What's Behind VW's Downfall and Secretive Emissions Deals

The German carmaker’s emissions-testing cheat reveals how car companies and regulators negotiate tradeoff between fuel efficiency and performance

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Vehicles included in the VW emissions scandal include the Audi A3, Beetle, Golf, Jetta and Passat . The allegations cover roughly 482,000 diesel passenger cars sold in the United States since 2008 plus millions more worldwide.

Volkswagen AG that 11 million of its diesel vehicles worldwide use the software that helped the carmaker . This revelation comes as the U.S. Department of Justice launches a criminal probe against the company and officials in European Union and South Korea launch their own investigations. Despite the backlash against the German automaker, VW’s use of emission control devices isn’t illegal or even surprising. The company’s downfall was instead using this technology to try to game the U.S. Environmental Protection Agency’s secretive emissions certification process.

Most cars use software-controlled systems to adjust engine emissions when the vehicle needs more engine power to climb a steep incline or pull a heavy load. These emission control devices, called AECDs, can also dial up emissions controls to keep leadfoot drivers from abusing warrantee-protected engine parts. Algorithms programmed into these devices determine when a vehicle needs a boost by analyzing engine temperature and revolutions per minute, vehicle speed, transmission gear and other conditions.

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A carmaker or engine manufacturer’s legal staff typically negotiates AECD performance with the EPA or directly with a state agency such as the California Air Resources Board (CARB). Carmakers must meet emissions parameters established by that agency in order to sell their vehicles in the U.S.  

These negotiations sound mundane but they actually are highly secretive. More stringent emissions controls make vehicles less fuel efficient, which consumers don’t like. And the ability to ease such restrictions can confer a competitive advantage, says Daniel Carder, director for the at the University of West Virginia. “You don't want your competitors to know your strategy by letting them know what your AECD [settings] are,” he says. “If you’re able to successfully negotiate your AECDs with the government and your competitor wasn’t, then you’ve got a leg up.” Carder and his colleagues tested VW’s vehicles at the request of the , a nonprofit research group, and submitted their findings to the EPA and CARB in 2014. VW admitted to the regulators earlier this month that it had installed so-called emissions “defeat devices” on several of its models.

When car companies exceed their negotiated emissions limits, it is often an oversight, Carder says. The carmaker may have failed to prepare its vehicles to deliver appropriate emissions levels under all testing conditions, or they simply were not informed of the exact conditions. It’s the difference between telling students exactly what an exam will cover so that they can prepare properly and giving them a vague idea of what they can expect, he adds. Emissions testing could be improved by providing carmakers with greater transparency regarding these conditions.

Despite any problems with the current approach to emissions testing, VW’s problems, however, clearly were not the result of an oversight. The company surreptitiously installed additional AECDs in five types of four-cylinder diesels—the Audi A3, Beetle, Golf, Jetta and Passat—that were not specified in their application for emissions certification. These systems included an algorithm that used the position of the steering wheel, vehicle speed, the duration of the engine’s operation and barometric pressure to determine when the vehicle was being tested and then dial back emissions to meet EPA standards. During normal driving conditions, however, those vehicles would ramp up their engine power by reducing the effectiveness of the emission control system. This generated up to 40 times the amount of smog-producing nitrogen oxides (NOx) permitted by the U.S. Clean Air Act.

VW came clean when the EPA and CARB said they would not certify the company’s 2016 model year vehicles until it explained its skewed emissions readings and ensured the 2016 vehicles would not have the same problems. () Now VW faces several investigations, a possible management shakeup and up to $18 billion in EPA fines.

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