Later On

A blog written for those whose interests more or less match mine.

The VW fraud may reshape the auto industry

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Very interesting article in The Economist:

Herbie, a Volkswagen Beetle with a mind of its own in a series of Disney films launched in the 1960s, had its share of misadventures. But things had a way of ending up happily for both the car and its passengers. The German carmaker’s more recent attempts to give its cars the gift of thought have things headed in an altogether grimmer direction. Its use of hidden software to deceive American regulators measuring emissions from diesel-engined cars has plunged VW into crisis. And as the scandal provokes further investigations it seems likely to throw into question a wider range of claims about emissions and fuel efficiency. It could thus be a blow to much of the industry—one that might be large enough to reshape it.

The damage to VW, the world’s biggest carmaker, is cataclysmic. The company’s shares have collapsed by a third since its chicanery surfaced (see chart 1). It faces billions of dollars in fines and other financial penalties. Lawsuits will be flying their way to its headquarters in Wolfsburg. Its strategy for the crucial American market is ruined; its reputation is in tatters. Its boss, Martin Winterkorn—who in 2009, when the misleading “defeat” software made its first appearance, was also directly responsible for the company’s R&D—resigned on September 23rd.Chart 1The company’s home country is in shock. Germany’s environment minister, Barbara Hendricks, spoke for many when she declared herself “more than astonished”—though the Greens, an opposition party, say that in its response to a parliamentary question earlier this year the government admitted that it knew manipulating emissions data was technically possible. Mixed in with this is some embarrassment that, as with the scandals over FIFA and the World Cup, it is falling to America to enforce rules that Europeans have been breaking.

There is also a certain apprehension. Sigmar Gabriel, the vice-chancellor and economics minister, said on September 21st that he hoped the export brand of Germany as a whole would not be tarnished. Germany’s economic strength rests in large part on the idea that anything stamped “Made in Germany” will offer a high level of reliability, trustworthiness and engineering prowess. Much of that reputation rests on the broad shoulders and sturdy tyres of the car industry, which directly or indirectly employs one in seven of the country’s workers; and with a stable of marques that includes Porsche and Audi, VW is that industry’s leader. Industrialists fret that consumers worldwide could exact reputational Sippenhaft—collective punishment, but literally “kin liability”—on all German engineering.

As well as being a threat to Germany’s export earnings, the scandal also menaces the brainchild of one of its most eminent engineers, Rudolf Diesel—at least as far as its future in cars is concerned. Diesel engines use fuel more efficiently than engines with spark plugs, and better efficiency reduces both drivers’ expenses and carbon-dioxide emissions. Those advantages have endeared diesel engines to thrifty Europeans with green governments; none too popular elsewhere in the world, they power half of Europe’s cars (see chart 2).Chart 2

Unfortunately, the benefits come with costs. Diesel cars’ efficiency comes from burning their fuel at a higher temperature, and that means they turn more of the nitrogen in the air they use for burning into various oxides of nitrogen, collectively known as NOx. This does not have global climate effects on the same scale as those of carbon dioxide, which is the most important long-lived greenhouse gas. But it has far worse local effects, generating smogs and damaging plants and lungs. To make matters worse, the catalytic technologies used to deal with the NOx emitted by petrol engines are not well suited for use with diesels, requiring engine makers to deploy more complex and expensive alternatives. That is not a big problem for large engines like those of trucks and ships. But it is for small engines like those of cars.

In America NOx standards are more demanding than they are in Europe. Mazda and Honda, both accomplished producers of diesel engines, have had trouble complying with them. It now appears that VW, which has put a lot of effort into persuading Americans that diesels can be clean and green, would also have failed to comply if it had not cheated. The campaign to convince Americans of the merits of diesel may thus well be at an end. And if it turns out that under real-life conditions many diesels also break Europe’s less stringent NOx standards then the future of diesel cars worldwide will be bleak.

Nothing seems right

The scandal broke on September 18th, . . .

Continue reading. Lots more, good stuff.

Later in the article:

. . . It is possible that some companies are using software trickery to cheat on Europe’s tests on fuel efficiency. But as Nick Molden of Emission Analytics, a consulting firm in Britain, argues, the European testing regime is so out of date and open to abuse that carmakers do not have to bother with such subtlety. The companies test their own vehicles under the auspices of independent testing organisations certified by national governments. But these organisations are commercial enterprises that compete for business. Although obliged to put the vehicles through standard activity cycles both in a laboratory and on a test track—neither of which is remotely realistic—they are aware that their ability to “optimise” the test procedures is a way to win clients. In practice this means doing everything possible to make the test cars perform far better than the versions punters drive off the forecourt.

The cars that are tested have generally been modified to be as frugal as possible. Things that add weight, such as sound systems, are left out. Drag is reduced by removing wing mirrors and taping up cracks between panels. Special lubricants make the engines run more smoothly. Low-resistance tyres are overinflated with special mixtures of gas. Alternators are disconnected, which gives more power to the wheels but guarantees a flat battery in the end. The cars may be run in too high a gear, and conducting tests at the highest allowed ambient temperature—another efficiency booster—is commonplace.

Stable for days

Worst of all, though, is that once this charade has produced a claim as to the car’s efficiency, no one checks whether it is true or not. In America, too, carmakers are responsible for their own tests. But there the EPA goes on to acquire vehicles at random for testing at a later date, to see if the cars on sale to the public live up to the claims. If the numbers do not match up substantial fines can follow. In 2014 Hyundai-Kia was fined $300m for misstating fuel-economy figures. Europe has no such system for punishing those who transgress. As a result more than half Europe’s claimed gains in efficiency since 2008 have been “purely theoretical”, says T&E. And the industry as a whole has developed a gaming attitude to tests and regulations that it should take seriously. As Drew Kodjak of the ICCT observes, VW’s activities in America are part of a pattern of behaviour that the “European system created”. . .

Written by LeisureGuy

25 September 2015 at 12:31 pm

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