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Volkswagen Stock Plummets as CEO Apologizes for Emissions Cheat
- ck2 11y agoThis is why I believe in corporate death sentences. You ship millions of cars that don't actually slowly poison the drivers but the people on the side of the road instead, you should have more than a little justice coming your way.
- paulojreis 11y agoYeah, it's actually plausible that this kind of white-collar crimes cause more death than a single homicide. It certainly smells like impunity. Big corps are actually very good at making sure that there's no one to complain and no one to blame (from customer service to this kind of executive maneuver).
- 7952 11y agoHeres how you test emissions for a car. Lock the executives in an unventilated room with the engine running for half an hour. If they survuve it is ok to release to the public. Obviously I am joking, but it should be the goal to have no dirty emmissions at all.
- saint_fiasco 11y agoThey'll just make it so their cars run cleaner when executives are around.
- Gravityloss 11y agoMaybe you could trick the car to run in low emissions mode by having a scarecrow in an expensive suit and a pillow under the shirt. You would have to place these every hundred meters in a neighborhood.
- rhino369 11y agoIt would be a bad idea to shut the company down totally, but if you wanted to enact a death sentence, just cease the shares and auction them off again. The company still operates--which allows employees to keep their jobs and the economy doesn't take a huge GDP hit--but the owners pay the price.
- jessaustin 11y agoHow would this proposal solve any problems? The executives of the firm are the ones who, ahem, actually decided to break the law. Why should they keep their freedom, to say nothing of their jobs? The various index funds and pension plans that you want to penalize were never informed of the scheme.
- rhino369 11y agoNew ownership would presumably clean house. And this wouldn't prevent those who were involved from being charged as well for their individual role. >The various index funds and pension plans that you want to penalize were never informed of the scheme. I only meant this how you'd carry out a corporate death penalty without hurting third parties. Any corporate death penalty would wipe these share holders out anyway.
- vegabook 11y agoIt looks like the stock is pricing in an enormous fine, because otherwise a 500k recall would not do anything like this to the price. Even adjusting for VW's disgraceful wrongdoing, do I smell veiled protectionism? Payback for Europe's hounding of GOOG in there somewhere?
- sz4kerto 11y agoAt the moment $17B is wiped out -- the fine could be even bigger than that, and then there's the backslash of the damaged reputation...
- toyg 11y agoDown the tinfoil, dude. It's just that it's such an egregious breach of trust, from a company priding itself on reliability and green credentials, that it will clearly impact them deeply, even more so in a situation where they were already struggling to compete in the US market.
- IkmoIkmo 11y agoThe notion that the US protects its car industry is totally uncontroversial, for one. The notion it may increase the fine to help do so, slightly above and beyond what they're fully justified to fine, is not a stretch of imagination. It's controversial and not to be assumed that they would hike the fine out of protectionism, but it's a possibility that is way more likely and a much less far fetched than someone claiming last month that VW may be scamming the emissions system in the US to improve their sales, which would be met with tinfoil comments, and guess what just happened. Not saying it's true but it's far from tinfoil.
- swingbridge 11y agoThere's no defense for what they did. I mean it's so silly it's the sort of thing you expect to be part of the evil guy's plans to destroy the world in a Bond film... not something that a stupid corporation actually does.
- x5n1 11y agoEspecially not something a German corporation does.
- pionar 11y agoCare to elaborate what makes a German corporation so different?
- jonknee 11y agoStereotypically speaking, Germans love rules.
- differentView 11y agoThat only applies to the average citizen, not executives of large corporations. They have more in common with foreign corporate executives than with their own citizens.
- pjmlp 11y agoTaking shortcuts instead of delivering quality is usually very badly seen.
- PhantomGremlin 11y agoTaking shortcuts instead of delivering quality is usually very badly seen. The repair bills on my BMW are in contradiction to "delivering quality". The car instead appears to have been optimized for "delivering ongoing repair business" to the local dealership.
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- QUFB 11y agoFour days ago, GM was fined $900 million for a known defect that killed over 100 people. If the VW fine exceeds that, something is clearly out-of-line with corporate prosecutions in the US.
- onewaystreet 11y agoFrom another article: > The maximum Clean Air Act violation is $37,500 per vehicle, meaning Volkswagen's fine could technically be as high as $18 billion.
- duncan_bayne 11y agoOnly if you assume that actual harm to human beings trumps harm to the 'environment'. I'd argue it doesn't, at least not as far as the EPA is concerned.
- anc84 11y agoHuh, this was days in the coming. I am surprised it just happens today. I should have bet on it...
- arcticbull 11y agoI have to hand it to them, it takes a huge pair to actually design, develop and ship something like this to customers. I'd always assumed if anything this crazy as going on at least one employee would have blown the whistle at some point. I guess this answers my Bond-villain henchman recruiting problem. I'd always wondered how those super-villains recruited henchmen and grunts necessary to run their island fortresses. Turns out it may not be all that hard ^_^
- maccard 11y agoI wonder how many people along the chain of command knew about this. It's evident that those at the top knew about it, and obviously those at the very bottom knew about it (as they were the ones fudging the numbers) but how many of the people in between were unaware of what was happening?
- Zigurd 11y agoNot to excuse them if they did know, but this could have been a way to meet an engineering goal, and nobody at the top directed this action. It isn't likely that ALL the test-tuning that's done in, for example, graphics card drivers and firmware, was ordered from the top down. It's possible this is a similar case.
- mikekchar 11y agoWhen I worked at the now defunct Nortel, I was asked to implement a feature that would allow a large bank to spoof it's telephone numbers in long distance telephone calls. I was told that the feature was necessary to make a $60 million sale. I looked at the spec and, of course, the change they were requesting was disallowed. Even worse, there was an actual law specifically forbidding running equipment with that ability in the country where the request was being made. I refused to implement it. The B level manager came to my lowly cubicle (I was still pretty young back then, so didn't actually hobnob with people in that stratosphere often). I was told that it would cause a lot of people a lot of trouble if I didn't do the work. And besides, we weren't running the equipment, so we weren't breaking the law. I refused again. They never asked me again and I never knew if they found someone else to patch the code without my knowledge. I'm pretty sure they did. But how do you whistle-blow that? They just cut cut everyone who doesn't play ball out of the loop. I can well imagine something like that happening here. It's pretty easy to find someone with kids, or someone who needs their job for keeping their work visa, or someone who just doesn't care. You can patch it in the load build in most large companies and nobody would ever know the difference.
- TomGullen 11y agoEven with the looming threat of billions of dollars of fines, big co's STILL try to cheat the system. In a deregulated market, how can we ever expect these co's to act honestly? We can't.
- knd775 11y agoIt is regulated... They just didn't follow the regulations.
- mtgx 11y agoAnd in many cases they get away with it as DOJ often doesn't want to prosecute the "too big too fail", so they start finding the risk of breaking the law acceptable, especially if "everyone does it". I assume there are other car manufacturers who do this, but haven't been found yet, or at least were considering doing it in the future with more stealthy technology.
- pionar 11y agoThe point was that if they don't follow regulations, how can we expect corporations to act ethically if they're deregulated?
- branchless 11y agoPretty sure we have seen this worked well with banking /s
- michaelt 11y agoIf there aren't any regulations, they won't be breaking any regulations. Problem solved - right? :)
- jazzyk 11y agoRegulations ARE in place, but until someone goes to jail, these things will keep happening. The cost of fines will be passed on to the shareholders (and ultimately, the customers). Even if the executives get fired, you can be sure they get golden parachutes. Rinse and repeat.
- tonyjstark 11y agoI worked with them and know that before they release software they do a risk calculation. They do it even for small mobile apps and if the risk is too high because they would need to regain public trust they don't release that app / software. So how in the world can it be that they released this? Normal employees there are not allowed to make such decisions.
- morsch 11y agoHow likely is it that other manufacturers are doing the same thing?
- aluhut 11y agoI've heard something similar for freezers or some other kitchen equipment but can't find it right now. Since it can be done through software and those red to green sheets are all over cars and electrical equipment inventing new levels of A+++++...well, I'd guess: very likely.
- PeterisP 11y agoThis should be testable - I mean, it's not practical to review every car while it's running; but if we have a suspicion that such 'defeat devices' are installed by default, then it should be feasible to simply rent a few random cars of each manufacturer, ducttape some sensors on them, and take them for a loop on a normal highway - if the indications are suddenly significantly different from what you measured in normal testing, then the expected fines will pay for a detailed investigation.
- usrusr 11y agoAll of them optimize for those well defined regulatory test cases. It's all shades of gray as long as they are just tuning parameters to yield favorable results in the test scenarios without bothering with possible drawbacks in other situations. But things suddenly turn solid black when a method of optimization is employed that is explicitly disallowed in the rules. It's not unlikely that this infraction was enabled by "motivated disbelief" questioning that software alone can be a "defeat device". And without court-actionable "defeat device" this thing would clearly be in the gray range, even if the "up to forty times" that are being talked about would probably make it one of the darker shades. They might have even checked this with some lawyers, who can sometimes be very eager to look at the law in the way most favorable to the client: "Yes, it may hold in court" (and if not I will still get my money, also, the negative PR caused by the lawsuit even if you wirll will be your problem, not mine)
- benjarrell 11y agoFord & Honda were find in 2008 for doing this: http://www2.epa.gov/sites/production/files/2014-06/documents/defeat.pdf http://www2.epa.gov/sites/production/files/2014-06/documents...
- 7952 11y agoIt is strange that he is apoligfising for misleading people. The damage is the excessive toxic gas that was released into our communities.
- mtgx 11y agoA better apology would be one where he also promised that all of VW's vehicles will be fully electric within 10 years, just like BMW did (well, with gas-powered range extenders but close enough, I guess).
- a3n 11y agoHe's apologising for being caught.
- toyg 11y agoNobody cares about the actual damage, it's the reputational damage that is important. "If they cheated on this, how do we know they followed all other safety/environmental regulations and their cars won't just blow up? How do we know their published accounts are truthful?" etc etc. The apology is basically "sorry we lied in this case, usually we don't lie, please keep trusting us." Actual damage is relatively nonimportant. You can always donate to this or that green group, develop a magic air-cleaning machine or something... but only if you keep getting money out of customers trusting you.
- tantalor 11y agoPrevious discussion; https://news.ycombinator.com/item?id=10240001 https://news.ycombinator.com/item?id=10240001
- einrealist 11y agoI can say so much: many VW employees in my "vicinity" are baffled, too.
- struppi 11y agoReally? I've heard those rumors (that many car makers build cars that try to detect whether they are tested) years ago. The reasoning back then was that hybrid cars could cheat the results, by completely emptying their batteries during the 20 minute test... [Edit: Clarifications after reading the replies]
- einrealist 11y agoWell, it's not R&D I work with. And it is possible, that this "feature" was not even developed by VW itself, but by a supplier. However, someone must have known this within the company. And since the CEO is also head of the R&D department.....
- struppi 11y agoSorry, I wasn't clear. I have not been talking about VW in particular. I've heared the rumor that "many car makers" do this...
- jscheel 11y agoHey, VW could always come to my county. We don't even bother requiring emissions testing here.
- happyscrappy 11y agoDid VW have to do this in Europe as well or are their air standards more lax?
- masklinn 11y agoCurrent european standards are laxer, especially when it comes to diesel. In fact, the whole thing was busted because a european supporter of cleaner diesel thought "look they've got much cleaner figures in the US market so they know how to do it and we can way tighten emission standards". Then they went to road-test US-market cars, and found out the real-world emission profile was more or less identical to the EU one, and completely out of spec for the US regulations. See http://www.bloomberg.com/news/articles/2015-09-19/volkswagen-emissions-cheating-found-by-curious-clean-air-group http://www.bloomberg.com/news/articles/2015-09-19/volkswagen... for a timeline and a rundown with names and all.
- tiplus 11y agoTest tuning seems to have a long history at VW. The VW subsidiary Porsche tuned the 918 spyder with a battery just large enough to pass fuel consumption test at ~78mpg, or 3l/100km which is ridiculously far from reality. I am very curious, as to who wrote that patch. Afaik, almost all German manufacturers buy their common rail Diesel motor control units from Bosch. Stuff like pressure adjustment, valve control, or silly 'sports mode' buttons are all designed at Bosch. They ship a modular firmware which the manufacturers customize. Maybe VW were not the only customers of this special 'feature'.
- kuschku 11y agoThe post from yread makes this seem very likely...
- ohitsdom 11y agoI don't understand this "defeat device". What's the incentive for VW to do this? If the car can emit in the target range during a test, why not do it all time?
- feld 11y agoProbably lowers efficiency
- masklinn 11y agoPerformances. The engine's efficiency is much lower under restricted emissions conditions. Quoting from https://np.reddit.com/r/engineering/comments/3lhhjk/have_you_ever_been_asked_by_your_boss_to_violate/cv8ypjk https://np.reddit.com/r/engineering/comments/3lhhjk/have_you... > They were caught cheating on NOx emissions primarily although all emissions are in a way connected. > NOx is created when temperatures and pressures are very high during combustion. Sadly NOx emission is generally higher when your combustion is nice and hot and rapid, which gives higher efficiency (closer to the ideal thermodynamic cycle). > […] [A lying] car will produce a lot more NOx in normal driving, and have better fuel economy. > […] If VW correct this via recall the car will be required to run on the "clean" calibration all the time. This will mean poorer fuel economy, I would be speculating to say by how much but VW wouldnt have bothered cheating if it wasnt a significant gain. It may even have implications on durability if certain parameters (like exhaust gas temps, turbocharger RPMs or oil life) are affected as they often are.
- branchless 11y agoThey should try the bank line: * hey we are just playing the game, it's the regulators who set the rules * it's business, if we didn't get innovative with the rules we'd loose customers and go out of business * it was one rogue guy, the culture here is fine! If all these fail then just make sure the fine is less than the profit you make from the "transgression".
- davotoula 11y ago"We have a legal obligation to our shareholders to maximise our profits."
- rrmm 11y agoIn my cursory search, I've not found any numbers for just how badly they cheated. Anyone know what the test vs defeated emission numbers were? I imagine there's gonna be a huge class action suit on top of everything. Edit: 10-40x the EPA limit of NOx according to the EPA letter to VW (pdf: http://www3.epa.gov/otaq/cert/documents/vw-nov-caa-09-18-15.pdf http://www3.epa.gov/otaq/cert/documents/vw-nov-caa-09-18-15....)
- w_t_payne 11y agoPresumably VW had a project (either in-house, or through one of their tier-1 suppliers) to develop this technology. A crime was committed, so who is criminally liable? The sales-people who agreed the deal? The project manager who was given the project to manage? The release manager who signed-off the release? The systems test manager who tested the vehicle? How about all the software developers and other engineers who were assigned to work on the project? I'd particularly like to know what people think the extent of criminal liability for individual software developers in the automotive industry is and should be?
- dbot 11y agoConvicting someone of a crime requires proving all of the elements. Most crimes require a culpable state of mind (or mens rea). So the issue would be whether an individual has the requisite mens rea (recklessly, knowingly, etc.) These are very fact-intensive inquiries. Having worked in the antitrust world, I saw lots of cases where mid-level managers and employees were engaged in anticompetitive conduct. The fact that their bosses demanded that behavior as part of their job function didn't absolve criminal liability.
- w_t_payne 11y agoWhat would the appropriate actions on the part of those mid-level managers and employees have been to avoid criminal liability?
- dbot 11y agoRefuse to participate in the scheme. Yes, it is possible (or likely) that you will be fired. But going to federal prison is a very real possibility. I visited several witnesses in prison. They are "normal" guys - the kind you see standing on the sideline of a kids' soccer game. They have kids, two car payments, a mortgage, etc. It's a tough situation to walk away from (especially because the crime is often just a phone call or a few emails with a competitor). Keeping a conspiracy going year after year is difficult. There is "cheating" by conspirators, turnover of personnel, etc. The DOJ also has an immunity program that protects whistleblowers from criminal liability (and sometimes the company from treble damage civil liability). The immunity program makes it much more likely that someone quits the conspiracy and turns themselves in. So while losing your job sucks, if your company is violating federal antitrust law, chances are your job is not secure or desirable anyways.
- robmcm 11y agoEnvironmental impact aside, this is the same practice employed by Samsung and HTC with regards to performance benchmarks: http://bgr.com/2013/11/27/samsung-benchmark-cheating-banned-htc/ http://bgr.com/2013/11/27/samsung-benchmark-cheating-banned-... I saw a documentary about other manufactures removing seats and using different tires for tests. I expect this is rife with any industry imposed tests :(
- kinofcain 11y agoThe EU announced earlier this year that they were changing the test procedures and certification rules for diesel cars to more accurately assess and control NOx output and to prevent gaming of the tests by manufacturers. Defeat devices were explicitly called out: http://www.theguardian.com/environment/2015/feb/03/car-makers-face-real-world-emissions-tests-in-eu-pollution-clampdown http://www.theguardian.com/environment/2015/feb/03/car-maker...
- abakker 11y agoSo, the real moral here is that Volkswagen took advantage of the fact that our emission standards basically trust the cars own on board diagnostics to determine if they pass emissions... CA, at least, uses the BAR-OIS inspection for diesel cars, coupled with a "visual inspection" to make sure that the car does not produce visual pollutants. Effectively, this means that the software reads whether the car is passing from the OBD-II port in the car, and then, as long as the car has the necessary parts (Exhaust recirculator, catalytic convertor, etc) then it passes. It would not surprise me to find out that more than just VW have these kind of issues. Effectively, we don't actually verify with any instrumentation whether the emissions are within spec. Sure, VW may have duped the system on purpose, but, the fact that this has gone on for years has to weigh in a bit on a critical mind. Our tests don't work very well if this stuff can go on this long. ___ Of course, it is also trivial to find an inspection location that will pass almost any diesel vehicle, if you know where to look. For any interested parties, try googling "diesel exhaust delete" or some similar query for any number of Ford f-350s, Ram 2500s or any other large turbo diesels. This basically consists of taking a saw, and cutting out the EGR, and some other flow restricting parts of the exhaust to increase exhaust flow, typically done in combination with a chip/turbo map. The results can be significant. A person I know got a fairly significant bump in both power and MPG at the expense of needing to carefully plan how to pass emissions tests. The main question that weighs in is whether it is better to pass emissions and get 13-15mpg, or to fail emissions technically, but get 24-26Mpg with diesel. Those are real numbers with a 2008 Ram 2500. I think this VW thing should spark a larger conversation about how we measure emissions in the first place, and what cost the emissions passing imposes.
- abakker 11y agoReplying to my own post to clarify my position: I'm not defending VW's actions. I'm questioning whereto our emissions testing regimen is good enough if this kind of stuff gets by for so long.
- noipv4 11y agoI think you mean the Diesel Particulate Filter delete. http://news.pickuptrucks.com/2013/01/epa-says-dont-touch-paticulate-filter.html http://news.pickuptrucks.com/2013/01/epa-says-dont-touch-pat...
- yread 11y agoI looked a bit into this and it seems strange that this happened only now. Consider this [1] 2014 study (scroll to last page of executive summary, page 5). Basically they tested 15 vehicles from 6 manufacturers for emissions while on the road and NONE OF THEM passed the euro 6 average (!) limit. 1 was exactly on the limit, the worst one emitted on average 24 times more than the norm. They noted the vehicles emit more when driving uphill. Then there is this article [2] from 2014 which says the emissions in city traffic are 3 times the norm. In 2013 this study [3] was published which measured diesel NO2 emissions and found out that Euro 5 class vehicles have exactly the same emissions as Euro 2 (from 1992) cars. [1] http://www.theicct.org/sites/default/files/publications/ICCT_PEMS-study_diesel-cars_20141013.pdf http://www.theicct.org/sites/default/files/publications/ICCT... [2] http://www.telegraph.co.uk/motoring/news/10862975/Emission-tests-substantially-underestimate-pollution-pumped-out-by-diesels.html http://www.telegraph.co.uk/motoring/news/10862975/Emission-t... [3] http://uk-air.defra.gov.uk/assets/documents/reports/cat05/1307161149_130715_DefraRemoteSensingReport_Final.pdf http://uk-air.defra.gov.uk/assets/documents/reports/cat05/13...
- mironathetin 11y agoWould that mean emission limits are set lower than technically achievable? Car manufacturers still provide more powerful cars every year. I always wondered, how they can claim their engines emit less while they get faster and faster. Everybody knows that a modern car does not consume so much less fuel than a car of then comparable standard 20 years ago. But lets face it, consumers require more power, less fuel consumption and less emission - in this order. Probably the development of on paper values has been disconnected from the real world for marketing reasons (that is no excuse, its an observation). Before everybody throws stones at Volkswagen only, please measure other cars (again, no excuse). From time to time I rent cars of different brands and at the gas station I see proof that there has been little progress in fuel efficiency. That said, Volkswagen and Audi diesels seem to be the most fuel efficient engines around for the pure power they deliver. The only diesel I know that felt more advanced was a Volvo V60, but mostly because of a geniously constructed gear system and a perfectly rectangular torque (so I had to change gears at 3500 rpm). In Europe (and that means in this case in Germany), car manufacturers invented the fleet consumption and emission. That means, the consumption and emission of a whole class of cars is averaged. This is to trick high powered engines on paper into an acceptable consumption and emission range. The goal is clearly not transparency and openness.
- totalrobe 11y agoNice discount on VW stock
- deleted 11y ago[deleted]
- tinbad 11y agoMeanwhile GM gets away with a laughable $900m settlement for knowingly using faulty parts that have caused the deaths of hundreds and many more severely injured. Reason I'm saying this is I expect VW will end up paying magnitudes of this amount for their wrongdoing that did not result in anyone's death. EDIT: Toyota had to settle for $1.2b in the unintended acceleration lawsuit that may have caused the death of 3 people where, up to this day, there is still no proof that there was something wrong with the cars, let alone that any employees were knowingly approving the installation of faulty parts. http://www.bloombergview.com/articles/2015-09-18/gm-s-cynicism-pays-off-in-ignition-settlement http://www.bloombergview.com/articles/2015-09-18/gm-s-cynici...
- NickM 11y agofor their wrongdoing that did not result in anyone's death It's well-established that fossil fuel emissions actually do cause many deaths due to increased cancer rates and other respiratory illnesses. Burning diesel without proper emission control systems will also create larger particulate pollution which is especially detrimental to the public health. Unlike the GM case, it will be impossible to trace exactly how many premature deaths VW has contributed to, but that doesn't mean they should be punished any less harshly.
- enraged_camel 11y agoDon't forget the contribution to climate change. It's probably negligible, since the cheating VW cars make up a very small portion of cars worldwide, but it's still worth thinking about, in my opinion.
- femto113 11y agoIt might not be that negligible--in the US alone there are were half million or so diesel VWs sold since 2009--if they are really spewing 40x the limit, then we're talking emissions equivalent to almost 20 million cars that do meet the limit. This is around 1 to 2 years of total new cars sales, or roughly 10% of the active light-duty vehicle fleet in the US.
- 11y ago
- digitalneal 11y agoIMO, EPA should seize the cars till there is a legal solution. Let the consumers sue for being sold a vehicle on false pretenses. Being a car enthusiast, I already see posts on the forums from car guys stating they will refuse to allow VW to fix the problem on their cars, because they know the fix will sacrifice performance and economy.
- crabasa 11y agoProbably a great time to buy some VLKAY: http://money.cnn.com/quote/quote.html?symb=VLKAY http://money.cnn.com/quote/quote.html?symb=VLKAY
- Simulacra 11y agoHint: Buy VW stock now.