Dear Volkswagen: you are probably doomed (but not because of diesel)

http://blog.salathe.com/dear-volkswagen-you-are-probably-doomed-but-not-because-of-diesel

by marcelsalathe • 11 years ago

20 59 11 years ago

blog.salathe.com

suryon• 11 years ago

SW as a product is hard. No matter how good your backend or frontend if the whole package does not fit perfectly together.

The germans are the most boring "innovators".

infinotize2• 11 years ago

Many of your top executives will go to jail.

So naiive. I would be very very surprised if anyone goes to jail over this. VW is going to take a huge hit but doomed? Puhleeze... companies have survived worse.

mschuster91• 11 years ago

This case could drag the entire automobile industry except Tesla down. It's been widely suspected (but, likely due to corruption, ignored) that emissions and fuel consumption tests are outright manipulated.

Now the regulators have to act in face of the public outrage, and I'm going all in that we're going to have some pretty nasty surprises being uncovered.

return02• 11 years ago

where did you see the public outrage?

lispm2• 11 years ago

It's been widely suspected (but, likely due to corruption, ignored) that emissions and fuel consumption tests are outright manipulated.

This is widely discussed here in Germany for some years now, but the government chose not to act. A form of corruption and a fear of loss of jobs -> voters.

When it comes to electric vehicles, I'm not so sure they make that much more sense environmentally: lot's of energy and materials used during production, new large scale infrastructure needed, electricity mostly produced by coal and nuclear power plants, exotic materials used for the battery, etc etc.

Here in Germany the number of electric cars is tiny. We are seeing lots of electric bicycles and public transport is starting to invest in electric busses on a larger scale.

What could have quicker some positive environmental impact and would be relatively simple, would be to have more cars use natural gas, since a lot of cars could be using it.

aioprisan14• 11 years ago

Are you saying that there's been clear industrial fraud on this scale before and a company survived this? Care to cite some examples?

hebdo4• 11 years ago

2008 financial crisis - collateralized debt obligations. Incomparably bigger.

infinotize2• 11 years ago

GM's deliberate cover up of of faulty ignition modules which resulted in dozens of deaths. (The mistake wasn't deliberate, but the systematic sweeping under the rug and ignoring the known issue definitely was)

That and banks get away with worse all the time, even ignoring 2008 which is hard to pin on a single actor. You have LIBOR scandals, HSBC violating sanctions with Iran - clear deliberate legal violations that result in fines and maybe some new regs but that's it. If you extend the criteria into gross negligence there are tons of horrible examples - BP spilling a gazillion barrels of crude into the gulf. Executives are forced to pull the golden ripcord a little early. The companies keep ticking.

Maarten88• 11 years ago

This is written from a US centric viewpoint by someone who sees VW as a niche brand for environmentally aware people. But we are talking about the largest car manufacturer in the world. In Europe VW is a mainstream car, people buy them because they are economical and well built. I think most people in EU see VW less as an especially "Green" brand so the reputation damage in their home markets might be less severe.

And WV reacted like Lance Armstrong caught with doping: like cycling I'm assuming all the other manufacturers are doing the same. Maybe they were less aggressive or maybe they were just were not as successful with it, therefore they were not caught, yet.

DanBC2• 11 years ago

The mainstream nature of diesel in EU makes the problem worse; dirty diesel kills many people each year (about 9,000 in London alone) so VW have killed (and contributed to the deaths of) many people over the years this fraud has happened. This has cost the various health services billions of Euro.

davidiach• 11 years ago

The author is actually from Switzerland, see http://blog.salathe.com/europes-technological-irrelevance-ti...

gutnor3• 11 years ago

Also, the main assumption is that the consumer have been duped. Most of the people that I know that buy VW car ( which is a lot of them considering it is one of the most popular brand where I come from ) do it for reliability, consumption, price. i.e. running cost of the vehicule. The rest is also interested by performance, look, ...

Pollution is only important because tax level of the car is directly related to the emission of the car. IMO that is highly unlikely that government will take action against car owner like retroactive taxation, so as far as customers are concerned, nothing has changed.

As an illustration, I remember as a kid when VW turbo diesel became really performant. Since Diesel is much cheaper, diesel car became really popular. People were claiming that they did it for the environment as at the time, diesel was thought to be cleaner. A decade or more later, diesel was recognised as being more polluting but that did not change at all the diesel use in the country at all. ( Let's be realistic for a moment - Prius type car are popular but they would have stormed the market if pollution was a top concern for people. Instead, we got SUV taking the European market by storm - SUV !!! )

So yeah that will be rough time for VW, but the analysis in the document does not seem realistic at all.

aioprisan14• 11 years ago

Also, the main assumption is that the consumer have been duped.

That main assumption is correct. When your car resale value tanks and you'll have to sell your car at a massive loss, you've been duped. When you've paid a massive premium for a more rapidly depreciating asset due to willfully deceptive marketing, you've been duped. When you can't re-register your car because it doesn't comply with emission standards in your state and you lose your economic livelihood, you've been duped.

DanBC2• 11 years ago

Pollution is only important because tax level of the car is directly related to the emission of the car.

That ignores the thousands killed by pollution each year, and the increased spending of health services directly caused by pollution.

planetjones2• 11 years ago

So the solution is to hire software engineers, abandon the motor car and build autonomous vehicles.

I may be wrong but I just don't see self driving vehicles being the norm in the next 30 years. If I were VW I wouldn't abandon the traditional motorcar just yet.

melling• 11 years ago

By 2045 we won't have figured out a way to have autonomous cars? If we can't solve the problem by then I'd guess that we'll make the problem easier to solve by adding smart roads.

planetjones2• 11 years ago

Smart roads? In the UK the councils are struggling to maintain the existing roads. there is a huge difference from what would be possible with unlimited resources and what will actually happen in the real world.

sajaki92• 11 years ago

american propaganda.

aioprisan14• 11 years ago

The author isn't even American. What are you talking about?

pavornyoh• 11 years ago

@Sajaki9, did you even read the article? How is this an American propaganda?

sajaki92• 11 years ago

what a bunch of american Fud.

lispm2• 11 years ago

and I thought hacking the diesel engine is coal, I mean, cool:

http://www.huffingtonpost.com/2014/07/06/rolling-coal-photos...

hebdo4• 11 years ago

Volkswagen will certainly take a hit, but it is not going to collapse - the German government will bail it any time it's necessary. An ordinary German loves and cares about the national car-making industry, and quite rightfully so.

aioprisan14• 11 years ago

VW stock plunged 40%, they've set aside billions but that won't be enough for the lawsuits and massive fines that will get levied. Let's do some math. VW has a $50B cap now. No one is going to buy VW cars for a while, so the bleeding will continue. With 11 million cars affected and an average price of $20-30k, even a $5k reimbursement or fine or fixes per car that's involved, that's $55B that's gone up in smoke. Do you think that I, as a VW owner, will be able to get a good car resale value, even after a fix that will likely leave my car less powerful or get worse fuel economy? Those are your only two options. The amount of willful deception and fraud that needed to take place at all levels of this company's management will make a great study for what not to do for decades to come. This company is done, the only option is for the German government to step in and bankroll a large bailout package.

Oletros4• 11 years ago

No one is going to buy VW cars for a while,

I highly doubt this

With 11 million cars affected and an average price of $20-30k, even a $5k reimbursement or fine or fixes per car that's involved

This is supposing that they will be fined for the 11 million vehicles

hebdo4• 11 years ago

You overestimate the damage. First, it only affects diesel engines.

Second, I'm not sure that 25% of the sticker price is an adequate compensation. After all what needs to be done is these cars need to be permanently reprogrammed, and as you say it means power reduction and worse fuel economy. But by how much? It has been a few years now that we (as customers) have to deal with the common industry practice of advertising unrealistic fuel consumption statistics, so I'd say to some extent more car-makers are similarly boned here.

Third, Volkswagen is a group, and owns quite a lot of brands: Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda, Volkswagen, Ducati, MAN, Scania, Neoplan and Volkswagen Commercial Vehicles.

Fourth, it is common that such investigations go on for years without end. Microsoft f.eg. did not pay a single penny for the IE antitrust case.

frungee• 11 years ago

Second, you haven't just duped millions of people into buying a product they would never have bought had they known the truth

This one made me laugh the most. All the potential buyers couldnt care less.

return02• 11 years ago

If americans cared about their car emissions america would be a different country by now. People trust VW cars for their safety mainly, and this is not a safety issue. Watch for VW sales in the next months. Autonomous cars may be good for countries with good infrastructure, but they would be dangerous for many european cities. In any case, now is a good time to buy VW stocks.

aioprisan14• 11 years ago

That's great that you can speak for all people and why they trust VW cars. Do you still think they trust VW now?

Programmatic2• 11 years ago

I own a TDI myself and this article seems a bit hasty in its logic. I have mixed feelings at present, but the author's feelings don't seem to be well thought out:

As someone who just recently bought at VW diesel - my first VW ever, and almost certainly my last - I can of course only speak for myself. But everyone I've talked to feels pretty much exactly as I do. And if after some more independent analysis, the numbers come back and they are even close to what we currently read in the press (10-40x more pollutants than advertised), I will sell the car immediately even if it is at an almost total loss.

I agree not to reward Volkswagen's fraudulent behavior, but if everyone is made whole as a result of this saga I am not sure that I have an issue with Volkswagen moving forward. I certainly would not sell my car. The only actions that make sense through the author's lens of wanting to be environmentally conscious would be to fix the emissions or crush it. Selling it appears to just move the problem to someone else.

There is one, and only one reason why I would consider buying a VW in the future: massively beat Tesla at their game. Abandon all fuel-powered development today and invest every single cent into long-range electric cars, and build the electric charging infrastructure throughout Europe and the US (and the rest of the world). In addition, the development of the self-driving car has to be your top priority. The car of the future has no human driver in it, and of course you know this (anyone at VW who doesn't, let go of them immediately).

The author believes that an entity engaged in a scandal for shady software cheats should engage in making software that once again has the ability to impact people other than their owners in order to make amends for their current software cheat?

I can't say as I agree. I believe the amends that they need to make are: 1) fix the emissions issues in all current and future cars, 2) make the environment whole to the fullest extent possible. I'm not sure what options are available for this, but fines and funding third party research would fit the bill if nothing else, 3) make the owners of the cars whole: If the emissions fix alters the car's attributes negatively I want to be compensated for the delta from the car I actually bought.

The new CEO, Matthias Müller from Porsche, thinks autonomous vehicles are an unjustifiable hype. I wish I was kidding, but I'm not: the VW board thought that the best person to replace the guy who oversaw the cheating software scandal (or was unaware of it) is a guy who seems to have even less appreciation of the ongoing software revolution.

Finally at the end of the article we get to some actual meat!! That is unfortunate, and would be worth putting at the top of the article and expanding on.

marcelsalathe• 11 years ago

Appreciate your thoughts. A few comments:

- I have thought about destroying / recycling the car. I am not sure this would be the most meaningful action. At this point, I simply want to go to the seller and return a product that is not as advertised.

- I certainly agree that there are some intermediary steps that need to be taken with the existing pipeline. I simply wanted to express that the future has to be about batteries & software, and radically so given the current scandal.

- Adding a TLDR to the article now.

Programmatic2• 11 years ago

Appreciate it, the tl;dr focuses it quite a bit! Being able to return the product would be the simplest way for the buyer to be made whole, and would be incredible of VW to offer. I'd personally wait to see what the emissions fix looks like before exercising it if they offered it.

dingaling• 11 years ago

I groaned at this point of his diatribe:

massively beat Tesla at their game.

The Nissan Leaf plug-in electric car has sold 180k globally, three times as many as all Tesla's models combined.

Even the plug-in variant of the Prius has sold more than all Teslas.

So what exactly is Tesla's game? Playing third-fiddle?

jpkeisala• 11 years ago

Doomed? Like all other corporations that had been caught on false advertising and frauds?

Havoc2• 11 years ago

Seems a little over-dramatic.

Remember the GM switch story? Also had active deception for over a decade & and worse people actually died (169) as a result. That cost them just over a billion.

Even if the American regulator wants to make an example of them I doubt it'll exceed 10bn. As for jail: I doubt anyone will end up in jail let alone "many" of their executives.

aioprisan14• 11 years ago

That was not willful deception, along the lines of "we have the best ignition system in the world!" and people bought those cars because of specific features that were fraudulently and willfully marketed as such. How many more people will now get cancer due to the carcinogens released by a 40x increase in pollution from VW cars? It's out there to affect all of us now, thanks VW!

Havoc2• 11 years ago

That was not willful deception

No? They realised a fault in their cars were actively killing people and opted to not do anything about it. Thats closer to murder than wilful deception really. As for the deception part - they silently redesigned the part but kept the old part number so that it would fly under the radar.

Neither VW nor GM's behaviour is acceptable. Just pointing out that various car manufacturers have a history of sketchy behaviour & I'd expect the fine for this instance to be broadly in line with previous examples.

cancer due to the carcinogens released by a 40x increase in pollution

I don't think N2O is significantly carcinogenic. The primary risk is greenhouse effect risk as far as I understand. As I understand it the other pollutants all made it below the thresholds without software sorcery, though frankly who knows at this stage.

vlehto2• 11 years ago

The weird part of this is that if you accept higher NOx emission, you can cut fuel usage by ~20%. Since matter does not disappear, this also has to cut CO2 emissions by similar amount.

CO2 has global warming potential for at least hundred year scale. NOx has chemical half life of decade or two.

WHO isn't really sure how much NOx you have to emit before it's dangerous. Heating is however more culpable right now than vehicles.

I can't decide if Volkswagen is shitty thief or hero. It seems to be that the NOx fuss might be overblown and the costs in CO2 emissions could be far worse. Or not. Could someone enlighten me?

selimthegrim2• 11 years ago

Exactly my thoughts. I wish VW had had the balls to use this to lead a discussion about lowering the cost of SCR on vehicles.

That and the complete lack of regulation of particulate emissions on the supposed alternative GDI engines really galls me as a 2014 Jetta TDI owner

vlehto2• 11 years ago

Yes it seems weird. "We use this NO2 as indicator of particulate, as it's too difficult to measure directly.."

Frankly I would not be surprised if Exxon, BP and Shell would have lobbied these emission regulations. After all they get to sell 20% more diesel.

But again I might be completely wrong.

3pt14159• 11 years ago

What should happen, is that the claimants should tally up the damages and if it is greater than cash on hand, Volkswagen should issue shares to make up the difference. If that does not make up the difference, then the claimants should get a pro-rata portion of the company stock and all original share holders should lose their shares.

The reason for this is simple: the idea of a corporation is to shield investors from personal liability - NOT - to shield them from loss due to fraud.

What will actually happen is that the German government will meet with their trading partners around the world and pressure them into limiting the damage in order to protect German interests / pension funds.

mcphage• 11 years ago

Frankly, it's hard to see how you can come out of this alive.

If you can't see how VW will going to come out of this alive, then I'd stay away from prognosticating. Also: clean off your glasses.

Dear Volkswagen: you are probably doomed (but not because of diesel)

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