Everything You Need to Know about the VW Diesel-Emissions Scandal

January 7, 2017January 7, 2017 mrbangastang

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General Motors and Toyota had their massive scandals. Now it’s Volkswagen’s turn. The company, which owns 70 percent of the U.S. passenger-car diesel market, is in major trouble for cheating on diesel-emissions tests. After years of promoting “Clean Diesel” as an alternative to hybrid and electric vehicles—the company even marched on Washington with a squadron of Audi TDI models—Volkswagen is stewing in its own toxic vapors. Here’s our handy guide to what’s happening.

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What happened?

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Volkswagen installed emissions software on more than a half-million diesel cars in the U.S.—and roughly 10.5 million more worldwide—that allows them to sense the unique parameters of an emissions drive cycle set by the Environmental Protection Agency. According to the EPA and the California Air Resources Board, who were tipped off by researchers in 2014, these so-called “defeat devices” detect steering, throttle, and other inputs used in the test to switch between two distinct operating modes.

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In the test mode, the cars are fully compliant with all federal emissions levels. But when driving normally, the computer switches to a separate mode—significantly changing the fuel pressure, injection timing, exhaust-gas recirculation, and, in models with AdBlue, the amount of urea fluid sprayed into the exhaust. While this mode likely delivers higher mileage and power, it also permits heavier nitrogen-oxide emissions (NOx)—a smog-forming pollutant linked to lung cancer—up to 40 times higher than the federal limit. That doesn’t mean every TDI is pumping 40 times as much NOx as it should. Some cars may emit just a few times over the limit, depending on driving style and load.

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Which cars are affected? Will my car pass state inspection?

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The following Volkswagen, Audi, and Porsche diesel models have been cited by the EPA for emissions violations. There is no recall, and the cars pass all state inspections, at least for now. Remember, VW has admitted to violating federal emissions laws, and as such, it’s neither a state nor a safety issue. However, if Volkswagen does issue a recall, some states (particularly California and some that follow Partial Zero Emissions Vehicle standards) may prevent owners from renewing their registration if they don’t complete the fix.

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2009–2015 Volkswagen Jetta 2.0L TDI

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2010–2015 Volkswagen Golf 2.0L TDI

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2010–2015 Audi A3 2.0L TDI

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2012–2015 Volkswagen Beetle 2.0L TDI

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2012–2015 Volkswagen Passat 2.0L TDI

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2009–2015 Audi Q7 3.0L V-6 TDI

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2009–2016 Volkswagen Touareg 3.0L V-6 TDI

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2013–2016 Porsche Cayenne Diesel 3.0L V-6

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2014–2016 Audi A6 3.0L V-6 TDI

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2014–2016 Audi A7 3.0L V-6 TDI

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2014–2016 Audi A8/A8L 3.0L V-6 TDI

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2014–2016 Audi Q5 3.0L V-6 TDI

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What diesels can’t I buy?

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Volkswagen, Audi, and Porsche dealers can’t sell any new diesels. Additional certified pre-owned diesels are also under stop-sale orders. The following cars cover models and model years that go beyond those cited by the EPA, which has not ordered VW to halt sales. This list of banned diesels comes directly from VW corporate, although more models could be added. Other 2016 diesel models scheduled to debut, such as the 2016 Passat TDI, will not be offered anymore. Volkswagen has since committed to electric cars, and it’s possible the company will not sell a TDI diesel in the U.S. ever again.

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2013–2016 Volkswagen Touareg TDI

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2013–2015 Audi Q7 TDI

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2014–2016 Audi A6 TDI

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2014–2016 Audi A7 TDI

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2014–2016 Audi A8 and A8L TDI

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2014–2015 Audi Q5 TDI

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2014–2016 Porsche Cayenne Diesel

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2015 Volkswagen Jetta TDI

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2015 Volkswagen Golf TDI

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2015 Audi A3 TDI

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2015 Volkswagen Beetle TDI

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2015 Volkswagen Passat TDI

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What’s Volkswagen doing for customers?

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For 2.0-liter Volkswagen and Audi TDI models:
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-U.S. District Court Judge Charles Breyer approved the final $ 14.7 billion settlement on October 25, after which Volkswagen will start mailing notifications to all current affected owners and lessees of 2.0-liter cars informing them of the $ 10 billion buyback program. Judge Breyer had approved the preliminary settlement for the same amount on July 26, 2016. TDI owners who purchased their cars before September 17, 2015, can sell their cars back to Volkswagen for between $ 12,500 and $ 44,000, depending on model, age, trim, and region. TDI lessees will receive a cash value between $ 2600 and $ 4900. Owners and lessees who sold their cars or quit their leases before June 28, 2016, are also eligible. The buyback process started in November 2016. Official details and a VIN lookup are here. Exact payouts for all affected models can be found here.

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Through October 18, 340,000 owners and lessees have sent in registration forms indicating they want the company to buy back their cars under the government-negotiated compensation agreement. That’s nearly three-quarters of all 475,000 Volkswagen and Audi models with 2.0-liter diesel engines currently registered on U.S. roads.

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Owners who do not sell their cars back to Volkswagen will receive between $ 5100 and $ 10,000 to compensate for diminished resale value, plus a free emissions fix (see full details here). All owners and lessees of 2.0-liter TDI models will have up to May 2018 to decide their options. The eligibility dates correspond to the day immediately before the EPA first announced the violations and the day the EPA announced its preliminary settlement with the Department of Justice and the Federal Trade Commission.

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For 3.0-liter Volkswagen and Audi TDI and Porsche diesel models:
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-As of December 21, 2016, Volkswagen reached a second settlement with the roughly 83,000 owners and lessees of 3.0-liter diesel models. Buyback prices have not been announced, but they will be set using NADA Used Car Guide Clean Retail values as of November 2015 and adjusted for options, mileage, and the region the vehicle was registered in as of that month. The 2016 diesel models will be repurchased at 12.9 percent above prices for equivalent 2015 models. Owners and lessees will also be reimbursed for state and local taxes. The registration deadline is March 31, 2019. Owners and lessees will get the same payment (adjusted for mileage) regardless of when they register.

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Owners and lessees who refuse the buyback will be offered a similar cash payment as 2.0-liter owners who elect to keep their cars. These numbers have not been finalized. Fixes will differ depending on the vehicle; see more details below.

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Expired incentive programs:

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As part of its Customer Goodwill package, Volkswagen offered $ 1000 cash to every owner of a 2.0-liter TDI named in the EPA’s first violation notice: a $ 500 prepaid Visa card to spend on anything and another $ 500 cash card valid only at Volkswagen dealerships (to use toward another car, service, or lots of VW hats). They also could get free 24-hour roadside assistance for the next three years. The deadline to register for that program ended April 30. The same offer was extended to owners of 3.0-liter diesel models, who had until July 31. Audi, Porsche, and VW TDI owners who took delivery after November 8 were not eligible (full rules here). Current owners of any VW model were also able to get a $ 2000 cash rebate toward a new car, although this incentive may continue to vary or expire as time progresses. Dealers also have “discretionary” cash they can use to sweeten deals (and they’re getting guaranteed kickbacks for some models). Basically, if Volkswagen is on your shopping list, now’s the time to haggle like a pro.

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When will my car be fixed?

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For 2.0-liter Volkswagen and Audi TDI models:

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As of January 6, 2017, Volkswagen announced a complete fix for 2015 TDI models with the third-generation engine. This will involve installing a second NOx sensor and a new or replacement diesel-oxidation catalyst. About 70,000 cars are affected. It is unclear, at this point, if this fix is final or just an interim repair. There are three generations of the 2.0-liter turbo-diesel four-cylinder, and all will require different fixes (from simple software updates to complete, and potentially performance-crippling, hardware retrofits).

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By the end of 2017, we should know whether VW can start fixing cars with the first and second generation engines. Emissions modifications, if approved by the EPA and the California Air Resources Board (CARB), will be staggered in stages. For older, 2009–2014 TDI versions of the Golf, Jetta, Jetta SportWagen, Beetle, and Audi A3 models, VW has until January 27, 2017 to submit its proposal. The 2012–2014 Passat TDI is due by March 3, 2017.

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For 3.0-liter Volkswagen and Audi TDI and Porsche diesel models:

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There are two versions of the 3.0-liter turbo-diesel V-6 that require different modifications. While the Generation 1 engines in the 2009–2012 Audi Q7 and Volkswagen Touareg cannot be made fully compliant with EPA regulations, VW will attempt to make them partially compliant. The rest of the Generation 2 engines will be under a formal recall to make complete repairs, which most likely will be a software update. On those models, Audi said on November 23, 2015, that it would update the software and “resubmit” its emissions applications after the EPA found undocumented “auxiliary emission control devices” that were allowing excessive levels of NOx.

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Don’t all automakers tailor their cars to ace the EPA test cycle? Why single out VW?

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Automakers optimize powertrains for each second of the EPA’s dynamometer tests (Federal Test Procedure 75, the one VW’s computers detect, runs for 1370 seconds). They have to, because they’re required to self-certify every model on sale. The EPA verifies roughly 15 percent of those tests each year. In rare cases, automakers grossly overstate fuel economy (as Ford and Kia did) and can take advantage of loopholes in the certification process.

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Yet these standardized tests, as flawed as they may be in comparison to real-world driving, are critical. Performed correctly, they’re at least an accurate method to assess legal compliance and provide a fair comparison for consumers. Right now, there’s no indication that automakers program their cars to run in a wildly different fashion on the road, even as the EPA and the German government attempt to prove otherwise. Volkswagen explicitly did, and that’s why it’s getting hammered.

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What are selective catalytic reduction and urea injection?

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Diesel fuel is carbon rich and close in composition to home heating oil. As such, it’s inherently dirty and sooty when burned. While heavy-duty diesel pickups, vans, trucks, and other commercial vehicles follow looser environmental standards, light-duty vehicles have it tough—and nowhere is it tougher to certify a diesel car or truck than in the U.S. In order to trap particulates and curb nitrogen oxide in practically all new diesel engines, selective catalytic reduction (SCR) and urea injection must be used.

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A three-way catalytic converter in gasoline vehicles treats exhaust gas by both oxidizing (adding oxygen to convert carbon monoxide and other hydrocarbons to carbon dioxide and water) and reducing (removing oxygen to convert nitrogen oxide to nitrogen and water). But diesel engines burn so lean that they require separate oxidation and reduction catalysts. After diesel exhaust passes through the oxidation catalyst and a particulate filter, diesel exhaust fluid (DEF, branded by VW as AdBlue) is injected into the stream before entering the reduction catalyst. DEF is a precise mixture of one-third urea and two-thirds deionized water and must be refilled (typically at manufacturer-recommended oil-change intervals) from a separate tank.

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If this sounds complex and expensive, that’s because it is. And very likely, that’s why VW chose not to install SCR and urea injection on most of its TDI models.

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What’s going to happen to Volkswagen?

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On January 4, 2016, the U.S. Department of Justice first sued Volkswagen on behalf of the EPA. Volkswagen will now pay $ 14.7 billion to settle with three federal agencies suing the automaker for its excessive diesel emissions, the highest ever paid by a company for violations under the Clean Air Act. The Environmental Protection Agency, the Federal Trade Commission, and the Department of Justice announced the partial settlement on June 28, 2016. Aside from the $ 10 billion buyback program, another $ 2.7 billion will fund future state-level projects that reduce nitrogen-oxide emissions under the EPA’s Diesel Emissions Reduction Act, which are federal grants marked to replace old diesel engines and for retrofit kits for alternative-fuel powertrains and other similar vehicle hardware.

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Volkswagen must buy back 85 percent of all cars by June 2019, or else it must pay even more to fund such projects. The automaker also must spend $ 2 billion over the next 10 years to invest in green energy and electric cars, including paying for new public charging stations and public-education programs.

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Under the latest settlement with 3.0-liter diesels, Volkswagen will also be required to pay an additional $ 225 million toward projects that reduce NOx emissions. California will receive $ 41 million of that, and CARB wrote into the settlement some very specific requirements for the sale of electric vehicles.

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A Canadian settlement, which keeps to terms that are comparable to the U.S. settlement finalized in October, will cover about 105,000 vehicles there and potentially cost the automaker the equivalent of U.S. $ 1.6 billion. As in the United States, Canadian owners will be eligible to sell their vehicle back at an agreed-upon price or opt to fix their vehicle and receive a payment. And under a tentative consumer settlement in Canada, Volkswagen and Audi Canada will pay out the equivalent of U.S. $ 11.2 million.

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Additional civil penalties, a criminal settlement, and further state-level fines have not been determined but could add billions more. Volkswagen had originally set aside more than $ 7 billion to cover recall-related costs.

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Since news of the first violation broke on September 18, 2015, more than a quarter of the company’s market cap has been wiped out with its nosediving stock price through June 28, 2016, and the company has abandoned its goal of becoming the world’s largest automaker by 2018. Volkswagen is not even concerned with its U.S. sales numbers until this problem is resolved, according to chairman Herbert Diess. The company has posted consecutive U.S. monthly sales losses since November.

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CEO Matthias Müller—who said the company didn’t lie but faces a “technical problem“—has now ordered a complete reorganization that will see 30 battery-electric vehicles introduced across its 12 divisions by 2025. It inevitably will lead to firings, model cuts across its 340 variants, and other corporate changes. So far, though, even seemingly frivolous divisions like Bugatti aren’t getting axed. Former CEO Martin Winterkorn, who resigned in September, reportedly received a memo regarding the diesel problem in May 2014. He has not confirmed whether he actually read it.

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All right, I’d like some more free money. How can I sue?

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There are already a couple hundred lawsuits alleging economic harm against VW’s now infamous “Clean Diesel” marketing campaign and the half-million cars under EPA violation. None have yet been consolidated before the Judicial Panel on Multidistrict Litigation. For the time being, Hagens-Berman, a huge firm that squeezed $ 1.1 billion from Toyota and intends to sue General Motors for $ 10 billion, has a class-action lawsuit ready and waiting.

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What are TDI owners actually doing?

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As Greenpeace and other environmental groups lambaste VW, the obligatory news articles profiling angry TDI drivers have popped up. Granted, there are some people genuinely upset with VW for misleading them about their car’s emissions levels. But as we see it, the majority of TDI buyers are knowledgeable enthusiasts in love with sky-high fuel economy, torque, durability, and low running costs. Some really frugal types convert their TDIs to run on refined vegetable oil or biodiesel. These people are die-hards.

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If any fix Volkswagen proposes ends up hampering performance—be it increased fuel consumption or a loss of power—many TDI owners may very well ignore a recall. It’s a tricky legal situation, as neither the EPA nor the National Highway Traffic Safety Administration can force individual owners to update their cars. Several bills in Congress have proposed banning registration renewals for car owners who don’t complete recalls, but they’re a long way from becoming law. For now, most TDI owners are continuing to putter about, despite a considerable drop in resale values. With more time, we’ll have a fuller picture.

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This story was originally published on November 13, 2015; it is being constantly updated to reflect the latest developments in the VW diesel-emissions scandal.

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