehicles. The JRC even noted in 2013 that "Sensors and electronic components in modern light-duty vehicles are capable of 'detecting' the start of an emissions test in the laboratory (eg: based on acceleration sensors or not-driven/not-rotating wheels)”.

In the same report, the JRC also referred to "the use of defeat devices that activate, modulate, delay, or deactivate emissions control systems with the purpose of either enhancing the effectiveness of these systems during emissions testing or reducing the effectiveness of these systems under normal vehicle operation and use”.

So the JRC was well aware of the potential to thwart legislated emissions testing – around three years after Volkswagen had introduced its defeat device in diesel vehicles to the American market.

The JRC's warnings went largely unheeded in Europe, with the European Commission and the member states of the European Union unable or unwilling to decide who was responsible for policing and enforcing emissions regulations.

In 2014, a not-for-profit organisation named the International Council on Clean Transportation (ICCT) sponsored a study by researchers at CAFEE (Center for Alternative Fuels, Engines & Emissions) based at West Virginia University in the USA. The research team acquired a Volkswagen Jetta, a Passat and a BMW X5 for real-world NOx emissions testing.

The ICCT was already aware of the findings by the JRC – that vehicles tested in Europe had emitted nitrogen oxides far exceeding the mandated (Euro 3-5) limits in certain driving conditions. Even so, the ICCT expected the American tests to show that the three vehicles would easily meet the American emissions legislation standard.

The CAFEE researchers proved them wrong. While the X5 passed the test, neither of the two Volkswagens did.

CAFEE reported its findings to the EPA and CARB (California Air Resources Board). Investigators appointed by the two environmental bodies took 12 additional months to trace the defeat device to firmware bearing the innocuous-sounding name, 'acoustic condition'.

Far from reducing powertrain noise, vibration and harshness, 'acoustic condition' was present simply to lower the emissions of a diesel engine during rolling-road emissions tests.

What are the 'discrepancies' in real-world testing?

Taking the example of the Jetta, which was sold in both Europe and the USA during the same period, the real-world NOx output recorded by the researchers at CAFEE was at least seven times higher than the limit imposed by the Euro 5 standard for the Jetta at the time.

Measured against the Tier 2 / Bin 5 legislation applicable in the USA, the Jetta fared even worse. The car's best result was nearly 15 times more than permitted by the American regulations.

Yet both the Jetta and the Passat managed to achieve the required standard – even the much more stringent US standard – when tested on a dynamometer.

These are the results recorded by CAFEE:
Tier 2 / Bin 5 limit for Jetta – 0.043g/km
Euro 5 limit for Jetta – 0.18g/km
Dyno result for Jetta – 0.022g/km
Best real-world result for Jetta – 0.61g/km
Worst real-world result for Jetta – 1.5g/km

Tier 2 / Bin 5 limit for Passat* – 0.043g/km
Euro 5 limit for Passat* – N/A
Dyno result for Passat* – 0.016g/km
Best real-world result for Passat* – 0.34g/km
Worst real-world result for Passat* – 0.67g/km
* US market specification

What's the problem with nitrogen oxides?

Over decades, government, environmental groups and the automotive industry have all acknowledged that the nitrogen oxides produced by internal-combustion engines are a significant airborne pollutant that is a key element in photochemical smog, combines with volatile organic compounds to produce acid rain and has adverse effects on health – including heart disease and lung damage.

What action is being taken by regulators?

The US EPA issued a 'notice of violation' against Volkswagen in 2015, stating that nearly half a million diesel vehicles sold in America between 2009 and 2015 were in breach of the prevailing emissions legislation.

Volkswagen initially denied the allegations made in the EPA's notice but came clean in August of 2015.

In March of 2016, the US Trade Commission took Volkswagen to court over the company's claims to be selling 'clean diesel' cars.

The company is being held to account in other markets around the world, including Australia. Two months after Volkswagen's corporate confession, the ACCC (Australian Consumer and Competition Commission) revealed it would conduct its own investigation.

It has taken Audi and Volkswagen to Federal Court, and both companies have issued voluntary recalls for the dieselgate vehicles sold in Australia.

What action is being taken by legal practitioners?

Different class actions have been launched around the world, including one high-profile local case led by Maurice Blackburn.

As of March 16, 2018, Volkswagen Australia has conceded in court that vehicles fitted with the defeat device firmware cannot comply with the local emissions standard in any mode other than the 'test' mode, which the company has internally labelled 'customer' or 'comfort' mode.

Volkswagen has committed to compensating US Volkswagen owners and has settled class action claims in Canada to the tune of $CAD290 million.

This compensates owners for 'buyback', repair and restitution, which covers all the remedies likely to be sought by owners – including lower prices at trade-in time.

Volkswagen is yet to make such an offer to Australian owners.

Why did Volkswagen do it?

There's little but conjecture available to explain why Volkswagen sacrificed its brand reputation to sell diesels in America, a country that has been historically averse to diesel-engined passenger cars anyway.

The company's new engine family, EA189, did not perform as efficiently as expected, despite the company sinking a tonne of money into the development program.

So money is the short answer...

Who were the decision makers at Volkswagen?

Volkswagen is adamant that the company's Board of Management was unaware of the existence of the defeat device or its illegal deployment in Volkswagens sold around the world between 2008 and 2015.

To date, Dr Martin Winterkorn, CEO of the company at the time, has been the biggest scalp claimed by dieselgate investigators, although he chose to stand down from his position in September 2015, rather than wait for the axe to fall. German newspapers have speculated that he was in the know all along.

Those jailed to date include engineer James Liang, compliance chief Oliver Schmidt and Dr Wolfgang Hatz, Porsche's director of development and formerly Volkswagen Group powertrain development director.

An American politician serving on a US congressional committee had previously refuted claims by Volkswagen's American CEO that dieselgate was a side project run by a couple of rogue engineers. The arrest of Hatz and charges laid against at least five other company executives vindicate the congressman's view.

What are the longer-term consequences for Volkswagen?

Volkswagen has already been brought to heel with the insistence by governments all around the world that it recalls the vehicles fitted with the defeat device technology. Many industry analysts are prophesying bankruptcy for the company, if governments succeed in levying massive fines.

There's another school of thought that even in America, regulatory bodies and the courts will be reluctant to slam Volkswagen – which could have ramifications for US workers employed in VW's production plant at Chattanooga, in Tennessee.