Monday, September 28, 2015

VW Diesel engine cheating - should we be looking at the EPA too?

By now you've likely read about the VW diesel engine crisis. The short version is this : the EPA emissions test in the US is so far away from actually driving a car that VW were able to write software into their ECU that could detect when a car was undergoing emissions testing and change the NOX emissions of the engine to make it pass the test. The 4 cylinder 2.0 TDI engine is the one most affected.
This is bad - really bad for VW. In the case of some of their cars, they're driving around emitting 35x the clean air act standard for NOX emissions. The best case scenario is that VW issue a software and hardware fix for the cars which could cripple their performance or economy. The worst case scenario is that this could topple VW completely and take the German economy with it.
In the US alone, the EPA could choose to levy a $37,500 fine PER VEHICLE on the VW Audi group. With 482,000 affected cars, that bill alone comes to $18,075,000,000. That's $18 Billion. With a 'b'.
Then there's the used vehicle market. VW have already pulled all new and pre-owned vehicles from sale that have the affected engines in them. Owners of vehicles with these engines could see a near-zero resale value and to pile on the pressure, VW could be forced to buy back all these vehicles at cost, which could be another $15 billion. Also with a 'b'.
That's just the US. Look at Europe and those numbers could balloon to $70 billion with levies, fines and buy-backs and we've not even looked at the almost-certain-to-happen class-action lawsuits.
Germany's economy is very heavily reliant on their car industry and if VAG collapses as a result of this scandal, what's that going to do to Germany? They're already suffering with high labour costs. Sure Germany weathered the sub-prime scandal, the collapse of the Asian stock markets and even the East Germany fiasco, but do you think they can survive the very heart of their manufacturing industry collapsing?
But let's step back for a moment and look at the root cause here: the EPA testing procedure is so laughable that it hasn't properly represented real-world driving for decades. Two wheels out of four on a rolling road, no physical throttle or steering input and the entire process being done via a hookup to the OBD2 system? It really doesn't take much code at all for a car's ECU to figure that out. It's a series of simple 'IF' statements. Which leads to the obvious question: is the EPA partially to blame for this by making their test so easy to circumvent?
The lead-on questions then would have us looking at all manufacturers. VAG isn't some tin-pot collection of amateurs - they're one of the most technologically advanced manufacturers in the world. If they couldn't get their 2.0 TDI through EPA testing without cheating, what's the bet that other less-capable manufacturers have similar 'cheat modes' in buried in their own software? For petrol-engined vehicles as well as diesel-engined vehicles?
In fact I'd be prepared to bet that we will be able to look back on this point in automotive history and see it as the tipping point for the adoption of electric cars. If this scandal kills off light-duty diesel engines (which it very well could) then the next-best option for cleaner vehicles is all-electric.