Volkswagen just got caught cheating by the U.S. EPA, and the scope of the allegations levied against the German car manufacturer—and the penalties it now faces—are virtually unprecedented. VW is accused of rigging software in its “clean diesel” vehicles to game emissions tests. “Put simply, these cars contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test”, EPA enforcement officer Cynthia Giles explained. The U.S. government can levy fines of up to $37,500 for each vehicle sold that wasn’t in compliance with emissions regulations, and with nearly 500,000 of these diesel vehicles on the road, that could add up to a whopping $18 billion.
But that’s not the only cost of VW’s rule-breaking. As Bloomberg reports, the company’s stock has taken a nosedive in trading today:
Volkswagen AG lost almost a quarter of its market value after it admitted to cheating on U.S. air pollution tests for years, putting pressure on Chief Executive Officer Martin Winterkorn to repair the reputation of the world’s biggest carmaker.
Top supervisory board members will convene on Wednesday, according to two people with knowledge of the plans, who asked not to be named because the meeting is private. Volkswagen plunged as much as 23 percent to 125.40 euros in Frankfurt, wiping out about 15.6 billion euros ($17.6 billion) in market value. The stock closed at 132.2 euros, its lowest in more than three years.
Volkswagen CEO Martin Winterkorn apologized today, saying “I personally am deeply sorry that we have broken the trust of our customers and the public.” VW has moved to stop selling 2015 models of its diesel vehicles, pending an external investigation of the issue.
This isn’t the first time a European automaker has gotten in trouble for dubious approaches to emissions testing, though it’s certainly the most brazen example. We noted last December that Europe’s auto industry was fudging its emission numbers by testing vehicles in very specific (and quite unusual) conditions, using special engine lubricants, tires designed specifically for testing, taped-up panels, stripped-down interiors, and high-temperature conditions in order to boost mileage. The European Commission moved to introduce saner testing standards by September 2017, but the bloc’s auto industry lobbying group pushed back, saying it couldn’t “cannot envisage vehicle testing beginning before 1 January 2020.”
Carmakers bombard consumers with marketing about how “clean” and “eco” their products are, but incidents like VW’s software cheating are a reminder that the auto industry has no abiding love for the green ideals it’s peddling. Volkswagen will pay dearly for its transgression, but you can be sure there are many more companies out there—both inside and out of the auto industry—that are taking advantage of the average consumer’s enjoyment of feeling environmentally friendly, without actually delivering the benefits promised.