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Transportation Businesses

German Automakers Formed a Secret Cartel In the '90s To Collude On Diesel Emissions, Says Report (theverge.com) 195

An anonymous reader quotes a report from The Verge: Last week, Der Spiegel published an explosive report alleging that the major German automakers formed a secret cartel in the 1990s to collude on diesel emissions. These companies, including Volkswagen, Audi, BMW, Porsche, and Daimler, met in secret working groups to discuss "the technology, costs, suppliers, and even the exhaust gas purification of its diesel vehicles," the German weekly reported. The meetings were disclosed to German competition officials in letters from VW and Daimler and viewed by Der Spiegel. The secret meetings "laid the basis" for the 2015 diesel emission cheating scandal, in which VW was caught installing secret software in more than half a million vehicles sold in the US that it used to fool exhaust emissions tests. The admission of cheating ultimately cost the automaker tens of billions of dollars in fines and legal fees, making it one of the most expensive corporate scandals in history.

Years earlier, VW participated in dozens of secret meetings with its competitors, involving over 200 employees in up to 60 working groups, on how to meet increasingly tough emissions criteria in diesel vehicles. The automakers may have colluded to fix prices of a diesel emission treatment called AdBlue through these working groups, Der Spiegel says. Specifically, VW (which owns Porsche and Audi), Daimler (which owns Mercedes-Benz and Smart), and BMW allegedly agreed to use AdBlue tanks that were too small. AdBlue is a liquid solution used to counteract a vehicle's emissions.

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German Automakers Formed a Secret Cartel In the '90s To Collude On Diesel Emissions, Says Report

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  • by Anonymous Coward

    ...when ignorant politicians and regulators set emission goals that are apparently impossible to reach with current technology or far too expensive to include in a consumer vehicle.

    • by lazarus ( 2879 ) on Tuesday July 25, 2017 @09:41AM (#54873815) Journal

      I'm not passing judgment on their actions one way or another, but the dynamics of this are interesting. In a nutshell:

      • German car companies have historically made very good profits on diesel vehicles
      • They have been able to differentiate themselves from their American and Japanese rivals with the technology
      • They needed to find ways to overcome the limitations placed on them by new regulations if they wanted to continue to realize the revenue
      • They agreed to work together on this because all of them had a lot to lose
      • The first technology used was a "regeneration" system where every so often a CR (Common Rail) diesel would inject additional fuel into the exhaust and then incinerate it using very high temps. This would turn soot into ash. Pro: No extra tank needed for AdBlue. Con: This "filter" had to be replaced at great expense after it got full (about 150k-200k miles on a small car). It was also a very expensive system (about $5000 to replace if it failed)
      • The second technology they used was AdBlue. This is an older system that injects urea into the exhaust which has the effect of encapsulating the fine particles preventing them from floating away in the atmosphere. Pro: Cheap to produce. Better fuel efficiency because you didn't have to use fuel to meet emissions. Con: You needed a giant tank to hold the urea and it had to be refilled regularly.

      Or they could just take a bath on profits and stop selling diesel vehicles. Which VW did for three years while they sorted this out (2006 - 2009). Every diesel auto manufacturer tried both systems. Everyone wanted the regen system to work. But it was pretty terrible -- people didn't understand it and there were a lot of complaints about the smell. There were even class action lawsuits against Dodge for the regen system they installed on their pickups so German vehicles were not the only ones.

      AdBlue seemed like the more obvious way to go, but the large tank required that the vehicle's fuel tank would have to be smaller, and they would have to give up things like independent rear suspension (there was just no room for it). To overcome these issues they would have had to create larger vehicles which would have lowered fuel economy (and increased emissions ironically) and ultimately alienated their target market.

      The point is that every option was a compromise and they had a lot to lose. So they cheated. And got caught. There is just no way to make diesel work as cleanly as it needs to and frankly, there is just no need for it anymore. Gasoline engines have come a long way in the interim and electric vehicle costs will be at parity in just a few years (according to Bloomberg).

      Goodbye diesel. I will miss you, but your time has come.

      • by MightyYar ( 622222 ) on Tuesday July 25, 2017 @10:11AM (#54874027)

        There is even more to diesel than just the German car companies. The kind of crude that Europe gets is very high-quality and can be fed right into a fractional distillation facility. That's very economical, but also limits your choices in what comes out - you get whatever proportion of products happened to be in the crude. Usually this means quite a bit of diesel. As a result, diesel tends to be priced pretty well since there is plenty of supply. In North America, the crude is terrible - it needs to be "cracked" with catalysts into smaller chains to produce the desired product mix. This is expensive and complex, but the upshot is that once you've built these multi-billion-dollar facilities, you can tweak the mix quite a bit. If the market price for diesel is high, you can make more diesel. If it's gasoline you want, just change the recipe a bit. In North America, diesel tends to cost more, reflecting its higher energy (and carbon!) content per unit volume and therefore larger proportion of crude required to make it.

        If Europe gives up on diesel, they will need to spend billions to build new or to retrofit refineries, or else take a hit and export the diesel. I'm sure the oil companies and governments would rather not. "Clean diesel" was very alluring to everyone - economical cars for consumers, high profits for car makers, lower capital costs for oil companies, and no fights over refinery construction for governments. Environmentalists were excited over the false claims as well.

        • by lazarus ( 2879 ) on Tuesday July 25, 2017 @10:26AM (#54874137) Journal

          You bring up an excellent point which I did not address at all. Thank you.

          Diesel lubricity regulations (HFRR spec) is much higher in Europe (and Canada) than it is in the USA. Combine that with the "occasional" mistake (oops, I put a bit of regular gas in my diesel), and the Common Rail engine design which requires a high-pressure fuel pump (HPFP) generating something above 10,000 psi to the injectors and which is lubricated and cooled by the diesel fuel itself, and you have a recipe for disaster.

          The NHTSA investigated VW for this exact problem. When the HPFPs started going on their CR engines the cost to the consumer was $10,000 to fix it (because once the HPFP eats its own guts it contaminates the entire fuel system). Everything had to be replaced. VW just always claimed that the problem was that the consumer put gasoline in their car and would refuse to fix it. And the car may have in fact had gasoline in it, but it may have been contaminated at the fueling station, not the fault of anything that the consumer did.

          What a mess. Hundreds of pages of analysis here [tdiclub.com].

          • by Viol8 ( 599362 )

            A small amount of petrol mixed in with the diesel in a CR engine won't actually do it any harm so long as it only happens the once or twice. Its when the fuel is majority petrol that the problems start.

        • by llZENll ( 545605 )

          Hopefully they will not spend billions on retrofitting refineries and instead move everything to electric. Seems to be the path since nearly every auto manufacturer has electric in the pipeline and many only electric a few years out...

          • Yeah, I guess the timing for this diesel mess is very poor. Had it been discovered 10 years later maybe electrics would be a drop-in replacement.

        • by AmiMoJo ( 196126 )

          If Europe gives up on diesel, they will need to spend billions to build new or to retrofit refineries, or else take a hit and export the diesel.

          Europe is moving away from oil as a fuel in general. Countries that can see that coming are pushing harder for it, with announced cut-off dates for the sale of combustion engine vehicles (outside of specialist applications).

          It's a shame German car manufacturers put so much effort into diesel instead of hybrids and pure EVs. I guess they didn't have the vision that some Japanese manufacturers and Tesla did.

        • by thegarbz ( 1787294 ) on Tuesday July 25, 2017 @03:03PM (#54876427)

          The kind of crude that Europe gets is very high-quality and can be fed right into a fractional distillation facility.

          There is no "kind of crude that Europe gets". The economics of oil are highly dependent for each refinery. There are refineries that setup to take only local crudes, and there are refineries setup to take the nastiest crap on the market, and they'll get it from anywhere because it's cheap. The type of refineries are very heavily dependent on the consumer market. The largest refinery in Europe has a fantastic upgrading capacity and ability to run the nastiest shit you can think of, the second largest next door is 2 distillation towers and an ancient cat cracker struggling to keep on spec for bunker oil. It's a complete mixed bag.

          As a result, diesel tends to be priced pretty well since there is plenty of supply.

          The retail price difference between petrol and diesel has far more to do with taxes than supply and demand. The absolute cost of fuels even more so. Mind you saying diesel is priced pretty well should be qualified for an American news site. Priced well in this case means it only costs triple what the USA pay. The price split is very similar. Average diesel price in Chicago is 1c above gasoline right now, average diesel price in Antwerp is only 2c below gasoline.

          If the market price for diesel is high, you can make more diesel. If it's gasoline you want, just change the recipe a bit.

          That's really not the case at all. Well it is a bit, but the amount of handles you have are very limited. What you do have a handle on is the removal of impurities, but the general mix is hard to alter as the refineries' units are designed to produce an optimum output. I.e. if you decide you don't want to produce as much gasoline as diesel tomorrow and buy the appropriate crude to do so, what you're actually saying is I don't want to run the expensive equipment I bought to it's full utilisation and therefore don't want to make as much money. That's one of the great things about a completely fungible feedstock and product, it will always sell and the sensible option is almost universally to optimise refineries for max throughput regardless of what the market is doing. I briefly worked at a refinery in Australia that wasn't able to sell diesel locally since it lacked the ability to meet the sulphur targets with its feedstock. It was cheaper to run that refinery and export 100% of it's diesel to Asia than it was to buy a feedstock that allowed it to meet the sulphur spec, and at the time Australia was hungry for diesel. (Quite disappointing to see a ship full of diesel leave for Asia passing a ship full of diesel coming from Asia both operated by the same company, but the cost / benefit made that the most profitable option).

          If Europe gives up on diesel, they will need to spend billions to build new or to retrofit refineries

          To be clear Europe IS giving up on diesel, at least for the consumer market. In my city alone there has been a 90% drop in the number of registered diesel vehicles in the past 10 years. Major cities are implementing bans or have implemented them already. However this doesn't interest refiners much anyway for several reasons: They need to spend billions to retrofit in order to meet new jet standards, increasing emissions standards, flaring standards, they have continuously spent on meeting the ever changing diesel standards, and the next big one coming up: fuel oil standards. Some of the coking refineries need to upgrade as power-plants shut down, others as the iron and aluminium industry shut down.

          Basically what I'm saying is investment is continuous and ongoing (even now with the oil price where it is), so changing consumer demand won't impact the industry on the whole much.

          • Thanks. One of the great parts about Slashdot is that when you get corrected, it's likely to be by someone who actually knows what they are talking about :)

            • You're welcome, but I won't begin to proclaim to know it all :-) There are some things in this industry that really do your head in, like having a 3rd party terminal take multiple oil shipments of different grades and mix them together before loading them back on a ship and sending them to you so that the oil doesn't bump the units as hard during a crude change.

      • by Anonymous Coward on Tuesday July 25, 2017 @10:55AM (#54874393)

        I don't know where you got that from, but VW did not stop selling diesel vehicles for three years. That would be economic suicide for a major car producer.

        I also don't share your conclusion. Diesel is only 'dirtier' if you only care about NOx. All of the really nasty stuff (ultra-fine particulate, volatile organic compounds, carbon monoxide) is produced in larger quantities by petrol engines and the gap is getting wider. Scrutiny may be increasing and NOx emissions may be much more in focus than they were in the past, but diesel will continue to be the most economic means of propulsion for larger cars, vabs and trucks for quite some time and I don't see the market share of diesel cars going below 40% anytime soon. Manufacturers still have to meet their CO2 goals and consumers who drive a lot will still want to use less and cheaper fuel. Diesel isn't dead until internal combustion is.

        • Maybe they stopped selling diesels in the USA. But not in Europe. I bought one here around that time.

        • by amorsen ( 7485 )

          When it comes to particulates, the gap is getting narrower. Petrol engines were basically particulate free for quite a long period, since the invention of microcontroller-managed engines.

          The new ultra-lean burning engines are unfortunately emitting particulates in such amounts that they will likely need filters. Which could bring the whole AdBlue scandal back.

      • It does nothing for the latter. You still need some other method to get rid of the soot.

    • ...when ignorant politicians and regulators set emission goals that are apparently impossible to reach with current technology

      They are entirely reachable with current technology. That's what AdBlue systems do. The companies didn't want to use those systems, so they cheated instead.

  • by 140Mandak262Jamuna ( 970587 ) on Tuesday July 25, 2017 @09:16AM (#54873651) Journal
    I remember posting about it back when VW diesel cheating was making rounds.

    If it is any other country/company we could blame it on "low level team cheating" or "midlevel managers were scared to tell the higher level managers the truth" or "simple incompetence and cowboy attitude towards laws".

    But in Germany, in VW, these stories do not add up. Given the documentation they do and the way they follow the orders, the cheating was done with full knowledge and compliance of everyone all the way to the top. VW buys our software. I see their acceptance testing reports and how much they test, document and demand explanations. Not only they document, they refer to the docs and use them all the time.

    No way the VW diesel cheating was the work of some rogue team in some isolated division. It went all the way up the company, now it appears, it went all the way up the entire damned industry.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      It went all the way up the company, now it appears, it went all the way up the entire damned industry.

      The real question then, becomes what else is going on? We already know that the lead in gasoline was a scandal for decades, the whole business with tobacco, the petrocompanies lying about climate reports, and even New Coke.

      I suggest we start the executions.

    • by XXongo ( 3986865 ) on Tuesday July 25, 2017 @09:38AM (#54873795) Homepage

      I remember posting about it back when VW diesel cheating was making rounds.

      The article is mixing up two different things, and pretending that they are connected. Der Spiegel says that the automakers met in secret to discuss “the technology, costs, suppliers, and even the exhaust gas purification of its diesel vehicles." Then, separately, VW implemented a cheating system to dodge the emissions testing, with other automakers doing similar things, although to lesser degrees.

      But the article implies that these two things are connected. Documentation, however, pretty well shows that the original plan of VW was to buy a license for the Mercedes "blueTec" technology, but they abandoned this plan when the Chief Operating Officer changed, who favored using their own developed technology (TDI). TDI didn't work as well as expected, necessitating the cheat.

      Der Spiegel attempts to imply that the collusions were to agree on how to cheat, but from the evidence, it looks like the "collusion" was exactly the opposite of what Der Spiegel implies: the "collusion" was to collaborate on technology to avoid producing emissions, but when that collaboration fell apart, they shifted to cheating.

      New York Times article here: https://www.nytimes.com/2015/1... [nytimes.com]
      Wall Street Journal article here: https://www.wsj.com/articles/v... [wsj.com]

      • Not only that:

        "Volkswagen, Audi, BMW, Porsche, and Daimler"

        That's three companies in a random order. Volkswagen, Audi, and Porsche are all under the Volkswagen Group.

        You'd think Der Spiegel would know this, but it makes it look more sinister with a longer list.

      • by Solandri ( 704621 ) on Tuesday July 25, 2017 @12:19PM (#54875207)
        Yeah, the DEF (diesel exhaust fluid) technology using urea to reduce diesel NOx emissions is patented by Mercedes. So naturally the other diesel vehicle manufacturers would have to "collude" with Mercedes to license it.

        The curious thing though is that the DEF usage rates are all over the place. I first noticed this when I had to rent a diesel Ram 3500 for some towing, and it used way more DEF than my personal vehicle (VW Touraeg). So out of curiosity, I looked into the DEF consumption rate for other 3.0 liter diesel engines.
        • VW Touareg - 5.3 gallon tank, 5 gallons DEF per 10k miles claimed, approx 5.5 gallons per 10k miles observed
        • Ram 3500 - 8 gallon tank, 11.4 gal per 10k miles observed. Though it got about 65% the MPG since it was a 6.2 liter engine, vs 3.0 liters for all the other vehicles. Normalizing for fuel consumption, it was about 7.4 gallons per 10k miles observed.
        • Jeep - 8 gallon tank, 8 gallons per 10k miles claimed
        • BMW - 6.1 gallon tank, 6.5 gallons per 10k miles claimed
        • Mercedes - 6.8 gallon tank, 4.4 gallons per 10k miles claimed

        Notice that VW's and Mercedes' DEF use rates are lower than Dodge, Jeep, and BMW. And the two automakers thus far accused of cheating on diesel emissions are... VW and Mercedes.

    • Of course the upper management knew. It was probably their idea.
  • by sjbe ( 173966 ) on Tuesday July 25, 2017 @09:22AM (#54873687)

    AdBlue is a liquid solution used to counteract a vehicle's emissions.

    AdBlue is a solution of urea [wikipedia.org] and water generically referred to as diesel exhaust fluid [wikipedia.org]. It lowers NOx emissions in diesel vehicles.

  • Comment removed based on user account deletion
    • For a while here in Missouri they had the Gateway Clean Air program for car emissions testing. You didn't even have to go to some specific company/building to get tested they could actually set up on the side of a road, often an on-ramp to a major interstate, a camera at license plates and a set of sensors for recording actual emissions and viola, if you were up for renewal on registration you'd get a certificate of passing (or failing) in the mail not too long after. Whether this is an accurate or cost
    • That would be pretty dumb, but that's not what they do. VW programmed the engine to detect an emissions test and change to a lower-performance mode that would produce less emissions. On the road the vehicle would revert to its normal high-performance mode.

    • Except for the VW defeat device in question being the software sensing when the vehicle was in test conditions and de-tuning the engine in order to pass the test, you are absolutely correct.

      No wait, you are wrong. And that's how VW got away with it for years until an independent research effort sought to confirm the emissions rates under actual road conditions, and couldn't. In fact, they found the emissions were many times worse when on a real road then when the same car was going the same speed on a dyn

  • by Harald Paulsen ( 621759 ) on Tuesday July 25, 2017 @09:41AM (#54873819) Homepage

    "The meetings were disclosed to German competition officials in letters from VW and Daimler"

    So, not really a secret cartel meeting then? More a cooperation between industry leaders trying to find a solution.

    Kind of like how many industries have a forum where competitors can exchange experiences and work on some things together?

  • I am already seeing anti west types calling this a conspiracy created by tesla and the us govt to destroy the german auto industry. Yup.
  • The bean counters have struck again.
  • It's like the journalist is trying to shove ordinary industry co-operation (or "collusion") into some kind of a conspiracy template. Even the /. abstract starts out with emissions something-or-other, sounding like it's about emissions cheating like WV etc., but then it comes down to allegations of price-fixing of diesel exhaust fluid and BMW building their diesel cars' tanks for it too small.

    Not exactly a scandal here, not an environmental "we're all gonna die because of the free market solution being collu

  • I'm going to stick with my original theory that the conspiracy is larger than what we've seen so far: http://geekcrumbs.com/2015/10/... [geekcrumbs.com]

  • Isn't the German motto if you aren't cheating you aren't trying hard enough? Und ja, ich spreche Deutsch.

  • cartel (plural cartels)

    A group of businesses or nations that collude to limit competition within an industry or market.
    A combination of political groups (notably parties) for common action.
    A written letter of defiance or challenge.
    An official agreement concerning the exchange of prisoners.
    (nautical) A ship used to negotiate with an enemy in time of war, and to exchange prisoners.

    ..as opposed to the word I'm suggesting should have been used:

    cabal (plural cabals)

    A usually secret exclusive organization of individuals gathered for a political purpose.
    A secret plot.
    An identifiable group within the tradition of Discordianism.

    Please, Slashdot editors, could you be bothered to check these things before you post them? Thanks.

    **********

    In any event: I for one am not at all surprised to hear this, and in fact I was expecting it. Furthermore I expect that in the days to come we're going to find that every automaker on the planet has been doing something similar. Sadly, the days of the internal combustion engine need to come to an end, if we're going to clean thing

  • ...when they do bad things, they still keep meticulous records about it.

  • I'm not quite sure where the "Adblue tank too small" can come in. My (German) car's Adblue tank holds enough for at least 11000 miles (18000km) of driving, which is the farthest I have driven it between services, where it is filled up. A work colleague's non-German car (with higher fuel consumption, it's an SUV) still runs about 10k miles between Adblue fill-ups. Meanwhile Adblue is very cheap if you go to a service station that caters for goods vehicles. Of course you can pay a huge premium for some dealer

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