VW thwarted pollution regulations for 7 years

DETROIT -- Volkswagen became the world's top-selling carmaker trumpeting the environmental friendliness, fuel efficiency and high performance of diesel-powered vehicles that met America's tough Clean Air laws.

VW's success story was so good, pollution-control advocates did their own tests, hoping to persuade other countries to enforce the same strict standards.

Instead, they got a foul-smelling surprise: In actual driving, the VWs spewed as much as 40 times more pollution from tailpipes than allowed by the U.S. Environmental Protection Agency.

"We ran the program to show that U.S. diesels are clean," said John German, senior fellow with the International Council on Clean Transportation, the group that blew the whistle on Volkswagen. "Turned out we found a violator."

The EPA and the California Air Resources Board announced the violations Friday, accusing VW of installing software that switches on pollution controls during smog tests, then switches them off again so drivers can enjoy more engine power on the road.

Winterkorn (Martin)

VW got away with this scheme for seven years, and according to the EPA, didn't come clean even when repeatedly confronted with evidence of excessive pollution.

Industry analysts say the company likely was trying to reduce costs and improve performance, to match its marketing.

Instead, VW's stock plunged 17 percent Monday, costing the company $15 billion in market value in a single day.

It outraged customers, turned up the heat on the CEO and could bring up to $18 billion in penalties from the U.S. government alone.

The company stopped selling the vehicles and likely will have to recall nearly 500,000 Jetta, Golf, Beetle and Audi A3 cars dating to the 2009 model year.

CEO Martin Winterkorn promised a company investigation as he apologized Sunday, saying VW had broken the trust of customers and the public. He also pledged to cooperate with government investigations.

U.S. diesel emissions limits, mainly for ozone-causing nitrogen oxide, are more strict than those in Europe.

Removing the chemical requires additional hardware.

Instead, VW used secret software -- an algorithm that detects when cars are being tested on treadmill-like devices called dynamometers and stealthily switches the engines to a cleaner mode.

Because smog tests almost are always done on dynamometers, VW got away with the scheme for seven years, until the "clean transportation" advocates went to West Virginia University, which tests emissions using equipment that fits in car trunks.

WVU tested three cars in real-world conditions -- a 2012 VW Jetta, a 2013 VW Passat and a BMW X5 SUV.

The BMW passed, but the university found significantly higher emissions from the Volkswagens, according to the EPA.

The university and the council reported their findings to the EPA and CARB in May 2014, but VW blamed the problem on technical issues and unexpected conditions.

The automaker even did a recall late last year, without much improvement, the EPA said.

Only when the EPA and CARB refused to approve VW's 2016 diesel models for sale did the company explain what it had done.

"We met with VW on several occasions, and they continued to dispute our data, so we'd return to the lab," recalled CARB spokesman Dave Clegern. "Over time, VW had no other explanations left, and it was our lab staff who actually got VW to admit that there was, in fact, a defeat device."

VW's diesel cars represent just a fourth of its U.S. sales, so the company probably was trying to avoid the cost of more sophisticated pollution controls, because it sells far more diesels in Europe, said Alan Baum, a consultant in Detroit who advises automakers on fuel economy regulations.

"That enabled them to offer the diesel without some of the additional hardware and software in the U.S.," Baum said.

The scheme also gave VWs better mileage, German said.