The Flawed Volkswagen Dieselgate Settlement & How to Fix it

While I typically keep a narrow focus on the content of this blog, that being to obsessively cover the BMW i3 electric car, occasionally I'll post something if I feel it has particular importance to the electric vehicle industry as a whole. Such is the case with this entry. For those of you unfamiliar with the Volkswagen "Clean Diesel" scandal, it basically amounts to the fact that Volkswagen cheated the emission testing in place and flooded the market with highly-polluting vehicles that were improperly called "Clean Diesel".

As a result, the Volkswagen Group was fined a record amount of money and forced to buy back or fix nearly half a million cars in the US which were operating in conflict with US emission laws. As part of the penalty, Volkswagen was ordered to pay a 2 billion dollar penalty, which would be used to fund zero emission infrastructure, and improve access to ZEVs.

On face value, the proposed Dieselgate settlement initially seemed like it might provide the monumental boost to public electric vehicle charging infrastructure that many have been waiting for. The Volkswagen Group has agreed to pay $14.7 billion for intentionally deceiving the public, and selling “Clean Diesel” vehicles that emit up to 40 times the legal limit of certain pollutants. There are three parts to the settlement:

• Buybacks and financial settlements to owners of 466,000 affected vehicles: $10.0 billion

• Compensation for the illegal cars' environmental impact: $2.7 billion

• Fund new infrastructure and access for zero-emission vehicles: $2.0 billion

However, as the October 18th court date approaches at which time U.S. District Judge Charles Breyer is set to decide whether to grant final approval to the settlement, the details of the infrastructure part of the settlement are, to say the least, concerning.

As it stands now, the Volkswagen Group will have little oversight as to how they spend the 2 billion dollars earmarked for infrastructure and improving access to ZEVs. (CARB will be reviewing and approving the California projects and the EPA will be doing the same for the rest of the country) I question why Volkswagen will have ANY discretion as to how the penalty funds are spent, let alone near complete control over it. Volkswagen isn’t in the electric vehicle infrastructure business. In fact, they are barely in the electric vehicle business as it is today. The only OEM that I’d actually trust to do infrastructure implementation properly would be Tesla, because their business model depends on it, and they’ve been doing it very successfully for half a decade already.

What if Volkswagen decides to start their own EV infrastructure company and use the funds to pay their own subsidiary to manufacture and install the equipment? (*EDIT: I've since read the full proposed transcript and I don't believe they could actually do this, so that's one good thing) We could end up with substandard equipment, and a network that has poor customer service, inadequate repairs and outrageous pricing models. Even if they were to do it right, and the company was successful, why should Volkswagen benefit from the penalty? What if they offered free charging for the first couple years so they could put all the competition out of business and then raised the prices to unreasonable levels? Indeed, you could do a lot of damage with 2 billion dollars and this settlement doesn’t provide any safeguards against that in its current form.

A ChargePoint DC Fast charger rapidly filling up my BMW i3s battery

Last week ChargePoint asked the courts to intervene, and Judge Breyer accepted the plea. It’s ChargePoint’s position that the way the settlement is currently constructed, Volkswagen is “solely responsible for every aspect of selecting the National (ZEV) investments…including timing and locations”. Among concerns that Volkswagen isn’t experienced enough in the electric vehicle infrastructure business to have sole discretion over sure a large fund, Chargepoint is also concerned that Volkswagen will have too much say over the future of electric vehicle charging. Since the amount of funds available in the fund is so great, Volkswagen could dictate the fate of many of the existing companies and decelerate advancements, often fostered by fair competition: “If the settling defendants become the sole source for electric vehicle infrastructure, it will stifle innovation in industries designed to support electric vehicle recharging.”

I have to agree with Chargepoint on this issue. I don’t believe it’s in the best interest of the electric vehicle industry to allow Volkswagen to have sole discretion over how to spend these funds.

Personally I’m not rooting for ChargePoint over Car Charging Group, or for EVGo over Greenlots, etc. I believe the market will sort that out, and eventually the stronger networks which provide the best equipment and customer service will emerge as the dominant forces. However, the enormity of this settlement could have the opposite effect, and allow VW to crush the competition before the natural evolution and survival of the fittest has time to take effect. If the stronger companies of today aren’t even allowed to bid on projects funded by this penalty, they could end up dying before they have the chance to flourish and provide the marketplace with superior products and services.

I’d like to see an independent council appointed to oversee the infrastructure fund implementation, so as to not skew the marketplace. There should be appointees from various industry stakeholders, EV advocacy groups, like Plug in America, The Sierra Club, Clean Cities Coalitions, etc. Let the council decide how the money is spent and always offer open, competitive bidding taking in consideration more factors than simply the lowest bid. The council will be much more effective than Volkswagen could ever be, and we'll probably get more robust equipment and better customer service as a result.

Volkswagen should not have near complete control over the money they were fined. They’ve proven beyond any reasonable doubt that they cannot be trusted when it comes to clean air initiatives. There’s too much at stake here. We have an opportunity to really advance the proliferation of electric vehicle charging infrastructure in the US, and provide the industry with a much-needed boost. This settlement should be modified to allow competitive bidding for all projects, to follow a master plan for national electric vehicle DC fast charging, and to add proper oversight and transparency.

VW: Das-eption and the path to Redemption

Volkswagen CEO Martin Winterkorn resigned on Wednesday.

While this blog's primary focus is the BMW i3, I occasionally sprinkle in some featured EV products and discuss topics not necessarily i3-centric, but are instead just general electric vehicle information. In light of the recent revelations that Volkswagen has been deliberately cheating on emissions testing for many years now, I wrote the following article for Green Car Reports.

So far, no other automaker has been caught as VW has - with proof that they purposely installed a "defeat device" on the vehicles so the cars would curb their emissions only during actual emission testing. However it's fair game to speculate if other OEMs may also be exposed as cheaters now that the EPA knows what they have to look for, and how to expose it. It will certainly be interesting to watch this all unfold.

In any event, Volkswagen is going to face huge fines for intentionally violating Federal emission standards and I wanted to offer my thoughts on how I believe some of that money should be used. If we don't use at least a portion of that money to help reverse the damage done by these heavily polluting "clean diesels", I believe we will have missed a great opportunity to improve the quality of air we all breathe.

 How VW Can Atone For Diesel Deception: Electric-Car Advocate's Thoughts

The full impact of Volkswagen's diesel-emission cheating scandal has yet to be realized, but what it has apparently already admitted to doing could result in the largest civil fine ever levied by the Federal government on an automaker. And that's just the beginning.

Besides paying civil penalties, and coping with a spate of criminal actions, and class-action lawsuits, and investigations by multiple levels of government, VW also needs to deal with the 482,000 cars it sold--plus more in limbo at dealers--that clearly do not comply with emission laws.

In real-world use, these vehicles emit 10 to 35 times the allowable legal limit of certain pollutants, so they're not just slightly out of compliance. They will need to be modified to comply, or VW will have to buy them back. And if owners don't like the modified cars, they'll likely have to buy those cars back too.
After all that, VW has to figure out how to regain the trust of the public.

There are lots of aspects to this debacle, and all will undoubtedly be discussed ad nauseam over the coming weeks. But the aspect I find most interesting is how Volkswagen can best right the wrongs it has done. How does paying fines, settling lawsuits, and bringing highly-polluting vehicles into compliance really undo the damage done? It doesn't. All it does is punish Volkswagen. And I believe the public deserves more.

Make no mistake: If VW is guilty as charged, it absolutely deserves to be punished--and severely.

It turns out they aren't as clean as we were told - not nearly, actually.

But I hope the Justice Department also considers what can be done to offset the damage to air quality created by the offending so-called "clean diesels." And I hope VW, separately, does the same. We've seen penalty estimates as high as $18 billion dollars (the maximum allowed of $37,500 per vehicle for intentionally violating the Clean Air Act. I doubt the actual penalty will be anywhere close to that, but it will likely be in the billions. I think it's not unreasonable to expect the fine to be somewhere around $2.5 billion, or about $5,000 per non-compliant vehicle sold.

Why not use a portion of that civil fine to invest in a nationwide DC Fast Charge network for electric vehicles?

If just half of a $2.5 billion fine were dedicated to this purpose, we could blanket the majority of Interstate highways and major high-traffic corridors with DC fast chargers that would make switching from gasoline and diesel cars to zero-emission electric vehicles a much easier decision for many buyers. Here's why I believe that is what should be done. Helping to advance the proliferation of cleaner electric vehicles would, over time, more than reverse the emissions damage that has been done, and further improve the quality of air we breathe, instead of just punishing the offender. And shouldn't that really be the goal here?

A second thought: As well as using the fine to build out a national DC fast-charging network, how about Volkswagen getting out in front of this crisis itself and telling us how it will do its part to help clean the air it polluted?

BMW, Volkswagen and ChargePoint teamed up to create "Express Charging Corridors" on the East and West coasts. While it's a good start, much more fast charge infrastructure is needed to allow the average electric car of today to be a viable choice for long distance driving.

Rather than just declaring that it will be a leader in electric mobility, as the company has done before, show us the proof that it's serious about how it plans to expand its zero-emission vehicle offerings? VW Group could combine that with a generous investment in public charging infrastructure, on a much greater scale than last December's partnership with BMW and ChargePoint to install approximately 100 DC fast chargers.

That program in just now starting to get under way, but it's really only the beginning of what's needed. VW should commit to expanding it to 400 or 500 stations, including high-volume corridors not only on the East and West coasts but across the country--essentially following the Tesla Supercharger road map.

Tesla North American Supercharger map.

Yet another idea to consider: Give the owners of the affected vehicles the option to replace their car with a new electric Volkswagen e-Golf. Some current Volkswagen TDI diesel owners have said they now feel guilty for having driven their diesel for the past few years, with a main reason for their purchase having been both fuel economy and because it was a "clean" diesel.

Offering those owners the option to return the polluting car for a much cleaner Volkswagen could demonstrate that VW understands and is concerned with its customers' desire to drive clean cars. Many owners won't take advantage of such an offer--diesel partisans can be just as committed to their technology as electric-car advocates--but the offer would send a powerful signal about the company's intent. I believe these are the sort of things Volkswagen must consider if it wants to convince the public it is serious about making proper restitution for this egregious deception.

How about offering eGolfs to the customers that don't want their dirty diesel anymore?

There are plenty of ways to make some good come out of this shameful episode. No matter how you slice it, it will be very painful for Volkswagen AG. How well or poorly the company manages this crisis will  have a lingering effect for years to come, even decades.

It appears VW intentionally deceived both the American consumer and the U.S. government, and put public health at risk, by knowingly planning and executing a fraud. To me, and I think to many others, that's much worse than a carmaker trying to delay or prevent a vehicle recall.

But Americans are forgiving people, and sin followed by redemption is a part of our national myth. As long as we believe the offender is genuinely remorseful for what it did, and is taking steps to prove it hase learned from the offense, recovery is possible--perhaps even lauded and held up as a shining example of redemption.

Now that we've found out the real truth in German engineering, the ball has moved into VW's court to decide on what it can do to begin to offset the damage it has done to itself, its customers, and the environment.
Let's hope Volkswagen is smart enough to make the right decisions.

*Edit: BMW released a statement regarding the recent discussion of diesel engines and emission compliance. You can read it HERE.