Volkswagen Admits to Cheating on U.S. Emissions Tests

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Volkswagen AG admitted to systematically cheating U.S. air pollution tests, leaving the automaker vulnerable to billions in fines and possible criminal prosecution.

The company sold diesel versions of Volkswagen and Audi cars with software that turns on full pollution controls only when the car is undergoing official emissions testing.

During normal driving, the cars pollute 10 times to 40 times the legal limits, the Environmental Protection Agency said. EPA called the technology a “defeat device.”

Violations of the Clean Air Act could be referred to the Justice Department for criminal prosecution, the EPA said. The potential financial liability is unclear. The EPA could fine the company $37,500 per vehicle, said Cynthia Giles, the agency’s assistant administrator for enforcement. With 482,000 autos part of the case, the total could be $18 billion. The VW investigation involves model years 2009-2015.

“Using a defeat device in cars to evade clean air standards is illegal and a threat to public health,” Giles said. “EPA is committed to making sure that all automakers play by the same rules.”

Last year Ford Motor Co. was forced to lower mileage estimates and compensate more than 200,000 customers. The Dearborn, Michigan-based company sent out payments ranging from $200 to $1,050. In 2012, an investigation led to Hyundai Motor Co. and Kia Motors Corp. relabeling some of their top-selling U.S. models.

VW ‘Cooperating’

Volkswagen, based in Wolfsburg, Germany, said in a statement it’s cooperating with the investigation and unable to comment further. The EPA and the California Air Resources Board said their investigations are continuing.

The affected models include diesel-powered versions of some of VW’s most popular U.S. cars: the Beetle, the Jetta, the Golf and the Passat. The Audi A3 is also part of the investigation. As recently as July, diesel models accounted for 26 percent of VW brand sales in the U.S., according to a company news release.

Consumer Reports magazine issued a statement on Friday saying it suspended its “recommended” rating of the Jetta and Passat diesel models because of the use of the defeat device. The magazine said it plans to retest the vehicles once a recall repair is completed.

The company’s preferred shares fell 3.2 percent to close at 162.40 euros in Frankfurt.

In a letter to VW Friday, the EPA said the company admitted it had designed and installed software to evade pollution controls after regulators made clear they weren’t going to certify the automakers’ 2016 models.

Surprising Horsepower

Consumers haven’t yet been ordered to return to their dealers for a recall, and it’s safe to keep driving the cars, said Janet McCabe, acting assistant administrator of the agency’s Office of Air and Radiation.

It had been surprising that Volkswagen diesel models were able to get impressive horsepower output and fuel economy performance using less costly pollution control technology than employed in some other automakers’ engines, said Bill Visnic, an independent auto analyst in Weirton, West Virginia.

The software workaround may have enabled the performance without the expected pollution controls, he said.

“You can’t have anything like this that’s intended to game the system,” Visnic said.

Pollution Equipment

It would be very difficult for Volkswagen to add new pollution-control equipment to the existing engines, so the only way to fix this may be to cut horsepower and fuel economy performance to lower the pollution output once the software is eliminated, said Visnic, who has been studying engine design for two decades.

The EPA has been concerned about how well its laboratory tests reflect conditions consumers experience in the real world, amid consumer complaints. The agency announced last July it would overhaul the tests, which involve allowing computers to drive cars on a dynamometer to ensure accurate, repeatable results.

(An earlier version of this article misspelled Volkswagen.)

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