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What's the deal with Dieselgate?

In 2015, the world’s second

largest automobile manufacturer was caught cheating on emissions tests. Volkswagen had programmed its cars to run cleaner in testing stations than on the road. More than 11 million cars worldwide and 500,000 in the US were running the cheat code, and belching harmful emissions into the atmosphere. VW was forced to buy back or fix every car running the cheat, and pay $2.8 billion in criminal fines in the US. CEO Rupert Stadler was arrested on 18 June 2018 and sent to jail in Germany. Altogether, the company paid $25 billion in fines, penalties, fixes, and restitution. It was arguably the single largest automotive scandal in the past 50 years.

So what, exactly did VW do? And why would it take such a tremendous risk?

It all started in the early 2000s, when governments across the world began enforcing stricter fuel efficiency standards for passenger vehicles. These new standards were partly introduced to reduce reliance on oil from other countries, and mostly to help reduce the amount of carbon being pumped into the atmosphere. Vehicle manufacturers had to meet average fuel economy targets—the average fuel economy across their entire range of vehicles. To meet these lower averages, some manufacturers released smaller cars with smaller engines. Others added turbos, direct injection, or other technologies to make engines more efficient. Many manufacturers in Europe invested heavily in diesel cars to help meet the new standards.

Diesel is a more energy dense fuel than gasoline—it packs about 13 percent more power by volume than gasoline. That’s a big reason why diesel cars get better mileage than gas cars. Diesel engines also run at a much higher compression and ignition or burn temperature, making them more efficient than gasoline engines. All of this means that a diesel car will produce less CO2 per mile than a comparable gasoline car.

If you’re an automotive manufacturer that has been tasked with increasing efficiency and making cars that release less CO2, diesel seems like a dream. But there’s a big problem with diesel: It’s dirty.

Everyone is familiar with diesel exhaust, those foul black fumes that billow out of big-rig smokestacks. That stuff is just as dirty as it seems, and can be downright deadly. To understand why diesel engines belch black smoke, you need to understand how they work and how they’re different from gasoline engines.

In a gasoline engine, fuel is mixed with air, then it’s injected into the combustion chamber where a spark from a spark plug starts the fire. As the air-fuel mixture burns, it pushes the cylinder down, turns the crank, which turns gears in the transmission… and eventually the car gets moving. Diesel engines work slightly differently. Fuel is injected directly into the combustion chamber, where it mixes with a tiny amount of air. The cylinder compresses the fuel and air until it heats up and spontaneously combusts. As the fuel burns, it pushes the cylinder back down and you’re off and running. Because the fuel isn’t mixed with air before it enters the chamber, it doesn’t completely burn. But because of the extreme temperatures within the combustion chamber, it kind of chars into fine black particles. That’s the black smoke you see coming out of big diesel trucks.

That black smoke is gross and can cause real health problems, but it’s not the biggest issue with diesel. It can be filtered out of exhaust using replaceable filters. The real danger is NOX, or nitrogen oxides. Because it burns at very high temperatures, diesel fuel makes more NOX, which is difficult to filter out of exhaust. NOX is transparent, but deadly.

It reacts with ammonia, moisture, and other compounds commonly found in the air to form nitric acid. Nitric acid can damage lung tissue, worsening respiratory diseases like asthma, emphysema, and bronchitis. It also can aggravate heart disease. NOX also reacts with other common organic chemicals to make a variety of toxic chemicals that can damage DNA and even cause cancer. NOX also reacts with organic compounds to form ozone, which also damages lung tissue.

Gasoline engines used to produce a lot of NOX. But new gasoline formulations, fuel injection systems, electronic engine management systems, and catalytic converters have reduced NOX emissions from gas cars by about 96 percent. Today’s gasoline cars may produce more CO2 per mile than comparable diesel cars, but they produce hardly any NOX.

So, diesel is energy dense, but dirty. However its exhaust can be cleaned up with something called Diesel Exhaust Fluid, or DEF. DEF contains urea and water. When it’s injected into a diesel exhaust system, it reacts with the NOX to form water and nitrogen, both of which are harmless. Big rigs (lorries) use DEF and larger modern diesel cars and SUVs use it, too. But DEF is expensive and inconvenient. DEF systems add several thousand dollars to the initial purchase price of the car, and the stuff costs about six bucks a gallon. Thankfully diesel cars only use DEF at about two percent of fuel consumption, but DEF tanks still have to be checked and filled.

The holy grail for automotive manufacturers is a small diesel engine that gets fantastic mileage, makes great power, and emits low levels of NOX. And that’s exactly what VW promised with their smaller TDI turbo diesel engines that were released for the 2009 model year. They appeared to be miracles of modern technology—small diesel engines that got almost twice the mileage of comparable gas engines, had plenty of power, and burned clean. In the old days, diesel cars were painfully slow, noisy, and not very fun to drive. VW’s TDI cars felt like space ships in comparison. Lively and punchy with none of the rattly racket of old diesel engines. Larger versions of the TDI engines were equipped with DEF systems, but small economy cars were not.

VW sold more than 11 million TDI-equipped cars across the world from 2009 to 2015. TDI engines were made in a variety of sizes and put in tons of different cars and trucks. Everything in the VW lineup from the tiny Polo to the midsize Passat could be had with a TDI engine. VW made billions and billions of dollars on TDI cars.

Then, in 2014 the fantasy started to unravel. Researchers at the International Council on Clean Transportation devised a “very ordinary” emissions test to measure emissions in real-world driving situations. Ironically, they wanted to prove that diesel was indeed as clean as gas, and they strapped a testing apparatus to several US-model diesel VWs and BMWs. They picked the US models because they actually have stricter emissions standards than the European models. The results were troubling. The BMWs produced the expected amounts of NOX, but the VWs produced more. Much more.

The researchers raised concerns publically, then another group of researchers at the University of West Virginia got a grant to do their own testing. Again, they got three US-model diesel cars—A BMW, a VW Jetta, and a VW Passat. They strapped testing equipment to the cars and started road tripping, logging emissions data as they went. They drove all the cars for more than 2,000 miles, taking a trip from LA to Seattle and back. The BMW tested at or below the standards, but the Jetta produces between 15 and 35 times the legal limit, the passat 5 to 20 times the legal limit.

They tested, and tested, and tested again before submitting a report to the EPA and the California Air Resources Board. More tests in Colorado confirmed the results later that year. VW TDI cars were pumping out far more NOX than advertised, or allowed.

The results launched a year-long investigation that eventually identified the cheat code within VW engine management computers. Here’s how it works:

Modern cars are full of sensors, including wheel speed sensors that are used for antilock braking systems and attitude sensors that measure vehicle incline for hill assist systems. Using these sensors and other cues, the VW computers can determine when they’re on emissions testing platforms. Once they know they’re being tested, they run a different engine tune.

A tune is basically the computer code that tells the engine how to run—when and how much fuel is injected into the combustion chamber, how much air gets in, etc. Change the tune and you can completely change how an engine runs. One tune can produce a tune of power, but also burn a ton of fuel. Another can be super efficient, but the engine will be gutless. When the VWs sensed they were being tested, they switched to a more environmentally friendly tune that limited power, fuel consumption, and emissions. When the test was over, they switched back to a more powerful tune that produced way more NOX emissions than allowed. This cheat software, or a version of it, was also found on cars with Audi 3-liter V6 diesel engines.

The result was a car that was pretty quick for a diesel, yet seemingly met NOX emissions standards. And so the TDI cars were extremely popular. More than 11 million were sold worldwide and 500,000 in the United States—including Audis.

And all those cars put a lot of NOX into the atmosphere. According to a study published in the journal Environmental Research Letters, VW and Audi TDI cars put about 10k kilotons of NOX into the atmosphere in 2015 alone. Now, I know that number is meaningless to, well, any human. But the same study estimated that the excess NOX led to approximately 59 premature deaths in the US alone between 2008 and 2015. Now, it’s impossible to link VW NOX emissions directly to deaths, but it is possible to run the numbers. If TDI vehicles hadn’t produced so much NOX, the air would’ve been that much cleaner, which could’ve saved lives.

So what did VW do about all those dirty diesel cars? They fixed them. After the scandal was revealed, and VW was forced to pay criminal fines in the billions, the company agreed to fix every TDI car on the road to meet or exceed the original NOX emissions standards.

In the years since 2009, VW had refined its emissions systems. A new tune and a hardware fix could make old TDI engines run cleaner. According to several independent tests by Car and Driver Magazine and Cars.com, the fix doesn’t significantly affect performance and only reduces fuel mileage by about one mile per gallon. Long-term tests have not been conducted to determine if the fix will shorten the lifespan of emissions systems or effect engine reliability. VW was forced to either buy back or repair every single TDI car in the US. As of 2017, VW had bought back about 250,000 cars in the US, at a premium. Full disclosure, VW bought back my stepfather’s Audi A3 diesel for more than what he paid for it after three years of use. They also gave him a $500 Visa gift card, and a $500 Audi dealership credit.

In addition to buying back and fixing customer cars, VW was also forced to spend $2 billion for clean-emissions infrastructure. They used the money to form a company called Electrify America, LLC., based in Reston, Virginia. Electrify America will manage brand-neutral electric vehicle infrastructure programs and marketing campaigns. They’ll be installing hundreds of electric vehicle chargers across the US. They’ll also be actively promoting competitors’ electric cars—including the Nissan Leaf, the Chevy Bolt, and the Tesla Model 3. Of course they’re also allowed to promote their own electric vehicles like the Audi A3 E-Tron and VW e-Golf.

Altogether, VW paid about $25 billion in fines, penalties, and restitution for the scandal in the US. In Europe, however, VW has paid zero fines.

The difference in punishment is shocking. In Europe, diesel fuel has been championed for decades and there are more diesel cars on the road that there than in the US, by far. And other manufacturers, including Nissan, Renault, and Mercedes have been accused of running similar cheat software on their vehicles. Because there are so many more diesel cars, NOX emissions are even deadlier in Europe. The EU estimates that 72,000 residents die prematurely every year because of NOX emissions.

German criminal and civil lawsuits against VW could lead to fines or even jail time, but so far none have been successful. Even when judges have ruled that the company used emissions defeat software, they found that doing so cause no measurable harm to European citizens. Because emissions standards aren’t as strict in the EU, they say, VW has done no wrong.

VW isn’t the only manufacturer that has been accused of using so-called emissions testing cheat devices or software. Not long after Dieselgate broke, researchers discovered cheat software running on more than 100,000 Chrysler diesel vehicles. Again, the software detects emissions testing and runs a different tune to mitigate NOX emissions. On the road, it switches to a much more polluting tune. The EPA and the California Air Resources Board have sued Fiat-Chrysler for the stunt and as of November 2018 the company is working out a settlement deal. There’s no word on how much it’ll have to pay, but some unnamed sources close to the case say it’ll be in the billions.

General Motors got caught using an emissions cheat code in 1996. All 1991 to 1996 Cadillacs (and other cars) were programmed to burn more fuel when running air conditioners or heaters. During testing, all HVAC systems are turned off, thus the cars appear to run cleaner. The company had to pay $11 million in fines and recalled 470,000 vehicles.

Around the same time, in 1996, Fiat of Brazil got caught using an emissions cheat code on the popular Fiat Uno. They paid record fines.

In 1998, Honda got caught cheating and had to spend $268 million to fix their cars. Around the same time, Ford had to pay $7.8 million for programming 60,000 Ford Econoline vans to exceed emissions standards during highway cruising.

But by far the largest, and probably least known, emissions scandal involved seven heavy truck manufacturers. Caterpillar Inc., Cummins Engine Company, Detroit Diesel Corporation, Mack Trucks, Navistar International, Renault Vehicules Industriels, and Volvo Trucks paid about $83.4 million in fines for running cheat codes on their trucks to keep NOX emissions low during testing. On the highway, their trucks were emitting up to three times the maximum NOX levels.

Now big diesel trucks use DEF systems to keep NOX emissions in check. But even heavy trucks will be facing stricter NOX regulations, again driven by new California regulations. The California Air Resources Board is setting new, lower standards for NOX in an effort to reduce smog in Los Angeles, the San Francisco Bay Area, and other heavy-traffic areas facing poor air quality. This time manufacturers are backing the regulations—they want to sell the same trucks across the nation and they know that other states will soon follow in California’s footsteps.

So the question remains, WHY did VW cheat? Why didn’t they just ditch diesel when they found out it would be too difficult to control NOX? The company had invested billions of dollars into diesel research over the years and companies don’t invest in technology unless they can earn their investment back and then some. Once they started going down the diesel path, they simply HAD to earn enough money to cover the research and development and pay investors. That’s how for-profit corporations work. Selling those diesel engine cars became more important than anything else, including the environment and people’s health. It’s a classic example of how profit motives can be harmful and even deadly.

The most ironic, and sad, part of this story is that VW actually developed clean diesel technology—just too late. Today’s VW diesels run super clean and meet all NOX requirements. This is thanks to better computer modeling (mentioned earlier) and finer computer engine controls. If the company had taken some extra time, they could’ve saved lives and avoided fines and penalties. On the other hand, some calculate that VW’s profits during the dieselgate years far exceeded any fines or loss of revenue due to the scandal. In fact, VW earned 12.7 billion euros ($14.25 billion) in profits in 2014 alone. I did some quick calculations—VW earned about 62.5 billion euros ($71 billion at today’s exchange rate) in profit between 2009 and 2015. So maybe dieselgate was worth it after all?

VW is still the number two automaker in the world (right behind Toyota) and seems to be doing quite well for itself. And full disclosure, I’m a big VW fan. I’ve owned and repaired three different VW/Audi cars over the years and I enjoyed all of them. However I’ve owned five Mazdas, so I guess I’m a bigger Mazda fan. Yes, I buy and sell a lot of crappy old cars. But that’s a different podcast altogether…

There’s a lot more to learn about dieselgate. I didn’t even get into the arrests of several VW executives and top engineers related to the scandal, and there are new developments with the court cases seemingly every day.

Dieselgate was bad, and continues to be bad. But it has forced major European automakers to speed up development and production of electric vehicles. And while making and charging electric cars does produce greenhouse gases, it’s far less than a conventional automobile over its lifespan. Look out for a podcast about that in the future.

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