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VW will have an electric or plug-in version of every car it sells.
Oliver Schmidt will be sentenced in Detroit in December.
From September, Euro 6 rules mean diesels have to prove theyrsquo;re clean in the real world.
VW fixes must engage emissions control without dramatic performance loss.
Real-world testing and more stringent regulations would turn those numbers around.
CEO Matthias Mueller has changed his tune from just a week ago.
A settlement reached late Tuesday will give VW an opportunity to fix some cars.
Enlarge / STERLING HEIGHTS, MI - AUGUST 26: Fiat Chrysler Automobiles CEO Sergio Marchionne speaks at an event celebrating the start of production of three all-new stamping presses at the FCA Sterling Stamping Plant August 26, 2016 in Sterling Heights, Michigan. (Photo by Bill Pugliano/Getty Images)Bill Pugliano reader comments 89 Share this story On Thursday the US Environmental Protection Agency (EPA) announced that Fiat Chrysler (FCA) diesel vehicles were found to have "at least eight" instances of undisclosed software that modified the emissions control systems of the cars.

The vehicles implicated in the EPA's Notice of Violation (NOV) include 2014, 2015, and 2016 diesel Jeep Grand Cherokees, as well as Dodge Ram 1500 trucks with 3.0-liter diesel engines.

The allegations involve 104,000 vehicles, the EPA said. The EPA says it's still in talks with FCA and hasn't ordered the company to stop selling affected cars yet, nor is it officially calling the software a "defeat device" just yet until FCA provides a more detailed explanation. In a press conference, agency officials said that the undisclosed software was discovered after September 2015, when the EPA and the California Air Resources Board (CARB) began doing additional testing on vehicles in the wake of the Volkswagen Group scandal. VW Group was discovered to have almost 600,000 diesel vehicles on US roads with some kind of illegal software on them.

The software allowed VW Group's cars to pass emissions testing under lab conditions but would reduce the effectiveness of emissions controls under real-world driving conditions, causing the cars to emit nitrogen oxide (NOx) far in excess of federal limits. According to the EPA, FCA's undisclosed software works similarly, too.

EPA Assistant Administrator Cynthia Giles told press Thursday morning that the "software is designed such that, during the emissions test, Fiat Chrysler’s cars meet the standards," for NOx emissions. However, the "software reduces the effectiveness of emissions controls when driving at high speed or for long durations," she added. These kinds of workarounds are not uncommon for car makers to use and are not illegal if they're properly disclosed and approved by the EPA.

But efforts to meet emissions standards have driven automakers to install undisclosed devices illegally for decades.
In fact in the 1970s, Chrysler—along with GM, Ford, American Motors, Nissan, and Toyota—was reprimanded by the EPA for installing defeat devices in its cars to "defeat the effectiveness of emission control systems under conditions not experienced during EPA’s certification testing." In some instances the defeat devices helped the cars start more easily in cold weather, in others, time-delay switches cut the emissions control systems while the cars shifted from low to high gears. In Europe, too, rules allow diesel vehicles to cut the emissions control system under certain conditions like cold weather.

Automakers have toed a line, though, using emissions control software where "cold" weather means as high as 64 degrees Fahrenheit. Giles noted during the EPA's press conference that the agency has tested other diesel vehicles since the Volkswagen scandal was made public and found no violations. "It is by no means impossible to make a clean diesel vehicle that meets our standards," she said. In a statement (PDF), FCA said it would continue to work with the EPA to resolve the issue. "FCA US diesel engines are equipped with state-of-the-art emission control systems hardware, including selective catalytic reduction (SCR).

Every auto manufacturer must employ various strategies to control tailpipe emissions in order to balance EPA’s regulatory requirements for low nitrogen oxide (NOx) emissions and requirements for engine durability and performance, safety and fuel efficiency.

FCA US believes that its emission control systems meet the applicable requirements." FCA added that it had spent "months providing voluminous information" to the EPA and other regulators.

The company said it had also made proposals to fix the issues, including "developing extensive software changes to our emissions control strategies that could be implemented in these vehicles immediately to further improve emissions performance." FCA has not yet been sued, but the EPA says it could be "liable for civil penalties and injunctive relief for the violations alleged in the NOV [Notice of Violation]." Correction: This story originally said the EPA found the software on the FCA diesels was illegal.
In fact, the EPA is still determining whether the software itself was illegal. However, Fiat Chrysler violated EPA rules by not disclosing the software.
photo reader comments 23 Share this story The US Justice Department announced on Wednesday that Volkswagen would pay $4.3 billion in civil and criminal fines and plead guilty to three criminal charges pertaining to the automaker’s diesel emissions scandal.

The DOJ also announced an indictment of six high-level VW Group executives, who are charged with lying to regulators and destroying documents. Working with US Customs and Border Patrol, the DOJ brought against VW Group charges of defrauding the US government, committing wire fraud, and violating the Clean Air Act.

As part of the settlement, VW Group has agreed to submit to three years of criminal probation, which will require the German automaker to "retain an independent monitor to oversee its ethics and compliance program." It has also agreed to cooperate with the DOJ's ongoing investigations into individual executives that may have been involved with the scandal. For the past 17 months, the automaker has maintained that none of its executives were involved with the diesel scandal, in which illegal software was discovered on Volkswagens, Audis, and Porsches to alter the cars' emissions controls depending on whether the cars sensed they were under real-world driving conditions or lab conditions.
Instead, VW Group claimed, "rogue engineers" were responsible for the placement of the emissions cheating software on the cars. After the software was discovered, VW Group admitted that its cars did have mechanisms to reduce the effectiveness of the emissions controls on its so-called "Clean Diesel" cars.

Earlier this year, the Justice Department and a class-action group of consumers pursued civil penalties from VW Group, leading to historic settlements of many billions of dollars earlier this year. This new agreement repudiates VW Group's assertion that its executives were wholly innocent of tampering with the cars' emissions control systems.

The indicted VW Group executives include Richard Dorenkamp, Bernd Gottweis, Jens Hadler, Heinz-Jakob Neusser, Jürgen Peter, and Oliver Schmidt.
Schmidt, a former emissions compliance executive for VW Group, is the only executive currently in the US—he was arrested over the weekend by the FBI on charges that he knew about the cheating software and lied to federal regulators about it. Among the other five men indicted, Richard Dorenkamp, head of VW’s technical development for lowest emission engines, was suspended from VW Group in 2015; Bernd Gottweis, a retired VW Group executive, apparently warned CEO Martin Winterkorn that the company's cars could be found with defeat devices; Jens Hadler worked as executive director of powertrain development at Volkswagen in 2008; Heinz-Jakob Neusser oversaw Volkswagen research and development; and Jürgen Peter was a Volkswagen engineering executive who implored his colleagues via internal e-mail to "Come up with the story please!" when the California Air Resources Board started pressing Volkswagen on discrepancies in emissions tests that persisted after VW Group issued a "fix." So far, Volkswagen has agreed to pay $15 billion to compensate victims of the 2.0L diesel engine scandal, $1 billion to settle charges related to 3.0L diesel vehicles (although owner compensation hasn’t been decided on yet), and $1.2 billion to compensate US Volkswagen dealers, who were unaware that the cars they were selling were not in compliance with US emissions regulations. One engineer, James Liang, has pleaded guilty. According to the Associated Press, this fresh $4.3 billion settlement "is the largest ever levied by the government against an automaker, eclipsing the $1.2 billion fine against Toyota in 2014 over safety issues related to unintended acceleration." Assistant Attorney General Leslie Caldwell, speaking at the DOJ's press conference, said that VW Group executives were largely responsible for the scandal, describing a company culture where "lower-level people" expressed concerns and "higher-level people" decided to move forward with planting the illegal software.
reader comments 46 Share this story Enlarge / In this handout provided by the Broward Sheriff's Office, suspect Oliver Schmidt, an executive for Volkswagen poses in this undated booking photo.
Schmidt was arrested January 7, 2017 in Florida and is expected to be charged with conspiracy and fraud in the Volkswagen emissions scandal.
Schmidt was formerly a key emissions compliance manager for VW in the U.S. (Photo by Broward Sheriff's Office via Getty Images) Handout/Getty Images On Saturday night, the FBI arrested Oliver Schmidt, a former emissions compliance executive for Volkswagen Group, as he waited to catch a plane back to Germany at Miami International Airport in Florida.

The arrest is a major setback for VW Group, which has thus far been able to shelter most of its high-level executives from individual prosecution by US authorities. In a Monday appearance in US District Court in Miami, a Justice Department lawyer said that an attorney for Schmidt “had alerted government lawyers that the executive would be in Florida for vacation,” according to the Wall Street Journal. Schmidt, 48, was charged with defrauding the United States, wire fraud, and violating the Clean Air Act. He allegedly played a central role in hiding from US regulators the fact that some 500,000 Volkswagen and Audi vehicles with 2.0L diesel engines sold in the US were equipped with various types of illegal software designed to help the cars pass their emissions tests in a lab and to kill the emissions control system on the cars when they were driving on the road under “real world” conditions. Schmidt allegedly knew of this illegal software since VW Group began using it in Audis in 2009, but the charges the US Government has lodged against him have focused on his involvement between April 2014 and when news of the scandal broke in September 2015.

As an emissions compliance executive for VW Group, Schmidt was based in Detroit, Mich. and was alerted when the International Council for Clean Transportation (ICCT) and West Virginia University produced a report finding that many VW Group diesels showed an alarming divergence from their reported emissions levels when tested in real world driving scenarios. According to the complaint against him (PDF), Schmidt allegedly wrote to other VW Group managers at the time, “It should first be decided whether we are honest.
If we are not honest, everything stays as it is.” For the next year, VW Group danced around regulators’ questions about the study from ICCT and West Virginia University, claiming that the issue could be solved through a minor, voluntary recall. Later in the year, Schmidt wrote an e-mail to the then-CEO of VW Group of America analyzing the “Possible Consequences/Risks” of fallout from the ICCT and West Virginia University Study.
Schmidt added that modifications to the software in Generation 1 and Generation 2 engines “can achieve reductions of NOx emissions under RDE [Real Driving Emissions], but not compliance with the limits.” Even to this day, VW Group has only been able to certify a fix for Generation 3 vehicles—all 2015 models—that will bring the cars into compliance with federal emissions standards. According to the complaint, in August 2015, just a month before the Environmental Protection Agency (EPA), Schmidt traveled to Michigan to meet with a member of the California Air Resources Board (CARB), which had been aggressive in pursuing VW Group’s emissions discrepancies. “Schmidt offered technical reasons and excuses such as ‘irregularities’ or ‘abnormalities’ for the discrepancy without revealing the fundamental reason for the higher NOx measurements on the road: software intentionally installed in VW vehicles so the vehicles could detect and evade emissions testing.” The accusations in the complaint are bolstered by claims from two unnamed cooperating witnesses and James Liang, a engineer for Volkswagen that pleaded guilty to working on the diesel conspiracy in September. Liang has agreed to testify against VW Group to avoid prosecution in the US. Volkswagen has already settled two civil complaints over its illegal software in 2.0L and 3.0L diesel VWs, Audis, and Porsches.

The largest, concerning the 2.0L diesels, will set the company back $15 billion.

Earlier this month, the Wall Street Journal reported that Volkswagen and the Justice Department were considering another billion-dollar settlement based on a criminal investigation of the company.

Charges in that case have not been filed yet, however. Listing image by Handout/Getty Images
Erik Breader comments 0 Share this story Nearly a year and a half has passed since the Environmental Protection Agency (EPA) publicly announced that Volkswagen had cheated on its federally-required emissions tests for 2.0L diesel vehicles produced between 2009 and 2015.

And, just today, the EPA and the California Air Resources Board (CARB) announced the first fix that could make street-legal the 475,474 diesels that were caught up in the scandal. Unfortunately, the fix only pertains to 70,000 “Generation 3” diesels from VW Group, all of which were made in 2015.

The rest of the 405,000-or-so customers with older 2.0L diesels will have to keep waiting for a fix, unless they want to sell their cars back to Volkswagen. The news of the fix comes months after the approval of a $15 billion settlement between VW Group and the Justice Department.

That settlement set aside approximately $10 billion to buy back 2.0L diesels at the price the cars were worth before the scandal was made public, as well as compensate each purchaser with somewhere between $5,100 and $10,000, depending on the make and model of the car. But the settlement also provided another option for owners—if they didn’t want to sell their car back to VW Group, they could have the car fixed, provided that CARB and the EPA approved the fix.

That option has proven to be more difficult in practice because, according to the settlement, VW Group has to not only dramatically reduce the release of nitrogen oxide (NOx) from the diesel engines, but also minimize wear and tear on the engine while still providing gas mileage close to what the car experienced before the fix. According to the EPA, the fix for the 70,000 Generation 3 cars will be carried out in two waves: the first wave is ready to be deployed today and involves a software update that will “remove the defeat device software and replace it with software that directs the emission controls to function effectively in all typical vehicle operation.” The second wave will be ready “about a year from now.” Per the EPA, it will involve a further software update as well as “a new diesel particulate filter, diesel oxidation catalyst, and NOx catalyst.” The cars that are able to take advantage of this fix are Volkswagen’s 2015 diesel Beetle, Beetle Convertible, Golf, Golf SportWagen, Jetta, and Passat, as well as Audi’s 2015 diesel A3. What’s remarkable is that the EPA and CARB are claiming that this fix will not only curb excess emissions by 80 to 90 percent, but that the fix “will not affect vehicle fuel economy, reliability, or durability.” “EPA and CARB confirmed those conclusions through independent testing and analysis at their own laboratories,” the EPA wrote in a press release. Even if a fix is costly, it’s in VW Group’s interest to find ways to bring their cars inline with US emissions regulations so the company can reduce the cost, even by a small amount, of purchasing back cars from customers who don’t want their diesels fixed.

The June settlement with the Department of Justice stated that VW Group cannot resell cars with defeat devices on them after the automaker has bought them back from customers—even in other countries where emissions regulations may be less strict.

But if VW Group can repair the cars it purchases back from customers to remove the defeat devices and meet greener standards, that restriction against reselling in other markets is lifted. The news that 70,000 of VW Group’s cars are fixable comes along with a report from the Wall Street Journal.

The report cites anonymous sources who say that VW Group and the Justice Department may soon reach a settlement in an expected criminal case based on a investigation of the German company by American Justice Department officials.

The settlement could involve a payout of several billion dollars in addition to what VW Group has already paid, the WSJ reports.

Criminal charges could include “wire fraud and misleading government officials,” a source told the paper. Thus far, only one individual, former VW Group engineer James Liang, has been named in a criminal case involving the diesel emissions scandal.
Erik Breader comments 1 Share this story Volkswagen defeat device scandal Sources say VW Group reaches agreement on fix for 80,000 diesel vehicles Regulators investigating new emissions irregularities in automatic transmission Audis 13 months after VW’s emissions scandal, judge approves $15 billion settlement US VW probe finds criminal wrongdoing, regulators work to settle Massachusetts, New York, Maryland accuse Volkswagen execs in fresh lawsuits View more storiesOn Tuesday, US District Judge Charles Breyer announced that Volkswagen Group and regulators had reached a $1 billion settlement over a portion of the 80,000 3.0L diesel vehicles that are still driving on US roads equipped with illegal emissions-system-defeating software. VW Group says it will buy back 20,000 of those cars.

The German company hopes to offer a fix for the remaining 60,000, although approval for the fix is still pending the approval of the Environmental Protection Agency (EPA). This tracks with earlier rumors that VW Group would buy back 20,000 older Audi and VW SUVs due to the more complicated nature of the fix that would be required to make those cars compliant with federal emissions standards.

Those same rumors suggest that the remaining 60,000 cars could be brought into compliance with a mere software fix, potentially saving VW Group billions in buyback costs or more involved fixes. Cynthia Giles, an EPA assistant administrator, said that the total cost for any fixes, buybacks, and additional compensation from VW Group for the 3.0L diesels will total around $1 billion, according to Reuters.

There was no word on how much additional compensation owners of 3.0L vehicles might expect from VW Group. In June the German automaker agreed to a much larger settlement—almost $15 billion over some 475,000 2.0L diesel vehicles that also had emissions-system-defeating software on them.

Those VW and Audi owners are entitled to between $5,100 and $10,000 in additional compensation on top of a fix or a buyback of their cars. Today, VW Group agreed to pay the EPA $225 million to mitigate the cost of the excess pollution that the company’s 3.0L vehicles caused.
In a separate agreement with the state of California, VW Group also agreed to sell an average of 5,000 electric vehicles in the state through 2025 and to pay the Air Resources Board $25 million.

Due to rules set in the ’60s, California is the only state that is allowed to set air regulation standards more stringent than the EPA’s. With VW’s new settlement, Judge Breyer also announced that Volkswagen’s parts maker, Robert Bosch GmbH, had agreed to a settlement with regulators.

Bosch has been accused of furnishing VW Group with components that it knew would contribute to circumventing US pollution laws.

Bosch did not say how much it had settled for, and neither did it accept liability or admit guilt on Tuesday. Reuters reported that the settlement is expected to be worth more than $300 million. Just yesterday, VW Group reached a settlement with Canadian antitrust authorities for $1.57 billion. One hundred and five thousand of the affected diesel vehicles had been sold in Canada when news of VW Group's emissions cheating broke. Ottawa authorities have accused the company of making false and misleading claims to customers about the eco-friendly aspects of its cars.