German automaker Volkswagen recently missed a deadline to appear in U.S. District court, but they were granted an extension until today, April 21, by U.S. District Court Judge Charles Breyer in San Francisco. This scheduled court date was meant for Volkswagen to present their plan to make VW cars involved in the company’s current emissions scandal compliant with environmental standards. However, if the company is unable to reach an agreement with the U.S. government, VW dealers, and their customers, a trial may take place to determine what Volkswagen owes to consumers and what changes they will need to make.
Finding an affordable option for the company has proved harrowing, as a satisfactory solution goes far beyond fixing the misleading software. Even if the software is updated and brought into compliance with environmental standards, the cars would no longer drive as well, and the ratings promised to buyers would be compromised. Refitting each car in the United States with proper parts and new computer systems is too costly, so a judge at the last hearing recommended that the company simply buy back the cars.
Buying back the cars would hurt Volkswagen financially, an area in which the company is already suffering. Tony German, a New York resident who drives an affected A3 model Audi, would gladly sell his car back to Volkswagen for the right price. His car’s resale value was damaged by the scandal, and buying a new car is an inconvenience. If Volkswagen can pay buyers for the original cost, and maybe an additional sum for the inconvenience, German and many others will likely gladly give up these vehicles.
The Federal Trade Commission (FTC) has officially filed suit against Volkswagen after the company admitted to cheating on U.S. emissions tests. After outside testing showed that some of VW’s clean diesel vehicles were outputting up to 40x the legal amount of pollutants in the United States, the company admitted to installing devices that were able to cheat emissions tests in as many as 580,000 of their vehicles.
In addition to the 500 existing civil lawsuits against the German automaker, the FTC has filed suit against Volkswagen saying that U.S. consumers have suffered “billions of dollars in injuries” because of the company’s deceptive actions. A Volkswagen spokesperson publicly stated that the company was cooperating with U.S. regulators and will continue to do so.
A federal judge has given VW until April 21st to remedy the situation with consumers by either fixing the vehicles or providing vehicle owners with some sort of financial compensation. No word has been given on the exact solution Volkswagen has been working on, but the company says that a plan is in the works.
In a whistle-blower lawsuit that has been filed by a former Volkswagen employee in Michigan, individuals with the German carmaker have been accused of deleting electronic data not long after the Environmental Protection Agency (EPA) first accused VW of equipping its vehicles with emissions cheating software. The former employee, Daniel Donovan, was an information manager for VW in Auburn Hills, Michigan.
The lawsuit claims that he was wrongfully dismissed last December because it was suspected that he would report VW for destroying electronic data that may have been used as evidence against the automaker by U.S. authorities. The suit goes on to describe how Donovan was instructed by his superiors to tell the chief information officer not to delete electronic data on Sept. 18. According to the lawsuit, the chief information officer was upset by this and that data continued to be deleted until Sept. 21, though the claim also alleges that backup data was being destroyed even after this date.
According to Donovan’s suit, he informed his managers that deleting this data may constitute “obstruction of justice” and that he did not want to engage in the activity. The suit also alleges that outside accountants that were hired by VW complained when they were not able to access all of the information they requested. On Dec. 6, Donovan was formally dismissed from his position, a dismissal that Donovan contends was prompted by the alleged certainty that “‘[Donovan] was about to report the obstruction of justice and spoliation of evidence’” to U.S. authorities. VW maintains that the employee’s dismissal is unrelated to the emissions scandal.
This lawsuit may put even greater pressure on U.S. officials to take a harder line with VW, particularly if Volkswagen cannot find a way to fix the emissions issue for people in the U.S. who own affected vehicles by the March 24—the date on which a federal judge in San Francisco asked the German company to present a plan to solve the problem. As of now, Volkswagen is still negotiating the penalties it will have to pay with the U.S. Justice Department and the EPA for the emissions-cheating software the company equipped in some of its diesel vehicle models.
In a statement made before the United States District Court in San Francisco, Robert Giuffra, a lawyer for Volkswagen, said that the German automaker may decide to buy back some of their diesel vehicles if the company is not able to make them comply with EPA air quality standards quickly enough. Giuffra is one of the attorneys defending VW against the class-action suits that have been filed against the carmaker by owners of affected diesel vehicles.
While the company has indicated in the past that it may eventually need to buy back some of its diesel vehicles in the United States, Giuffa’s statements are the clearest indication yet that the company simply does not have the technology necessary to fix the problem. That being said, VW has not made a definitive statement about what they intend to do for owners of affected vehicles.
At the time of the hearing in San Francisco, the number of vehicles that were known to be affected by the scandal was set at around 575,000. Since the Environmental Protection Agency brought the emissions cheating scandal to light in September and through the end of December in 2015, the value of VW diesel vehicles has dropped by a staggering 16 percent, according to data that is collected by Kelley Blue Book. Even steeper declines have been reported by some owners.
Months after Volkswagen admitted to equipping certain diesel vehicles with software designed to cheat emissions tests, the company has hired Kenneth R. Feinberg to address claims related to the scandal and create a compensation plan for victims. Feinberg is a leading specialist in compensation funds, his most notable work including payouts to victims of 9/11, the BP oil spill, and most recently, those who were affected by the faulty ignition switches in General Motors’ vehicles.
Volkswagen came under fire after the company admitted to installing illegal devices in certain diesel vehicles in order to get lower results on emissions tests, leading many VW owners to take legal action against the automaker, claiming that their vehicles were devalued because of the scandal.
While details of the compensation program have yet to be finalized, VW hopes this move will limit the number of lawsuits filed against them. Feinberg and his team’s first step in developing this program will be to outline parameters for eligibility and what proof vehicle owners will be required to provide. Feinberg plans to receive input from the company as well as vehicle owners to fully develop the plan, including the amount of compensation that affected VW owners could get.
Feinberg also explained that the compensation program will not interfere with any state and federal investigations of the company’s actions regarding the scandal. He expects that the program will take about 60 to 90 days to develop.
Volkswagen has withdrawn all 2016 models of its diesel cars from environmental certification in the U.S. due to the revelation of a second program designed to affect the emissions controls in their vehicles. Federal regulators, along with California state agencies, are investigating the recently revealed device to determine whether or not it violates American emission standards.
The head of Volkswagen’s American unit, Michael Horn, disclosed the existence of the software in testimony given before a House Energy and Commerce subcommittee. The company has stated that it failed to disclose the software and seek approval before introducing these vehicles into the market, giving this explanation as their reason for withdrawal.
According to agency spokesman Nick Conger, “VW did very recently provide E.P.A. with very preliminary information on an auxiliary emissions control device that VW said was included in one or more model years. [Regulators] are investigating the nature and purpose of this recently identified device.” Volkswagen has refused to comment on whether or not this software was designed to be a second cheat for the emissions control tests like the program that came to light in September and was able to detect when the vehicles were undergoing tests in order to minimize emissions.
Last week, one of the biggest scandals in automotive history became public after Volkswagen admitted to installing illegal software in their vehicles in order to cheat emission tests. The scandal affects nearly 11 million vehicles worldwide, nearly 500,000 in the U.S. alone, and has raised 30 class action lawsuits against the company. However, many are unaware of how this scandal came to light.
In 2012, in order to perform emission tests on clean diesel vehicles, a research group at West Virginia University received a $50,000 grant from the International Council on Clean Transportation. When the research team started testing Volkswagen vehicles, the emissions levels were off by up to 35 times the expected amounts. When the data was made public a year and a half ago, many began to raise questions, including the California Air Resources Board (CARB).
CARB and the Environmental Protection Agency (EPA) began discussions with Volkswagen to uncover why there were such massive discrepancies, with VW first claiming technical issues were to blame. Only after the EPA threatened to not approve VW’s clean diesel cars for sale in 2016 did the company finally admit to deliberate cheating. As the scandal continues to develop, VW’s stock continues to plummet and the future of their clean diesel vehicles is unclear.
