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Volkswagen Could Face $18 Billion Fine Over Emission-Cheating Software 471

After getting caught cheating on emissions testing by means of software, Volkswagen could face up to $18 billion in fines, reports USA Today. That number is based on the company being assessed the maximum penalty of $37,500 per affected vehicle. That's not the only bad news for Volkswagen, which has halted sales of its 4-cylinder diesel cars; the linked article reports that the violations "could also invite charges of false marketing by regulators, a vehicle recall and payment to car owners, either voluntarily or through lawsuits. Volkswagen advertised the cars under the 'Clean Diesel' moniker. The state of California is also investigating the emissions violations."
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Volkswagen Could Face $18 Billion Fine Over Emission-Cheating Software

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  • 23% of the company (Score:5, Insightful)

    by crow ( 16139 ) on Sunday September 20, 2015 @05:46PM (#50563079) Homepage Journal

    For reference, $18B would be about 23% of the market cap of the company. In other words, if the company were to pay such a fine by issuing new stock and giving the stock to the government, the government would end up with 23% of the company (or so goes the math if the stock market were being logical).

    That's not what's going to happen, but it shows that the company should be able to raise the money to pay the fine if it comes to it. Of course, such things usually take many years of lawsuits and appeals before it's all settled, which is why these things often are settled out of court for a lower price.

    • by lucm ( 889690 ) on Sunday September 20, 2015 @05:52PM (#50563103)

      The $18B doesn't cover the cost of 500,000 customers who not only got ripped off, but also were exposed to dangerous levels of harmful fumes. This is a torts lawyer wet dream.

      • by fuzzyfuzzyfungus ( 1223518 ) on Sunday September 20, 2015 @06:03PM (#50563137) Journal
        Plus, aren't all those customers now stuck with cars that are either not street legal(I know that pre-emissions-standards vehicles were grandfathered; but these aren't) or will absolutely suck once they get reflashed so that the 'clean' ECU parameters run all the time, rather than just during testing(I'm assuming that something about the test-mode parameters was lousy, or they would have had no incentive to try this little trick)?

        That seems like the sort of thing that might make them justifiably unhappy, and in a way with a relatively large, and relatively easily quantified, dollar value attached.
      • Re: (Score:2, Interesting)

        by 0123456 ( 636235 )

        The $18B doesn't cover the cost of 500,000 customers who not only got ripped off, but also were exposed to dangerous levels of harmful fumes. This is a torts lawyer wet dream.

        Ripped off by getting better performance than they would have if the emissions controls were in 'test mode' all the time?

        And, if you're worried about 'harmful fumes', you wouldn't have bought a stinky, polluting, smoke-spewing diesel in the first place.

        • Ripped off by getting better performance than they would have if the emissions controls were in 'test mode' all the time?

          ripped off by having engines that are running outside of their design envelope, with premature part failures and lower reliability

          • by 0123456 ( 636235 )

            ripped off by having engines that are running outside of their design envelope, with premature part failures and lower reliability

            In what sense are they 'running outside of their design envelope'? Are you saying that this isn't an intentional piece of code, it's just a bug that they don't run in 'test mode' all the time, and VW didn't design them that way?

            • In what sense are they 'running outside of their design envelope'?

              Higher performance means higher internal engine stresses. Bearings, rings, seals, timing chains, etc. are subjected to higher stresses and fail sooner.

               

              Are you saying that this isn't an intentional piece of code

              No. Get a clue: VW has more than one employee. The CEO does not mind-meld with the software developers.

              • by 0123456 ( 636235 )

                Higher performance means higher internal engine stresses.

                You have two choices here:

                1. The engine is designed to run in 'test mode' all the time, and the code that allows it to run outside 'test mode' is a bug, or something some EVIL PROGRAMMER inserted because he wanted his car to go faster.
                2. The engine is designed to run in normal mode all the time, and 'test mode' is a deliberate attempt to detune it for testing.

                Which are you claiming to be true?

                • "normal mode" is a lie, it's a fiction invented by a software developer, probably with the cooperation of higher-ups in order to sell a car that is not what it appears to be.

                  • by 0123456 ( 636235 )

                    "normal mode" is a lie, it's a fiction invented by a software developer, probably with the cooperation of higher-ups in order to sell a car that is not what it appears to be.

                    That's not an answer to my question.

                    You claim 'CRIMINAL FRAUD', so you must believe the 'test mode' is not the way the engine is designed to run. Yet you also claim that 'normal mode' is not the way the engine is designed to run. So why do you think VW would release a car that doesn't run the way it's designed to run?

                    • So why do you think VW would release a car that doesn't run the way it's designed to run?

                      $$$

                      or

                      DM DM DM

                      as the case may be.

                    • by 0123456 ( 636235 )

                      So, as far as I can make out, you seem to be claiming that VW released a car designed to be unreliable and break down, so they can make money on repairs?

                    • Re: (Score:3, Informative)

                      by mrbester ( 200927 )

                      € € € you mean. Germany hasn't used Deutchmarks since 1999.

                    • So, as far as I can make out, you seem to be claiming that VW released a car designed to be unreliable and break down, so they can make money on repairs?

                      that's one reason

                      another is that they tested the car with focus groups and the come-back was "it needs more power" and it is cheaper to fudge the software than it is to design a new engine

                    • So, as far as I can make out, you seem to be claiming that VW released a car designed to be unreliable and break down, so they can make money on repairs?

                      You've never worked on VW beetle, have you? They were designed to be as cheap and flimsy as possible. And with the poor oil flow to the valves, the Beetles were also DESIGNED to be unreliable. Do you hear that chirping sound from a VW beetle's exhaust? That sound is the valves grinding themselves away.

                    • http://www.volksworld.com/tech-guides/technical-information/air-cooled-vw-engine-oil-system-31531

                      "it took 40 years, and the advent of the so-called Type 4 engine, for VW to include a proper oil filter system in its design."

                    • by TwoUtes ( 1075403 ) on Sunday September 20, 2015 @07:23PM (#50563565)
                      Which Beetles are you referring to? The older first gen beetles, with the air cooled flat four chirped because the stock exhaust pipes had perforated baffles that whistled as the exhaust gas flowed through. Replace those tailpipes with, say straight pipe, and the chirp went away. My dad's '61 didn't chirp after he put on some flared stainless pipes. Valves faces and seats aren't lubricated by oil. The valve guides and stems are, but the faces are not. Unless the piston rings are bad. You may be referring to the cylinder behind the oil cooler, which I believe is number 3. It would starve for cooling air and the exhaust valve would eventually fail, popping the valve head off the stem and frag the cylinder. My '70 did that. Good times.
                    • That sound is from the exhaust design, not the engine design - attach the exhaust from a Porsche 356 or an aftermarket Bursch or Dansk and it will sound *much* better.

                      Now, if you hear one rattling like a drawer full of spoons that could be very loosely adjusted valves (iirc spec is a gap of 009 for push rods and valve rocker arms) or something funky happening with the generator pulley.

                    • the original point I was making is that VW has been selling questionable cars for many decades

                    • by AK Marc ( 707885 )
                      They are designed to be cheap to make and cheap to repair. You are whining about a centuries old engineering problem. Do you seal bearings, increasing their unserviced life by 2, or leave them unsealed, so they have to be "repaired" twice as often. Note, the sealed bearings can't be serviced, so they become disposable. That particular debated has gone on long enough that it's nearly solved, but so many others haven't been solved. For a car designed to be the Model T of the '40s, it was what it was supp
              • The CEO does not mind-meld with the software developers.

                I'll have to search around a bit, but I do think I saw this on a porn tube . . .

        • by mspohr ( 589790 )

          These were advertised and sold as "clean diesels". Presumably people who bought them thought they were buying a diesel that didn't pollute (much).

        • Ripped off by getting better performance than they would have if the emissions controls were in 'test mode' all the time?

          Ripped off by getting something that pollutes more than advertised - and, presumably, will have less power than advertised if that issue is ever fixed.

          And, if you're worried about 'harmful fumes', you wouldn't have bought a stinky, polluting, smoke-spewing diesel in the first place.

          And they didn't. They bought a clean diesel. Only it turns out it's not clean after all, because Wolkswage

      • by mspohr ( 589790 )

        It also doesn't cover the cost of fixing the cars... if they can be fixed.
        I assume that the reason VW resorted to fraud was that they couldn't make the cars run well while meeting emissions standards. If they "fix" the cars to make them meet the standards, they may not run very well (low power, starting problems, drivability issues, etc.). I can envision lots of irate customers whose cars no longer run well... VW may have to buy back these cars... that would cost a lot.

        • If they "fix" the cars to make them meet the standards

          They will probably run like the old diesel rabbits that they sold back in the 1980s. My boss had one and it literally would not make it up the hill with a full load of passengers. We got out and pushed.

      • The $18B doesn't cover the cost of 500,000 customers who not only got ripped off, but also were exposed to dangerous levels of harmful fumes. This is a torts lawyer wet dream.

        Just being in the USA is a torts lawyers wet dream.

        • by lucm ( 889690 )

          Used to be. But thank to the US Chamber of Commerce and their evil henchman, Karl Rove, the torts gravy train has come to a grinding halt.

      • The $18B doesn't cover the cost of 500,000 customers who not only got ripped off, but also were exposed to dangerous levels of harmful fumes.

        That's true. They will need $0 additional dollars to address the 0 customers who were exposed to dangerous levels of harmful fumes as a result of this decision. At least, that's what our own goverment says; out of one side of their mouth they say this is a public health issue, and out of the other side they tell us that the owners have not been exposed to anything harmful as a result. So which is it?

    • No, if they added 23% to their market cap, then gave that to the government, the government would own 18.7% of the company (23%/123% of the old market cap).
      • by crow ( 16139 )

        No, if they wanted to pay the fine in newly-issued stock, the issuing of the new stock would dilute the value, so (assuming a logical market), they would have to issue enough to result in the government owning 23% of the company. That's not issuing 23% more stock, it's more like 30%.

        Of course, the market isn't logical, so the real amount they would have to issue would be different. The point of my post is to put the size of the potential fine in perspective of the total value of the company. It implies t

      • by RichMan ( 8097 )

        The government would not be putting any money in. Please explain how in accounting terms they would be able to add 23% to their market cap when they would not actually be receiving any money?

        This would be a stock issue for 0 money into the company. A direct dilution.

      • No, if they added 23% to their market cap, then gave that to the government, the government would own 18.7% of the company (23%/123% of the old market cap).

        yeah, as if the stock value will remain the same after this

    • It's too bad that 'piercing the veil' appears to be some kind of taboo in the US.

      Unless Volkswagen has a wildly dysfunctional development process, on a scale that would doom most attempts at engineering, building, testing, and shipping ECU firmware with test detection and cheating algorithms isn't exactly something that a single bad actor could plausibly pull off on his own initiative.

      Unless the situation is somehow far more innocent than reports so far suggest; there should be a decent number of peop
      • I figure it is exactly the same as the flap in the exhaust of my honda CBR1000rr that is closed until it passes the RPM required for the ride by noise test. Then magically it is opened by a cable to allow the exhaust to be freer breathing. Ofcourse Honda says it is for improved backpressure at low rpm but.....

      • by tsotha ( 720379 )

        It's too bad that 'piercing the veil' appears to be some kind of taboo in the US.

        You're not using the right phrase here. That one refers to liabilities incurred by the owners of a corporation, which isn't something that normally happens. Judges can decide to do this based on things like material misrepresentations in corporate documents and the "absence of arm's length relationships", e.g. you start a corporation and then pay for personal items out of the corporate account.

        What Volkswagen did all occurre

    • by RichMan ( 8097 )

      I would prefer if fines were done by issuing stock to the government. Effectively it would devalue all currently held stock penalizing the stock holders who are the actual people where the "buck stops" and who have control over the board and the real direction of the company

      • by swb ( 14022 )

        Why not personal financial culpability for the officers of the company? The fine is their personal responsibility to be paid from their own assets, up to and including all their personal property being auctioned off and the balance paid through onerous payments that guarantee a net income of no more than $40k per year until the fine is settled.

        Bar any third party payments from insurance, corporate repayment or any other third sources. Garnish any cash payments to them from friends or family. Require ho

        • The officers of the company most likely have no clue how the engine management software works. We don't even know if the managers in the engine management division knew. For that matter, we don't even know if they outsourced this component.

    • For further reference, that is almost, but not quite, as much money as the federal government spends in two days.
  • by Nutria ( 679911 ) on Sunday September 20, 2015 @05:47PM (#50563083)

    And a civilization-killer asteroid *could* crash into the Earth this evening. They're both equally unlikely.

  • Hang 'em high... (Score:5, Insightful)

    by fuzzyfuzzyfungus ( 1223518 ) on Sunday September 20, 2015 @05:48PM (#50563085) Journal
    Unless there is some mitigating factor that none of the reports on this story have so far mentioned; Volkswagen seems to be 100% deserving of an absolutely brutal smackdown.

    Building ECU code specifically to deliver 'correct' results under test; and totally different results elsewhere, is going to be difficult to explain as an 'accident'; and also the sort of thing that it'd be pretty tricky for a single rogue actor to pull off without the knowledge, and probably the cooperation, of others on the design team and in management.

    I realize that it is considered unspeakably barbaric to pierce the corporate veil and cruelly touch the people who actually made the decisions; but under any non-corporate circumstance I'd have to imagine that the prosecution would have a stack of conspiracy charges so thick that it has to be delivered by two burly paralegals, in addition to charges related to the violations themselves; and all the possible civil litigation on the part of the misled customers.
    • This shows the foolhardiness of trying to legislate clean air. Alternative energy sources is the only real cure; make a set of criteria on paper (emissions levels or carbon credit trading) encourages fraud, and we already know billions of dollars of that kind of fraud is known. How much is unknown? We can trust in the power of the almighty buck and power grubbing scum to know even more is unknown.

      We have algae that can turn cellulose grown on scrubland into a direct substitute for gasoline (butanol), w

      • This shows the foolhardiness of trying to legislate clean air. Alternative energy sources is the only real cure

        So you are callling for legislative action in the form of tax breaks in order to make alternative energy more affordable?

      • Re:Hang 'em high... (Score:5, Interesting)

        by drinkypoo ( 153816 ) <martin.espinoza@gmail.com> on Sunday September 20, 2015 @07:38PM (#50563655) Homepage Journal

        We have algae that can turn cellulose grown on scrubland into a direct substitute for gasoline (butanol), we can make biofuel substitute for diesel. But there is no serious investment that way, only token efforts.

        No, it's worse than that; Butamax, a holding company owned by BP and DuPont, managed to get a patent on the process for efficiently producing butanol and are now actively preventing Gevo (a GE energy ventures subsidiary) from making butanol fuel and selling it to the public, which they would like to be doing right now — on a small scale at first, but ramping up over time.

        BP, some of the most evil fucks ever, and DuPont, more of the most evil fucks ever, are actively preventing us from having the best biofuel we could be burning.

      • by Darinbob ( 1142669 ) on Sunday September 20, 2015 @08:32PM (#50563899)

        Legislating clean air has worked. Check out the air in Los Angles now versus 30 years ago.

        • by no-body ( 127863 )

          Legislating clean air has worked. Check out the air in Los Angles now versus 30 years ago.

          Still ways to go - looking at the huge black clouds from diesel transport trucks going into the air at construction sites makes one wonder why this is happening. Fine dust particles staying in your lungs for good if you breathe that stuff in, which you do anyway.

          The "Rolling Coal" movement is another fad going on raising questions about mental competence.

        • For those of you who weren't around 30 years ago...

          Flying into LAX, you used to descended into a brown layer of smog during final approach. From anywhere along I-10 West of L.A. or CA-60 East of L.A., except for early morning you could only see the mountains to the north a few weeks out of the year. If you lived out near Riverside or San Bernardino, the day would start off with clear air, and about noon to 2pm, a thick grey-brown layer of smog would move in and drop visibility to 5-10 miles.

          I'm cons
  • Someone's gonna be hanging.

    If found guilty (which certainly looks to be the case) see a huge black eye to the industry, a huge fine (hopefully leveraged over years to avoid outright murdering the company but gutting profits), and ideally better testing a cheat prevention applicable to all other participants. Considering how few players are big in passenger vehicle diesel engines these days, it may just be the end of them as well.

  • by thoughtlover ( 83833 ) on Sunday September 20, 2015 @06:06PM (#50563157)

    "The state of California is also investigating the emissions violations"

    Oh boy are they in trouble now. I've heard they're worse than the Feds when it comes to issues like these.

    • Indeed. Even in the 80s California emissions laws kept certain models of cars from being imported, like hte Porsche 930 turbo. Hence the M491 option on the 911 (factory turbo look - a turbo car without the rear windshield wiper, or turbo script on the back end, and the NA 3.2L engine instead of the turbo charged version)

      • Indeed. Even in the 80s California emissions laws kept certain models of cars from being imported, like hte Porsche 930 turbo. Hence the M491 option on the 911 (factory turbo look - a turbo car without the rear windshield wiper, or turbo script on the back end, and the NA 3.2L engine instead of the turbo charged version)

        And in fact California is the very reason that manufacturers practically stopped selling diesel passenger vehicles in the United States to being with. They started coming back into style in the late 2000's after some law changes. But California has such strict emission standards that Subaru, for instance developed their PZEV technology. They entered into a compromise with the state of California so they could even have a chance to sell vehicles in the state without meeting all of the state's emission sta

  • by chill ( 34294 ) on Sunday September 20, 2015 @06:07PM (#50563159) Journal

    In October 2012 I bought a new car. it was a close decision between the VW Jetta TDI and Ford Fiesta. The slightly better highway mileage on the Jetta was the deciding factor for me.

    Ford probably lost a sale because of this deception.

    • by vux984 ( 928602 ) on Sunday September 20, 2015 @06:19PM (#50563215)

      Jetta TDI vs Fiesta? Yeah, you probably ended up with the much better car regardless of the outcome of this issue.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      Honda and Ford have already been under investigation for similar emissions manipulation. For 1.6 million affected cars, Honda paid a $12.6 million fine plus $250 million in remedial costs. Ford paid a $2.5 million fine plus $3.8 million in other costs for 60000 vans ( Source [nytimes.com]). The investigation into VW's manipulation is about roughly 500000 cars.

      So, while I agree that these manipulations are despicable and beyond stupid, an $18 billion fine is not likely at all, and other automakers probably don't want to ro

    • In October 2012 I bought a new car. it was a close decision between the VW Jetta TDI and Ford Fiesta. The slightly better highway mileage on the Jetta was the deciding factor for me.

      Ford probably lost a sale because of this deception.

      If it makes you feel any better, basically none of the Ford Ecoboost vehicles are coming anywhere near delivering their rated MPG.

  • everywhere, all the time.
  • It's not improbably that the issue (for drivers/owners) will be resolved by a software update that prioritizes emissions compliance at the cost of horsepower.

    Does anyone have a link that describes how the testing operation works or some technical details on what is being tested and how?
  • I hope ... (Score:5, Funny)

    by PPH ( 736903 ) on Sunday September 20, 2015 @07:08PM (#50563479)

    ... Volkswagen slaps the EPA with an $18 Billion DMCA suit for reverse engineering their software.

    Digging through several layers of links:

    EPA and CARB uncovered the defeat device software after independent analysis by researchers at West Virginia University,

    So it looks like WVU might have to bite the bullet on this one and the EPA will get off scott free. Sorry to all of you students who were hoping for your degree. After the school shuts down, maybe you can get jobs mining coal.

  • by Jim Sadler ( 3430529 ) on Sunday September 20, 2015 @07:12PM (#50563505)
    I would assume that numerous nations as well as buyers could file suit. We must not allow any company to profit by wrong doing. The fines should be several times the profits made from such a violation.
    • Re: (Score:2, Informative)

      by FranTaylor ( 164577 )

      I would assume that numerous nations

      why would you assume this? USA has the most stringent diesel emissions requirements on the planet, these cars are probably perfectly legal in other parts of the world.

  • by gzuckier ( 1155781 ) on Monday September 21, 2015 @08:00PM (#50570807)
    They've just wound up and kicked their most loyal customer base in the nuts as hard as they can.
    VW diesel owners are unswervingly loyal and unswervingly proud of their purchase and the VW brand, and unanimously proud of doing the right thing ecologically, so this is like finding their wife committing adultery with their dog.

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