VOLKSWAGEN AG has come under fire for cheating on emissions testing for its diesel engines; the scandal broke in the US after independent testing detected a huge discrepancy in its nitrogen oxide emissions on paper and on the road.
The automaker admitted the software had been installed in 11 million diesel cars; CEO Martin Winterkorn stepped down last Wednesday.
This week the scandal widened as Audi, another carmaker under the Volkswagen stable, said that 2.1 million of its diesel cars worldwide are fitted with the sophisticated software enabling them to cheat emissions tests.
What is the fuss all about, and what does it mean for Africa?
Volkswagen has been caught cheating on diesel emissions testing by installing a “defeat device”, software that allowed vehicles to limit emissions during laboratory tests, but on the road spewed far more deadly pollutants than regulations allowed.
HOW THEY DID IT
Laboratory tests are done under predictable, controlled conditions, so that makes them easy to hack. Most of a modern car’s performance is regulated by the car’s computer software; Volkswagen engineers sneaked in a parallel line of code that could detect when it was in laboratory conditions – for example, on a laboratory car treadmill as opposed to out in the real world.
The software faked pollution control by making the car switch off emissions during tests, but out on the road, the vehicles were spewing up to 40 times more than the allowed limit.
WHY THEY DID IT
Four years ago, Volkswagen set its ambitions to be the largest automaker in the world and unseat then market leader Toyota, and to do this, it would have to conquer the US market. Americans like big, powerful cars, but the Obama administration was also tightening standards on fuel efficiency and mileage.
All carmakers developed strategies to meet the new mileage rules, and Volkswagen put its bet on diesel, as opposed to the hybrid-electric strategy favoured by Toyota.
Diesel engines offer better mileage per gallon of fuel (pleasing their American customers) and lower carbon emissions than petrol or hybrid-electric ones, like what rival Toyota was betting on.
But diesel engines also emit more nitrogen smog-forming pollutants, so it was going to be a tricky trade-off for Volkswagen. The company’s strategy also ran head-on into American air pollution standards, which are stricter than those in Europe.
WHAT IT MEANS
Fines, lawsuits and a tarnished reputation
Volkswagen is facing up to $18billion in fines from the US’ Environmental Protection Agency, not to mention many more potential class action lawsuits. It could spell financial ruin for the company, and tarnish to the image of a company that was the epitome of German excellence.
Volkswagen lobbied hard in Europe for its supposed “clean diesel” technology, which promised to deliver better performance and less pollution. But this scandal re-establishes the perception that diesel is dirty after nearly two decades of concerted effort to change the view.
Electric car industry
CEO of Tesla Motors, Elon Musk, at the Tesla Factory in Fremont, California, USA. (Photo/ Flickr/ Maurizio Pesce)
Still, the scandal could be the spark that ignites the electric car industry in earnest, after so many false starts. “Clean diesel” was touted as a way to have it all – great mileage and low emissions. Now, industry players are calling the Volkswagen scandal “the death of diesel”, but it opens up the industry to a very different type of clean car – including those that may run on methane, hydrogen, electricity or are hybrids.
Already, the Telsa Model S, the latest battery-powered car from renewable energy conglomerate Tesla – whose CEO is South-African born Elon Musk - received the highest score ever from Consumer Reports magazine, setting a new standard for perfection.
The combination of power and efficiency was so off-the-chart that the group had to recalibrate its ratings methods “to account for the car’s exceptionally strong performance,” according to a statement.
“This is a glimpse into what we can expect down the line, where we have cars with the performance of supercars and the comfort, convenience and safety features of a luxury car while still being extremely energy efficient,” Jake Fisher, the magazine’s head of automotive testing, was quoted as saying in an interview. “We haven’t seen all those things before.” With the death of diesel, this could finally become the norm and not the exception.
WHY IT MATTERS FOR AFRICA
A VW ‘sink’?
In Africa, South Africa and Nigeria are the only countries that actually have emissions standards for passenger cars, and on Friday, the South African government announced it would investigate whether Volkswagen vehicles in the country are in compliance with emissions regulations.
But because there are hardly any emissions standards to speak of in Africa, the continent could become the “sink” for all the offending vehicles from Europe and North America.
It could mean surprisingly cheap VW’s in your car yard soon, but without a regulatory regime in place, it’s hard to say whether it would mean more pollution per se.
Air pollution control
Still, the whole scandal could bring the issue of air pollution in the forefront of government agenda; already, there is some traction. Today, nearly all African countries have phased out leaded petrol, and sulphur diesel is next on regulators’ sights.
In East Africa, following a regional promise to transition to low sulphur diesel fuel for cars, trucks and buses, Burundi, Kenya, Rwanda, Tanzania and Uganda formally adopted national standards for cleaner fuels as of 1 January 2015.
Urban air pollution is responsible for 176,000 deaths in Africa every year, and transport pollution - particularly old diesel engines - accounts for 75% of these, according to the World Health Organisation.
Platinum industry slump
The Volkswagen scandal also have an impact on the platinum industry, of which South Africa is a major producer, 44% of platinum demand comes from devices that curb harmful gases from cars, particularly diesel types.
Catalysts in diesel cars can use roughly 4 times more platinum than those in gasoline cars and have been the major source of demand growth for the white metal.
There’ll be a “substantial” drop in platinum usage if consumers buy fewer diesel cars, analysts speaking to Bloomberg say. Platinum prices have slumped already 28% in the past year as slower economic growth cuts demand, and supply increases after South African mine strikes last year.