Volkswagen CEO Resigns Over Emissions-Cheating Software - InformationWeek

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9/23/2015
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Volkswagen CEO Resigns Over Emissions-Cheating Software

Winterkorn says the company needs new leadership to win back trust.

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Volkswagen AG CEO Martin Winterkorn resigned on Wednesday, a casualty of the growing scandal over the company's use of software designed to cheat on emissions tests in certain cars with diesel engines.

"I am shocked by the events of the past few days," said Winterkorn in a statement. "Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group."

Winterkorn, who survived an attempt to oust him earlier this year, said his resignation would offer the company a fresh start. He said he was stepping down in the interest of the company, without being aware of any personal wrongdoing.

(Image: CEO Martin Winterkorn, Volkswagen)

(Image: CEO Martin Winterkorn, Volkswagen)

On Friday, the US Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) charged Volkswagen AG, Audi AG, and Volkswagen Group of America, with employing software -- a "defeat device" -- deliberately designed to limit engine emissions during regulatory testing in 482,000 US vehicles.

During actual road use, the US model cars in question -- Jetta (2009–2015), Beetle (2009–2015), Audi A3 (2009–2015), Golf (2009–2015), and Passat (2014-2015) -- emitted pollution at 10 to 40 times allowable levels, according to the EPA.

Volkswagen on Tuesday acknowledged that the deceptive software exists in 11 million of its cars worldwide.

The Guardian estimates that, globally, Volkswagen's vehicles could be responsible for the release of an extra 250,000 to a million tons of nitrogen oxides (NOx) into the atmosphere annually, potentially as much as the entire UK's NOx emissions from all of its power stations, vehicles, industry, and agriculture combined.

According to the EPA, NOx emissions contribute to the particulate pollution and have significant health effects, such as the aggravation of respiratory conditions and premature death.

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The EPA has directed Volkswagen to recall affected vehicles for repairs. But it remains to be seen how many owners of affected vehicles will bring their cars in for a fix that's likely to hinder performance.

Volkswagen said it is setting aside €6.5 billion ($7.2 billion) in its third quarter to cover costs arising from the scandal.

That may not be enough. The EPA alone could potentially seek fines of up to $18 billion. But the largest environmental penalty in the US, imposed on Andarko Petroleum Corporation, reached only $5.5 billion.

However, in the wake of Volkswagen's acknowledgement of the issue, regulators around the world have become involved. Authorities in Canada, France, Germany, Italy, Japan, South Korea, and Switzerland have either opened inquiries or expressed their intention to do so. There have also been at least 37 lawsuits filed against Volkswagen since Friday, according to Süddeutsche Zeitung.

With Winterkorn's departure, Volkswagen's stock price has recovered some of the ground it lost. As of midday Wednesday, the company's market capitalization stood at about $67 billion, down from about $86 billion when the emissions deception was revealed.

Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful ... View Full Bio

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Joe Stanganelli
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Joe Stanganelli,
User Rank: Author
9/30/2015 | 8:41:28 PM
Re: VW History
Ultimately, workmanship and marketing are two different things -- but what brand damage you set yourself up for when you promise things that you don't deliver!
vnewman2
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vnewman2,
User Rank: Ninja
9/30/2015 | 12:45:00 PM
Re: Good
@tzubair - I agree with you on a personal level, but I feel society as a whole has terrible long-term memory and it's getting shorter by the minute.  I could easily see an initial downturn in sales plateau after a short time and once everyone starts trying to guess the name of Kimye's new baby they will have long forgotten this mishap and it will be status quo for VW.
tzubair
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tzubair,
User Rank: Ninja
9/29/2015 | 4:07:19 PM
Re: Good
"I often wonder if it might be possible to use solar energy to synthesize alcohol to be used as fuel for autos. As alcohol burns super-clean, the only possible source of pollution will be at the plant, where it can be better controlled than at each individual auto, as it is now"

@Gary: I think a lot of renewable energy sources have been tried and tested when it comes to eco-friendly cars. This includes solar and hydro cars as well. The big question with them is efficiency and sustainibility in the long run when used on a commercial scale. That's where most ideas begin to falter and can't be accepted for commercial testing.
Pablo Valerio
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Pablo Valerio,
User Rank: Ninja
9/28/2015 | 3:39:59 AM
VW History
@Joe, what makes me mad is that I used to like VW a lot. The company history is full of achievements in engineering and traditional German quality/workmanship.

When  I had a car (not anymore since moving to Barcelona) I always had VW cars in different brands/models, and they were always great.

If you have the time read "Thinking Small: The Long, Strange Trip of the Volkswagen Beetle"  by Andrea Hiott. It will give you a detailed history of VW from the times of Ferdinand Porche (who invented the Beetle) and the challenges of the company, plus an interesting view of the advertisement industry in the US.

BTW, both VW and Porche have been under control of the Porche family for several generations.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Author
9/27/2015 | 10:56:28 PM
Re: Good
The problem with a lot of these "greener" cars -- especially all-electric ones -- is that the very manufacture of them, with their more sophisticated materials, winds up creating a bigger carbon footprint than the use of a traditional car would.

Perhaps one day it won't have to be this way, but presently, the only significant environmental impact electric cars have is to move pollution from rich neighborhoods to poor ones.  (See the 2013 IEEE article titled "Unclean at Any Speed.")
Joe Stanganelli
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Joe Stanganelli,
User Rank: Author
9/27/2015 | 10:53:00 PM
Re: Good
@Pablo: I don't know what it is, and I know it's irrational, but there's something about this scandal that makes it more outrageous to me for some reason.  Just the fact of programming the devices specifically for the purpose of cheating regulators seems more problematic to me than traditional data fudging/hiding.
Gary_EL
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Gary_EL,
User Rank: Ninja
9/27/2015 | 8:29:43 PM
Re: Good
All-electrics will only be a novelty until a battery that can be charged in a decent amount of time comes along. Then, a major change in infrastructure will be required to build the titanic electrical charging network that will be needed. And, with two drive-trains, what a nightmare it must be to repair a hybrid!

I often wonder if it might be possible to use solar energy to synthesize alcohol to be used as fuel for autos. As alcohol burns super-clean, the only possible source of pollution will be at the plant, where it can be better controlled than at each individual auto, as it is now
tzubair
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tzubair,
User Rank: Ninja
9/27/2015 | 6:48:46 PM
Re: Good
"I wonder how much damage this will cause to the VW. For me it's bye bye."

@Mak63: I think the biggest damage will come in the form of the brand image being tarnished for ages to come. It will be very hard for VW to recover the prestige and value it once carried. The financial cost of it will continue to occur for a very long time and there's very little they can do.
tzubair
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tzubair,
User Rank: Ninja
9/27/2015 | 6:43:31 PM
Re: Good
"According to the article, countries from Europe, along with South Korea and Canada "have either opened inquiries or expressed their intention to do so."; which is a great thing."

@mak63: Unfortunately, there are still countries who haven't and would probably not do anything about it. They have greater issues at their disposal and envrionment-friendliness isn't one of them. VW might just get away with it's cars there.
tzubair
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tzubair,
User Rank: Ninja
9/27/2015 | 6:41:46 PM
Re: Good
"unfortunately emissions, as tobacco, kill slowly..... otherwise we could be running only electric cars now"

@Pablo: I think this incident will certainly give a boost to the electric and hybrid cars and people will start trusting these more. Let's just hope there's not another scandal that comes to the surface related to those.
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