Preliminary findings confirmed suspicion that the VW diesel-cheating scandal occurred because the company’s ambitions in the U.S. collided with air-quality rules that were, and still are, more stringent than Europe’s.
WOLFSBURG, Germany —
The chairman of Volkswagen said Thursday that the decision by employees to cheat on emissions tests was made more than a decade ago, after they realized they could not meet U.S. clean-air standards legally.
Hans-Dieter Potsch, chairman of Volkswagen’s supervisory board, said the cheating took place in a climate of lax ethical standards.
“There was a tolerance for breaking the rules,” Potsch said in Wolfsburg on Thursday during his first lengthy news conference since the company admitted in September that 11 million cars with diesel engines were rigged to fool emissions tests. The fallout from that decision has confronted Volkswagen with “the biggest test” in its history, Potsch said.
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Potsch and Matthias Mueller, chief executive of Volkswagen, presented the results of a continuing inquiry. Although the company is not ready to identify culprits, the preliminary findings confirmed widespread suspicion that the scandal occurred because the company’s ambitions in the U.S. collided with air-quality rules that were, and still are, more stringent than Europe’s.
The company’s new disclosures, along with interviews with industry experts and some former executives, help connect some pieces of a sequence of decisions and events that played out over 10 years. “It proves not to have been a one-time error, but rather a chain of errors that were allowed to happen,” Potsch said.
The wrongdoing began in 2005, Volkswagen said, when the company decided to make diesel cars the focus of its U.S. marketing. Volkswagen saw diesel, which it promoted as offering superior fuel economy and acceleration, as a way to set itself apart from competitors.
In the years that preceded a marketing push that began with the 2009 model year, there was an intense internal debate about what kind of emissions technology to use, according to a former executive who was involved and asked not to be identified.
Some Volkswagen managers pushed a technology called selective catalytic reduction, or SCR. That method uses a urea chemical solution, sold commercially as AdBlue, which neutralizes nitrogen-oxide emissions without a penalty in fuel economy or performance.
Those managers argued that only SCR technology would allow Volkswagen to keep pace with ever stricter limits on emissions of nitrogen oxide, which have been linked to lung ailments.
Some other carmakers, including BMW and Mercedes-Benz, use SCR, which experts say is effective. But it costs more, adds weight to the car and takes up more space than other methods. It is particularly difficult to squeeze such systems into compact cars such as the Golf or Jetta, which are among Volkswagen’s best-selling models in the United States.
In addition, the tank that holds the chemical must be refilled periodically. That creates an inconvenience and expense for customers, especially in the U.S. Until this year, U.S. regulations barred drivers from refilling the tanks themselves. They had to go to a dealer or service station.
“It’s a small chemical factory,” Thomas Schlick, a partner at the German management consultancy Roland Berger, said of SCR systems. “It’s an additional system with no value for the customer.”
Some Volkswagen executives who advocated an SCR system were sidelined or pushed out of the company. Instead, beginning with the 2009 model year, Volkswagen sold cars in the U.S. that had 2-liter diesel motors equipped with so-called lean NOX traps. (NOX is shorthand for nitrogen oxide.) The device sponges up nitrogen-oxide particles and typically costs several hundred dollars less than an SCR system.
The NOX traps do not require a chemical that must be refilled. But they tend to be less reliable at controlling emissions, according to a study published in October by the International Council on Clean Transportation, an environmental group that played a pivotal role in uncovering Volkswagen’s cheating.
In addition, the NOX traps cut fuel economy by up to 4 percent. The penalty in fuel economy suggests another reason Volkswagen employees may have programmed cars to have the emissions controls fully engaged during emissions tests, but dialed back during normal driving. On the open road, some spot checks have found, the Volkswagen diesels could spew more than 40 times the allowable limit of nitrogen oxide.
Volkswagen executives, who had earlier declared their determination to overtake Toyota as the largest carmaker in the world, were eager for any competitive edge.
Volkswagen eventually phased in SCR systems in models sold in the U.S. Larger vehicles such as the Touareg SUV and Audi Q7 had them from the beginning of Volkswagen’s diesel push in 2009. The Passat sedan got an SCR system in 2012.
But the Golf, Jetta and Beetle did not get the chemical systems until 2015, according to documents filed with the Environmental Protection Agency (EPA).
Vehicles with the chemical systems should have been able to pass emission tests without a penalty in fuel economy. Yet, Volkswagen continued to equip those cars with “defeat devices” designed to detect when the cars were being tested and to turn up emissions controls. Apparently, people inside the company were trying to avoid the need to refill the cars with the urea chemical solutions in between regular service checks. So the company programmed the cars to use less urea than needed to contain nitrogen-oxide emissions, except when the car was being tested.
Volkswagen is in talks with U.S. regulators about how to make about 500,000 diesel cars it sold there comply with clean-air rules. Mueller said Thursday that he was optimistic a technical solution would be announced in the coming days.
While Volkswagen has figured out how to resolve the emissions problem in Europe at relatively low cost, the stricter U.S. limits on nitrogen-oxide emissions have made a solution harder to devise.
Volkswagen officials continued Thursday to maintain that the cheating was the work of a relatively small number of people. Officials said nine people had been suspended as a result of the scandal, one more than previously disclosed. But the officials said no names could be disclosed until the evidence was “watertight.”
Mueller and Potsch conceded the deception reflected organizational shortcomings. For example, the people who developed software were the same ones who approved it for use in vehicles. At other companies, it is standard practice for one team to develop components and another to check them for quality. Volkswagen said it would correct those procedures.
Mueller also said he wanted to change the company’s culture so there was better communication among employees and more willingness to discuss problems.
“We don’t need yes men, but managers and engineers who make good arguments,” Mueller said.