Volkswagen comes clean on emissions cheating

German automaker Volkswagen has revealed that as many as 11 million of its diesel-powered cars worldwide could be affected by software designed to dupe emissions tests. The software, which only switches on during emissions tests, leaves the cars emitting up to 40 times the legal pollution limits. Judy Woodruff speaks to John Stoll of The Wall Street Journal.

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    The scandal, and the fallout, over Volkswagen's cheating of emissions standards grew today. Just last week, the EPA alleged there was deceitful software in half-a-million cars. Today, Volkswagen raised that number significantly and tried to restore customer trust.

    Volkswagen revealed that as many as 11 million diesel-powered cars worldwide could be affected by software that was designed to cheat on emissions tests. Most of those cars are thought to be in Europe, the automaker's primary market. The revelation caused Volkswagen stock to plummet for a second day. The company lost almost 19 percent of its stock value, or $17 billion, Monday. The price plunged another 20 percent during trading in Frankfurt today.

    The CEO of Volkswagen America, Michael Horn, gave a frank apology last night at an event in Brooklyn.

  • MICHAEL HORN, CEO, Volkswagen America:

    So, let's be clear about this. Our company was dishonest. We have totally screwed up.


    A year-long investigation by the U.S. Environmental Protection Agency uncovered the software. It switches on a car's emissions controls when a smog test is taking place. But the controls turn off again when the test is over, leaving cars emitting up to 40 times the legal pollution limits.

    The software is installed in Volkswagen Jettas, Beetles, Golfs and Passats and Audi A3s sold in the U.S. since 2008. The Justice Department has reportedly opened a criminal investigation of the automaker. Investigations are also being launched in France, Germany and South Korea.

    For more, we turn to John Stoll. He is Detroit bureau and global automotive editor for The Wall Street Journal. He has been following developments in this story closely.

    John Stoll, welcome.

    You have been covering this story closely. And you have covered other auto industry problems. Where does this one rank?

  • JOHN STOLL, The Wall Street Journal:

    It's up there.

    I mean, this is one, because of the volume of vehicles we're talking about and the sort of transatlantic implications — 11 million is not a small number when you talk about the U.S. car park. About 85 million vehicles are sold a year. So, yes, that's spread over several years of production, but that's a large sum of cars. And Volkswagen right now is the biggest automaker in the world, as of the first half of 2015, huge aspiration, and obviously, in Germany, they're a big employer.


    Explain exactly what Volkswagen did to these cars to make them game this emissions test.



    From what we understand — and a lot of this was explained in the story that you had — is the software is known as sort of a masking device. It works when the compliance testing is undergone, when that's ongoing. The emissions information says what the test needs it to say, so that it passes regulatory tests.

    And then in real-world condition, it emits far more of the harmful emissions such as NOx into the air than is legally allowed. And so it's pretty sophisticated software that can detect when it's being tested. And, you know, I'm sure there's going to be forensics of who exactly designed the software and authorized it and whether or not this is more widespread.

    But, at the moment, the EPA has been pretty explicit on how this thing works.


    Well, you raise the question. This was something that was deliberately done by someone. I mean, who had to know? How high up the company is it thought that this went?


    You know, I have talked to a lot of people about that. It's hard to believe that — well, I would say that in order to pull this off, the circle could be relatively tight.

    You know, the pressure is high when it comes to meeting engineering standards. Diesel is a very important part of Volkswagen's play, not only in Europe, but in the United States. And they needed to get these cars back on the market about six or seven years ago in order to keep its momentum going.

    In order to meet that objective, one could imagine that the circle would remain pretty tight and need-to-know basis. I have talked with executives who were at the company at the time who have since left, said they knew nothing about this and would imagine that this originated in Germany, but that's speculation at this point.

    The interesting thing — and this is probably the silver lining and the bright light at the end of the tunnel — is Volkswagen is committing to full transparency. And we learned last year in the GM ignition crisis what that really could mean, is a full, hundreds and hundreds pages of self-revelation, usually done by an outside law firm or investigator, that will probably answer more of these questions, who knew what when, who authorized it and why. But that could be several weeks, if not months in coming.


    Well, we're talking about potentially significant amount of damage to the environment. We said, what, 40 times the pollution level is what these cars were emitting.


    As much as that. That's right.

    And this is a very harmful substance. And these are very harmful emissions. There's no doubt. And I think particularly the people who buy Volkswagen diesels — and this is generalizations — but they are not only looking for a fuel economy bump, they're not only looking for a way to save fuel consumption and money. They are buying into the promise that they are reducing emissions, that these are safer for the environment, that the promise of — quote, unquote — "clean diesel emissions" is actually what they advertise it to be.

    And that's what makes this so egregious, at least on the surface. A lot of people are saying, hey, this ranks up there with some of the most egregious corporate scandals in recent history because of the length of time that the deception went on. And they went up very far in terms of regulators of saying they didn't know it was going on. They didn't know why there was a disparity between real-world emissions and testing.

    And then only about a month ago, within the last month, they have come clean on this issue.


    John Stoll, any evidence? What are people saying about whether this could have extended to other diesel manufacturers?


    Thus far, we haven't heard from everyone in the diesel market. But thus far, a lot of automakers have come out and said they have done their forensics. They have asked the questions of the people internally, the engineers that they need to, and they're pretty confident that they are not employing the same software.

    I will give you a quick for instance. I called General Motors today. They have a lot of diesels on the market in Europe. And they wanted to popularize a smaller car diesel in the United States. They say they have already looked into this and they are 100 percent confident that what they have displayed to regulators is the truth is actually the truth.

    So, I think we will see more of this roll on, but you better believe that there's a lot of automakers, regulators and outside researchers looking into that exact question. And I think this isn't the last of that story that we have heard, but maybe the worst case of it.


    Well, it sounds like there's certainly more to be reported on here.

    John Stoll with The Wall Street Journal, thank you.

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