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Volkswagen's U.S. diesel emissions settlement to cost $15B
- london888 10y agoWhat's sad is how the word 'emission' is always used instead of the real word: pollution.
- gnoway 10y ago"Owners will have two years to decide whether to sell back vehicles..." So the rumor is I can drive my affected Golf TDI for ~2 more years, and then get compensated @9/2015 value plus up to $5k on top of that? Honestly, that's a terrible deal for VW. Edit: thinking more, maybe this is better for VW than an alternative where they have to make good right away. They don't have to scramble to get 500k cars repaired or off the road as quickly, and they can spread whatever makes up the rest of their hit over a longer period as well. To me, this does signal that we're a lot more upset about the dishonesty than we are about the emissions themselves.
- adamnemecek 10y agoIt's punitive, it's supposed to be terrible.
- bpodgursky 10y agoYeah, but I'd prefer the penalties did something useful, and weren't just a cash transfer to people who got lucky and bought cars from an unethical manufacturer.
- privong 10y ago> just a cash transfer to people who got lucky and bought cars from an unethical manufacturer. They didn't "get lucky". They were lied to by the company and sold a car under false pretenses. Edit: I had the fuel economy bit wrong, my mistake. I've removed that portion. Thanks @mikestew, @gnoway, and @GavinMcG for the correction.
- gnoway 10y agoThis wasn't exactly a fuel economy issue, it was more of an emissions cheat. I get great economy out of my Golf - higher than advertised. I agree that if they'd done the right thing w/ emissions that economy might have been worse and the car not as attractive.
- GavinMcG 10y agoDid they have extra fuel expenses? My understanding is that VW bypassed emissions controls in order to maintain a high level of efficiency and performance. The environmental cost of that was externalized onto all of us.
- mikestew 10y agoThe reason the cars got better fuel economy than competitors is because VW cheated on emissions. IOW, the deception wasn't in the economy numbers, but in how VW managed to pull that off.
- dionidium 10y agoThey didn't "get lucky". I agree that it's a little weird to say that they got lucky, but a pretty big hint that they actually did is that I wish I were a part of the settlement. It's not like anybody was actually harmed. These owners are getting a great deal.
- jonknee 10y agoThis is a settlement with the owners of the cars, the Clean Air Act penalties haven't been announced yet. They will be significant.
- mikestew 10y agoYeah, but I'd prefer the penalties did something useful I think that sticking VW's head on a pike as a warning to others that may follow would qualify as "useful". The fact that owners are compensated for not getting what they thought they were buying can be viewed as a bonus.
- jonathankoren 10y agoMoving the cost-benefit analysis for breaking the law towards the obey-the-law column isn't useful? I guess you could make that same argument about all law enforcement.
- superuser2 10y agoThey aren't lucky. The value of their cars dropped as a result of VW's unethical decisions. VW needs compensate them for that loss.
- twblalock 10y agoFurthermore, if the owners weren't compensated, many of them would continue to drive these cars rather than sell them at a loss. The outcome would be worse for everyone who breathes air, not just the VW owners.
- harryh 10y agoIt's it also supposed to get the too-high-emissions vehicles off the road? It seems like letting people drive them around for two more years is counter productive to that goal.
- kuschku 10y agoThey’d still be legal under the 2008 emissions regulations, just not under the newer ones. There are plenty more cars on the road from even older times, with far worse emissions.
- admax88q 10y agoIt's not counter productive, its just not super productive. But I think the concerns are less about getting these specific cars off the road immediately, and more so ensuring that other manufacturers are scared away from trying to pull this shit again.
- rando18423 10y agoExactly!!!
- jonknee 10y agoThey have some incentives to be speedy and individual states may move things along even quicker (denying registration for unfixed vehicles): > The settlement includes $2.7 billion in funds to offset excess diesel emissions and $2 billion for green energy and zero emission vehicle efforts, the source said. The diesel offset fund could rise if VW has not fixed or bought back 85 percent of the vehicles by mid-2019, the first source said. But they are still facing stiff penalties under the Clean Air Act which could more than double the damage. There are also 80,000 larger engine vehicles they still need to deal with (which I am quite curious about since I have one!).
- WalterBright 10y agoThere's an environmental cost to getting them off the road, too. Making a new car consumes tons of energy and emits its own pollution.
- int_19h 10y agoThe way I interpreted that verbiage, what they really mean is that they'll buy your vehicle back for the price that it would fetch in September 2015 _in the condition that it currently is_ - i.e. any extra mileage and wear and tear would still drive the price down, it's just that you don't have to worry about the value lost due to the scandal.
- pc86 10y agoCorrect. Current KBB good/very good value is probably a safe "it will be this or higher" number.
- rando18423 10y agoOnly $15B?
- deleted 10y ago[deleted]
- jonknee 10y ago"Only" $15B for this part, but they still face Clean Air Act penalties and another 80,000 vehicles with larger engines that aren't a part of this deal.
- socalnate1 10y agoIt seems odd to me that most of the financial windfall here goes to Volkswagen owners. (2/3 anyway). Wasn't the "damage" done almost exclusively environmental, which affects everyone? Wouldn't it make more sense to use these large amounts of money to combat the actual damage that was done? (e.g. environmental cleanup initiatives?)
- supercoder 10y agoBecause the VW owners were the ones who paid their own money for a product that was falsely advertised. Its not like these cars caused direct damage to the environment that can be cleaned up, they're still relatively low in emissions compared to a lot of other cars on the road.
- vkou 10y agoThe VW owners get their money refunded as part of the settlement. So, they are no longer stuck with a lemon (And get to pocket depreciation.) The extra $5,000/car could have been put towards planting trees, cleaning up an ex-industrial site, shingling San Francisco's city hall with solid gold...
- jonknee 10y agoYes, there will be many more billions of fines levied at a later date (this is an admitted violation of the Clean Air Act which could be a fine up to $37,500 per vehicle or an additional $17.8B in fines). The EPA doesn't really care about getting their cash first, they would rather the vehicles fixed or off the road.
- revelation 10y agoOh no, mind you, the tarmac didn't suffer, it's just another mil added to the cancer risk for every person in the cities these things are roaming wild. (That must be reason #192845 why "capitalist healthcare" doesn't work: often, you only need it because other peoples actions require you to, and they're not paying for it.)
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- 1024core 10y agoWhere's the jailtime? As an individual, you make one wrong statement to the FBI, and you are hauled off to jail. The company lied over 500,000 times to the government, and gets off by paying a paltry fine. No wonder companies continue to do this: there is no consequence to the employees who do this shit.
- spriggan3 10y ago> The settlement does not address lawsuits from investors or a criminal investigation by the Justice Department. It's seems that a criminal investigation may be ongoing.
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- x5n1 10y agoI would like to see a US company pay 15B for not following the rules. If it were a US company, the fine with be in the millions. Biggest fines against US companies. http://www.marketwatch.com/story/5-of-the-biggest-corporate-penalties-ever-2013-09-27?page=1 http://www.marketwatch.com/story/5-of-the-biggest-corporate-... So yeah this would be in the top 3 or 4 of the biggest ever fines paid by US companies.
- GabrielF00 10y agoBank of America paid $16.65 billion.[https://www.justice.gov/opa/pr/bank-america-pay-1665-billion-historic-justice-department-settlement-financial-fraud-leading https://www.justice.gov/opa/pr/bank-america-pay-1665-billion...] The tobacco industry is paying over $200 billion (although that's split between a number of companies). [https://en.wikipedia.org/wiki/Tobacco_Master_Settlement_Agreement https://en.wikipedia.org/wiki/Tobacco_Master_Settlement_Agre...]
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- spriggan3 10y agoDoes anybody remember when Volkswagen blamed the scandal on "the engineer culture" or something like that? like those engineers at Volkswagen called the shot and not the management ... ridiculous , like these engineers weren't asked to cheat ... I can't wait for the criminal investigation.
- themartorana 10y agoI feel like you might have to wait. A long time.
- SwellJoe 10y agoI'm of the opinion that there should be a corporate death penalty (though I oppose the death penalty in criminal cases). There's some situations that are so ethically indefensible, wherein a corporation can cause incredible harm over a long period of time, that the only just outcome is for the company to be destroyed. The people responsible are shielded from any real consequence (how many people at VW knew about this, and how many are going to jail over it?). This is not a minor squabble over regulations; this is a conscious decision, involving many executives within the company, to willfully cause environmental destruction that directly costs human lives and health. This is one of those cases where the corporate death penalty is the only just outcome I can think of. $15 billion looks like a large sum; and maybe it's even enough to deter car companies from doing something similar in the future. Maybe. VW is worth $73 billion, and they generated a lot of money on the strength of their diesel campaigns. Amortized over the many years that they were shipping out these cars, it begins to look like a cost of doing business, rather than a massively punitive expense.
- revelation 10y agoCrushing the company hits mostly the lower ranks who legitimately had no part in any of it (presumably; if you're a soldier in the Wehrmacht or the guy dumping toxic buckets, this doesn't apply). We just need strict liability for corporate officers.
- maxerickson 10y agoMaybe we should just split up big companies that screw up bad. Maybe in 2 pieces, maybe into lots more pieces.
- freehunter 10y agoWell if we go to war with another country, there are a lot of people working for that government who did not commit the atrocities. I'm sure the accountant or janitor didn't necessarily know or approve of the war crimes, they just needed a job and didn't hurt anyone. That doesn't mean we shouldn't fight the war, you just recognize that sometimes innocent people are impacted. The blame lies with the leaders who did the bad thing. If they hadn't done the bad thing, their lower ranking innocent workers wouldn't have been impacted. Every business decision comes with a cost/benefit analysis. Hurting your employees goes into the "cost" side, and if you do the bad thing anyway, obviously the "benefits" outweighed the "cost" of potentially hurting your employees.
- btilly 10y agoCompare with http://www.cnbc.com/2015/10/29/vw-excess-emissions-linked-to-60-us-deaths-study.html http://www.cnbc.com/2015/10/29/vw-excess-emissions-linked-to.... VWs actions left around 60 estimated dead. Around 120,000 days of people not being able to function normally. At a direct cost to the economy of around $450 million. And a cost to our quality of life that most would consider even higher. All of which is bad. But no matter how you do the math, most of this fine is punitive dissuasion for others who might be tempted to also cheat. (Note that most of the fine moves money from the left hand to the right without destroying it, so we are theoretically collectively left better off as a result. Plus we prevent about as much more damage as we had already.)
- gdudeman 10y agoI think you're right. Fines have to be higher than the direct cost to society and they have to be higher by the chance they're caught. In this case, it was very hard to detect, it was fully intentional on the part of the company, and they fought for years to keep it hidden. This sort of deception is maybe 1 in 20 or 1 in 50 to be caught? So it isn't like a parking ticket - it's hard to catch and was hard to prove. Furthermore, this is a "deal with the mess you made" solution - or a "natural consequences" consequence if you are a parent. There are certainly much more efficient ways of spending the money to improve public health, but those are abstract, hard to explain to the public, and hard to explain to the car owners. So they are less efficient from the government, public and company's perspective. Make America hyper-rational and the owners would continue driving these cars and we'd spend the money on truck emissions or something.
- BurningFrog 10y ago> In this case, it was very hard to detect Was it? The researches who detected it didn't seem like they were doing anything that special. My impression is that nobody had bothered to check before.
- sliverstorm 10y agoCall me vindictive but punitive is good. I tire of million dollar crimes punished with thousand dollar fines.
- togasystems 10y agoCould someone purchase one of these vehicles today and still be considered for the buyback program?
- louprado 10y agoOn September 22, 2015, VW stock had the trading highest volume / price decline. The stock closed $106 per share that day. There is a trading strategy that assumes markets over estimate liability of lawsuits. While I am probably cherry picking data, it is notable that the stock closed at exactly $106 per share today. So much for that trading strategy in this case. The market pretty much nailed it.
- penetrarthur 10y agoIn my opinion it is going to grow from now on, until it gets back to normal. A large part of the world is driving cars made by VW Group. Too big to fail.
- ModernMech 10y agoIt's going to cost them a lot more, I hope. Personally, I've wanted an Audi since I was 16. Last year before the scandal hit, I was test driving a Q5, ready to finally get one. Now, I will never touch VW, Audi, or Porsche. Not only will I not buy from them, I won't work for them either. Since the scandal, I've been approached by 2 separate recruiters asking me to interview at some Audi autonomous research division in the Bay Area. That's going to be tough for them, since I'm also being recruited by Apple, Google, Tesla, Uber, and Toyota. Guess where my talent isn't going...
- vidoc 10y agoYou certainly wont be fined for excess of modesty ..
- amaks 10y agoOh, I've got diesel Q5 when diesel gate came out
- dmackerman 10y agoLiterally no one cares.
- dang 10y agoPlease don't make HN worse by being rude.
- covi 10y agoNow's better than ever to buy a new Volkswagen. Because of the scandal, I've found crazy deals (~30-40% off MSRP) for new VWs.
- homero 10y agoWhere
- mayneack 10y agoDoes anyone know what the total paid by BP was for Deepwater Horizon? I can't seem to find a total anywhere here: https://en.wikipedia.org/wiki/Deepwater_Horizon_litigation https://en.wikipedia.org/wiki/Deepwater_Horizon_litigation https://en.wikipedia.org/wiki/Deepwater_Horizon#Aftermath https://en.wikipedia.org/wiki/Deepwater_Horizon#Aftermath
- blobbers 10y agoWhat about my lungs?
- amaks 10y agoWhat about them?
- beefman 10y agoIn the United States, the VW defeat mechanism abates 275,000 tonne/yr CO2 at the cost of 8,200 tonne/yr NOx.[1][2][3][4][5][6] [1] NY Times: How Volkswagen Got Away With Diesel Deception http://nyti.ms/1ZjAV1w http://nyti.ms/1ZjAV1w [2] Vox: VW's appalling clean diesel scandal, explained http://bit.ly/1MhJVuA http://bit.ly/1MhJVuA [3] FHWA: Annual Vehicle Distance Traveled and Related Data http://www.fhwa.dot.gov/policyinformation/statistics/2013/vm1.cfm http://www.fhwa.dot.gov/policyinformation/statistics/2013/vm... [4] EIA: How much CO2 is produced by burning gasoline? http://www.eia.gov/tools/faqs/faq.cfm?id=307&t=11 http://www.eia.gov/tools/faqs/faq.cfm?id=307&t=11 [5] EPA: Does the fuel used in fuel economy testing contain ethanol? http://www3.epa.gov/otaq/about/faq.htm#ethanol http://www3.epa.gov/otaq/about/faq.htm#ethanol [6] DOE: Fuel Economy of 2015 Volkswagen Jetta http://www.fueleconomy.gov/feg/bymodel/2015_Volkswagen_Jetta.shtml http://www.fueleconomy.gov/feg/bymodel/2015_Volkswagen_Jetta...
- williamscales 10y agoInteresting. Would you mind elaborating? What are the relative environmental costs of these pollutants? How did you arrive at the abatement figure? (I skimmed your links but it didn't leap out at me.)
- beefman 10y agoSee below for the calculation. The relative environmental costs are debatable but NOx being 34 times worse is a stretch. Protectionism may be a factor -- domestic automakers have little incentive to push back on NOx. The response is punitive because VW acted deliberately but otherwise far out of proportion to the harm. The article mentions that buybacks cannot be resold unless EPA approves a fix. I hope they do, because their embodied energy will dwarf by a significant margin everything else being considered here and scrapping them would be a disaster. Fortunately internal combustion engines are nearly obsolete for light automobiles and this will all be moot in a decade. VW light vehicle sales: 50M worldwide since 2009 [1] Affected cars: 500,000 US, 11M worldwide [2] VLKAY price: 70% pre-scandal level [1] For the United States... Annual average miles traveled per car: 11,000 [3] NOx emissions allowed: 0.06 g/mi [1] Actual TDI emissions: 1.6 g/mi [1] 11,000 mi * 500,000 * 1.5g/mi = 8,200 tonne NOx per year CO2 from gasoline combustion: 8.9 kg/gal [4][5] CO2 from diesel combustion: 10.2 kg/gal [4] Jetta fuel efficiency: 27 mpg [6] Jetta TDI fuel efficiency: 36 mpg [6] Jetta carbon efficiency: 330 g/mi Jetta TDI carbon efficiency: 280 g/mi 11,000 mi * 500,000 * -50 g/mi = -275,000 tonne CO2 per year
- astraelraen 10y agoIf you discount all the hypothetical environmental costs that at best guess are just that, guesses. And, if you were to consider this penalty in a somewhat satirical manner, it would have been cheaper for VW if they would have been killing the consumers of their cars. I understand the punitive nature of the penalty and its amount, but the amount seems somewhat egregious given the fact that all VW did was violate regulations of a government body. Uber is constantly praised for skirting or directly violating state or local government laws and regulations, yet is seen in an overall positive light for the supposed benefit they are providing society. This is the government's heavy hand making an example of VW and it's violation of regulation.
- throwawaysocks 10y ago> If you discount all the hypothetical environmental costs that at best guess are just that, guesses That VW's behavior caused some environmental impact is not a guess. The guess is only to the extent of the damage. > it would have been cheaper for VW if they would have been killing the consumers of their cars. That is ridiculous. The death toll would be many times 9/11. USG would've seized by force every asset inside its borders and a lot (or all) outside of its borders. Not only of VW but of any contractor that might've may had something to do with it. For starters. > Uber is constantly praised for skirting or directly violating state or local government laws And also constantly criticized, and sometimes shut down. But more to the point, violating different government regulations (by extension, different laws) has different outcomes. Why is that surprising/concerning, again? Federal environmental regulations SHOULD be treated more seriously than local taxi rules. > This is the government's heavy hand making an example of VW and it's violation of regulation. On only his can we agree. The message is clear: fines for willfully ignoring environmental regulation are not a cost of business.
- Aelinsaar 10y agoFamously bad reasoning for Germans in the last hundred years, yes.
- tn13 10y agoNot sure why the government attorneys should get paid anything here. Government was so much incompetent here that they failed to catch VW well in time, besides arresting few people in VW I think some people from the government side need to be fired too. The only worry here is that attorney generals might end up with more resources to harass small people now.
- kejaed 10y agoDas Payout
- bluedevil2k 10y agoI'm a "proud" owner of a 2014 Passat TDI (purchased May 2014). Here's the math breakdown for me personally: - $26,000 for the car, before TTL - First year, the car will depreciate 20%, so its September 2015 value would be $20,800. - VW will give me $5,100 (maybe more) plus that Sept 2015 value = $25,900 - I don't have to make a decision until December 2018 Result: I get a car for 4.5 years for which I've paid $100 * Simplified math, doesn't factor time-value or the 0.9% interest rate.
- TheCondor 10y agoWould you buy another VW, Audi or Porsche?
- bluedevil2k 10y agoPorsche for sure
- duncan_bayne 10y agoWhy not? Bear in mind, the vehicles VW sold were _superior_ from the point of view of the customer & driver. Unless of course the whole affair dented your faith in them responding properly to safety issues or the like.
- walrus01 10y agoModern VW might be nice from the perspective of a driver but they are a royal pain in the ass to service... Designed as throw away appliances almost.
- pc86 10y ago2015 Passat TDI owner checking in: I would love a Porsche Cayman but can't justify the price. I've been looking at the S5 or TTS though. I don't have any particular affinity for the VW group but Audi has some nice looking cars.
- bluedevil2k 10y ago
- wallace_f 10y agoI'm not following this closely, but I understand most at least 4 other auto manufacturers were doing essentially the same thing: https://www.theguardian.com/environment/2015/oct/09/mercedes-honda-mazda-mitsubishi-diesel-emissions-row https://www.theguardian.com/environment/2015/oct/09/mercedes... Why the focus on VW, then, rather on the auto industry?
- MrRadar 10y agoVW did something in the US that's explicitly illegal under US federal law (employ a "defeat device" to disable emissions equipment outside of testing). For the most part the other auto manufacturers seem to be tuning/optimizing their emissions equipment specifically to pass the test cycles but are not going so far as to outright disable it outside of them like VW did.
- Aoyagi 10y agoThere's a difference between a car that's tuned to passively give good values at emission tests and making a device that detects emission testing, activates a procedure that involves changing the dynamics of the engine.
- awt 10y agoLysenkoism
- r00fus 10y agoWhat does Russian anti-evolution ideology have to do with this settlement?
- amaks 10y agoThank you, Volkswagen!
- known 10y agoFB purchased Whatsapp for $15 billion :)
- alkonaut 10y agoSo because they marketed it as "Clean diesel" in the US their 2009 2.0 tdi owners get $5-10k plus an estimated value of the car as of 2015. Meanwhile in Europe we get a "fix" that reduces engine power and/or increases fuel consumption, and while the car has depreciated in value we get no other compensation, and seem to have no way of winning a class action against VW (Of course, if we did, we'd could kill VW instantly which I assume is not what any of the EU member countries want). I'd be perfectly happy with a much smaller sum or even a rebate on a new car. But no. Nothing. The low emission 2.0 TDI models (Such as Audi's TDIe) were very much marketed as very eco friendly, and it meant a lot of corporate buyers with CO2 caps bought it in stiff competition with other cars. If the engines had met the NOx emissions, the consumption (and thus CO2) would have been higher, and the cars couldn't have been boughy, or wouldn't have been bought because of being less attractive with lower power or higher consumption. If this isn't marketing it as "clean diesel" I don't know what is.
- reality_czech 10y agoVW deserves this. Hopefully this penalty will discourage other automakers from cheating in this way. It would also be nice if Mr. Winterkorn and the executives who were complicit in this were prosecuted. I wonder how well they have covered their tracks. I am glad to see there will be some money going to the owners of the affected diesels. A lot of these people bought the cars because they were marketed as more environmentally friendly. Then, they were left with an embarrassing car with near-zero resale value once the revelations came out. I feel like the US has a bizarrely inconsistent attitude towards air pollution. The standards for NOx emissions for diesel construction equipment and ships are almost non-existent. If VW's actions are reprehensible, surely the lawmakers who created such a bizarrely fragmented regulatory regime are also to blame. http://www.greenhoustontx.gov/reports/closingdieseldivide.pdf http://www.greenhoustontx.gov/reports/closingdieseldivide.pd...
- chappi42 10y agoEconomic war: US vs. Germany. Nothing else. Nature would benefit if gasoline prices were 10 US per liter and people would stop to drive around senselessly. (I know the geographic circumstances make this impossible, but nevertheless...).
- bogomipz 10y agoHow is defrauding consumers a "US vs Germany issue" and nothing else? Also VW got off with a slap on the wrist here. The US did nothing wrong here. People don't drive around needlessly, they drive because they live in places that often have no viable alternative. Why on earth should they be punished? Your comments are bizarre and naive. Is you point just anti-Americanism?
- chappi42 10y agoNothing to do with anti-Americanism. I'm critical b/c I think 'defrauding consumers' in this case doesn't deserve a 15 billion 'slap on the wrist' (which will hinder innovation and affect jobs here - VW could have spent this money on the development of electric cars). When hearing such numbers, yes maybe I am 'America-critical'. But it's not only in this case. E.g. recently I cannot understand how someone can sucessfully sue for $10,000 upon being forced to upgrade to Windows 10? Or, more fundamentally, how 'a country' can e.g. put Chelsea Manning behind bars for 35 (!) years? (She is an American hero for me).
- bogomipz 10y agoWhich country are you from that has a legal system that has never issued punitive judgements?
- shaqbert 10y ago1- GM, Ford, Chrysler lobby congress to enact the strictest NOX limits in the world. While at the same time having lenient limits on other exhaust fumes killing thousands of people every year, so that we can continue our gas guzzling SUV and Pickup truck craze. 2- VW faced wtih dilemma. Stop selling diesels altogether, or go rogue and yolo your way through emission tests. 3- Get caught and fined. Well played, GM, Ford, and Chrysler. GM, Ford, and Chrysler were behind in Diesel tech, so this as a great defensive move to thwart Japanase and European automotive competition. Moral of the story is: You need good lobbyists if you wanna be successful here.
- roel_v 10y agoI lament the days where HN was a place for intelligent discussion. Today the top post to submissions like this is an idiotic populist gut feeling, complete with dubious metaphors, calls for violence, a complete lack of any understanding of why things are the way the are and how we got there, as well as a blissful ignorance of proposed and/or tried solutions to age-old problems. There must be something in the water these days that spurs these insults on sane discourse, I have a vague feeling of recognition when going over current events in politics across the world the last few weeks...
- omginternets 10y agoWhy don't you state what's wrong with the opinion rather than stating that the opinion is wrong?
- dionidium 10y agoThe original opinion describes an abstract organization of people in anthropomorphic terms as something that can be punished. That's absurd on its face.
- Fordrus 10y agoNow, I don't necessarily disagree that it's a bad idea overall, but the anthropomorphic quality is NOT what makes this absurd. Not at all, not even a little. An abstract organization of people can be invested in, have its collective behavior driven by regulation or investment pressures, and can, out of 'fear' of losing value, allow regulation to override investor pressure. The point of things like massive fines and suggestions like the corporate death penalty is to create a situation where a CEO or VP will, despite knowing there's a lot of money to be made by, say, selling protected patient health information (and therefore substantial shareholder value to be generated from so doing), categorically refuse to do it, because they know the ensuing violations will ruin/bankrupt the company. In other words, if you told me that anthropomorphizing an organization like this were absurd on its face, I would accuse you of rank ignorance of the law, the rationale behind the law, and the whole idea of behavioral incentivization. The reason why we're all discussing this AT ALL is because the fines are often losing their ability to disincentivize the bad behavior - if a company can make 19 billion in a year using only 1 billion, and then be fined for 15 billion, then they can pay the fine can and pocket the 3 billion difference, and report a hefty profit to shareholders. Trying to influence collective behavior through incentives and disincentives is not 'absurd on its face,' dionidium, and I challenge your grasp of the overall context for asserting that it is.
- eddd 10y agoAnyone knows if this 15B is treated as the "cost" of the business? In that way effective income tax would be lower for VW.
- xshareit 10y agoWe should make a discussion about how we can prevent this kind of cases happen again.
- dmichulke 10y agoFor context: GM to Pay Record $35 Million Fine Over Ignition Switch Recalls (May 2014) http://time.com/102906/gm-fine-ignition-recalls/ http://time.com/102906/gm-fine-ignition-recalls/ "The federal government struck a $35 million settlement with General Motors after the company failed to act for 10 years on an ignition switch defect that led to the death of at least 13 people and recall of approximately 2.6 million vehicles"
- vonmoltke 10y agoIf you want to provide context, try picking an article from after GM admitted to hiding the extent of the problem: GM will pay $900 million over ignition switch scandal (September 2015) http://bigstory.ap.org/article/e1207eccc10c4f2a8ef550da95e121c0/gm-said-settle-criminal-case-over-ignition-switches http://bigstory.ap.org/article/e1207eccc10c4f2a8ef550da95e12... "General Motors agreed to pay $900 million to fend off criminal prosecution over the deadly ignition-switch scandal, striking a deal that brought criticism down on the Justice Department for not bringing charges against individual employees." "Also Thursday, GM announced it will spend $575 million to settle the majority of the civil lawsuits filed over the scandal." "The twin agreements bring to more than $5.3 billion the amount GM has spent on a problem authorities say could have been handled for less than a dollar per car."
- ProfChronos 10y agoI am really amazed by the comments I read so I am voluntarily going to "defend" VW while I would not in other circumstances. To make sure this is understood: yes VW is guilty, it has violated customers' trust, they are a shame for the entire car industry and should receive strong punishment for that. Yet, how can everybody forget about all other car manufacturers - especially US? They pretty much all lie about their gas emissions as proven by different experts and agencies [1] [2] [3]. Why? Because we have improved our gas emission limits to a level that most car manufacturers couldn't reach over the short run. Take the example of European car makers. The European Commission started to really regulate car emissions in 2010. At that time, car makers were faced with dropping sales (double crisis 2008 and 2010), stable/slightly increasing costs (wage inflation and poor labour market flexibility - German is an exception in Europe) and stable/slightly decreasing prices (due to competition and few new vehicles). In this context, how can you expect car makers to invest in "traditional cars" to reduce gas emissions and in electric and autonomous vehicles to fight against the competition of tech car companies like Tesla or Google. That is just not possible. So who is responsible? Of course VW and other car makers are all responsible for that mess and the disastrous consequences on environment. But WE are also responsible: we want safer, cleaner, cheaper and stronger vehicles from traditional car makers but but you can't have everything all at once. Tesla can do it because that they start from a "blank page", with no turnaround costs. For VW, GM, Toyota, that's another story. Maybe we should just keep that in mind before charged them with a "corporate death penalty"... [1]http://www.independent.co.uk/news/business/news/volkswagen-wasnt-the-only-company-rigging-emission-levels-says-expert-a6668611.html http://www.independent.co.uk/news/business/news/volkswagen-w... [2]https://www.theguardian.com/business/2016/apr/21/all-top-selling-cars-break-emissions-limits-in-real-world-tests https://www.theguardian.com/business/2016/apr/21/all-top-sel... [3]http://www.cbsnews.com/news/do-all-automakers-cheat-on-their-mpg-tests/ http://www.cbsnews.com/news/do-all-automakers-cheat-on-their...
- grp 10y agoTesla can't do it. Electric vehicles have a lot of hidden pollution like a meat steak or a bottle of milk. Tesla just makes cars that can't apply to gas emissions regulations, they are far from cleaner.
- patrickg_zill 10y agoI am surprised that no one mentioned the other fraudulent actor in this whole mess: the CARB, California's Air Resources Board. They are the ones who lied about their diesel engine standards for air quality. Under the guise of making tough standards they basically outlawed diesels in California. Since CA is such a big car market this prevented most manufacturers from selling any diesel cars anywhere in the USA.
- ourmandave 10y agoThe report this morning said the government gets $5b for environmental clean up and customers get $10b in fixes or buy backs. We'll see. There was a GM settlement like this (the pickup gas tank problem) and customers with existing pickups got a coupon good for $1000 off the price of a new pickup. So GM gets to sell you a new pickup and probably keeps any rebates or low financing. Also the recent Ticket Master settlement for $420M. There's a daily allotment of coupons worth $5 off the ticket price on select concerts (read: not the popular ones) that are buried in a series of hard to follow links. They still have the same service charges like before, they're just more transparent about it.