The repercussions of the Volkswagens emissions scandal
For those unaware, Volkswagen were involved in a huge emissions scandal in 2015. The EPA (environmental Protection Agency) found that Volkswagen’s turbocharged diesel engines were designed to pass NOx emissions tests only at the testing phase, whilst in reality producing up to 40x more NOx emissions than testing initially showed in a real world driving environment.
The programming effected approx. 11 million cars worldwide, and subsequently led to stock prices for the Volkswagen group dropping by a third in the days after the revelation.
The scandal stemmed from the interpretation that the high emissions output was not a result of an error, but instead were calculated by software controlled machinery. This means that the group may have purposefully programmed their vehicles to restrict their NOx output for testing, but not for production.
Earlier this week, it was revealed that VW had agreed to a staggering $4.3 billion fine (3.5bn) for the scandal; cementing the total cost of the scandal as $20 billion.
Furthermore, VW had agreed to plead guilty to breaking US emission laws in an attempt to further avoid any legal action ahead of Trumps administrative transfer to presidency.
Volkswagen commented on the recent news, stating that: ‘Volkswagen AG confirms market rumours that the company negotiated a concrete draft of a settlement agreement with the aforementioned US authorities which contains criminal and civil fines with a total amount of $4.3bn as well as measures to further strengthen the compliance and control systems including the appointment of an independent monitor for the next three years.’
The company continues to say:
‘Further, part of the settlement agreement is a guilty plea regarding certain US criminal law provisions and a statement of facts on the basis of which the fines have to be made’.
Resultantly, the total cost of the scandal has now exceeded $20 billion. It is reported that the company had set aside approx. $19 to handle the fallout of the scandal, but it is not yet clear whether this figure will rise, or whether VW’s fine and guilty plea will finally put an end to the ordeal, or whether other countries will use this as a point of leverage to seek additional compensation from the firm.