Dear Volkswagen: you are probably doomed (but not because of diesel) | Hacker News Reader

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

blog.salathe.com

20 pointsmarcelsalathe59 comments

> 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.

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.

where did you see the public outrage?

> 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.

> lot's of energy and materials used during production

regular cars also cost energy to produce. so unless there is a huge discrepancy it still means a relative reduction in emissions when compared to gas-guzzling ones

> electricity mostly produced by coal and nuclear power plants

that is a separate problem which is also supposed to get tackled over time. just because B hasn't been completely solved yet doesn't mean we can't start working on A which will depend on B to realize its full potential.

Not to mention that autonomous vehicles might very well become a third prong attacking the problem by making electric, autonomous fleets not owned by individuals a possible scenario.

Since cars wouldn't have to be individually-owned this might also drive down the overall fleet size and thus reduce the overall energy invested in vehicle production.

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

2008 financial crisis - collateralized debt obligations. Incomparably bigger.

That's overly simplistic. CDOs aren't inherently bad by themselves, and there are multiple types with a variety of underlying assets. It was the failure of the rating agencies to assess risk appropriately that made it into a crisis. There's been no proof of collusion among the banks to create a crisis, no specific people that criminal charges could be brought against, unlike in the case of VW.

By saying CDOs I meant their ratings. And while, as always, nothing can be proven on Wall Street, you won't tell me that giving mortgages to unemployed people and then selling it as CDOs (or even CDOs squared!) is good.

I made no claims to good or bad, of course the crash wasn't good, but the chain of proof isn't there for the financial crisis in the same way. I'm simply talking about provable fraud that needed to take place up the chain at VW, which, when you're talking about an engineered machine with clear trails of who's done what and multiple decision points over iterations of industrial components, it's much easier to follow to the source and prosecute accordingly.

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.

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.

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.

> dirty diesel kills many people each year (about 9,000 in London alone)

Here is a paper I found related to that claim:

"Understanding the Health Impacts of Air Pollution in London"

https://www.london.gov.uk/sites/default/files/HIAinLondon_Ki...

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

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.

> 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.

To have a massive loss in resale value, it would need to affect the car reliability.

Government action against car owners is unlikely for the very reason you list (i.e. it would only affect primarily the victim), and the yearly emission checks your car need to pass are way less restrictive than for new cars.

I see what you are saying and agree that it is a possible scenario. But it does not match to the reality around me or even the trends like european fastest growing car segment being SUV and Crossovers. Pollution on its own merit and not simply as a tax artefact is just not something that people look for and the article fails to give any sort of metric to prove I'm wrong.

>To have a massive loss in resale value, it would need to affect the car reliability.

No, it doesn't. To have a massive loss in resale value, other people contributing to the car sale/purchasing market need to be willing to pay less for that car. A car that now pollutes like a semi, will have worse fuel economy or handling after a fix, and has a tarnished image is likely to have a massive loss in resale value, when compared to others who do not have those values. And you better believe their competitors will take advantage of this problem and widen the gap even further.

> 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.

Well I agree with you but the market does not. Actually you would not need tax reduction if it did.

> 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.

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?

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

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.

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.

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.

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.

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.

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!

>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.

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.

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

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.

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

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.

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.

> 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

You're saying that only some of them were equipped with defeat devices? They were all equipped to mislead the public and deceive regulators, giving their cars an edge as a premium car with better handling, more reliability and gas economy. Most people compare multiple cars before making a decision, and the faked stats are clear grounds for adverse action against VW. I certainly wouldn't want to be stuck with a VW now.

No, I'm saying that it is just speculation that they will be fined for the 11 million vehicles.

I got the 11 million number from the VW statement: "In its new statement, VW gave more details, admitting that "discrepancies" related to vehicles with Type EA 189 engines and involved some 11 million vehicles worldwide." (http://www.nbcnews.com/business/autos/volkswagen-11-million-...)

$5k fine/devaluation per car is potentially an underestimation as well, we simply don't know, I used that as a ceiling for the entire value of the company, which at a cursory pass, doesn't seem unreasonable.

Having discrepancies in 11 million vehicles doesn't mean being fined for 11 million vehicles

While I can't speak for the rest of the world, the US EPA can fine the manufacturer $37.5k per car with such "discrepancies": "Whether the $7.3 billion set aside is enough to cover VW's costs from the scandal remains to be seen. According to EPA rules, VW could be fined up to $37,500 for each vehicle not in compliance with emissions regulations, or a total of around $18 billion. California regulators could issue their own fines." "The crisis began Friday when the U.S. Environmental Protection Agency accused Volkswagen of installing sophisticated software on nearly 500,000 U.S. vehicles to manipulate emissions tests."

So for the 500k cars sold in the US, they can be fined $37.5k/car, that ads up to $18.75B. And that's just the US costs, assuming absolutely no adverse action for the other 10,500,000 cars that are affected worldwide for these "discrepancies". Do you think there will be 0 costs for the other 10,950,000 affected cars?

I don't know for what and how much will be fined.

You're so sure that they will be fined a lot for all the cars.

Who is the one making assumptions? You, not me.

The likelyhood of the EPA wanting to make an example out of VW and fining them to the maximum allowed level isn't outlandish, but I guess we will have to see, nothing has been decided yet.

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.

A reflash won't be the end of it - if they don't retrofit SCR (and modify the EGR system for increased usage) they are going to have every owner of a detuned car suing them.

> First, it only affects diesel engines.

According to VW, it affects 11 million cars with type EA 189 engines: "In its new statement, VW gave more details, admitting that "discrepancies" related to vehicles with Type EA 189 engines and involved some 11 million vehicles worldwide." (http://www.nbcnews.com/business/autos/volkswagen-11-million-...).

>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.

No, that would be fraud. Care to cite examples of such "common industry practice"?

> Third, Volkswagen is a group

That won't make them less open to litigation.

> Fourth, it is common that such investigations go on for years without end.

Yes, investigation and litigation will take years, but effects will be felt suddenly, such as VW cars not being able to get re-registered and driven on roads since they don't comply with emission standards, causing economic hardship and potentially larger lawsuits against VW. I think juries will be rather sympathetic to a few testimonies to that effect.

> 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.

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

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

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.

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.

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.

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?

what a bunch of american Fud.

american propaganda.

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

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

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".

Reply on news.ycombinator.com