DPS30015 VW Emissions Scandal - Moore · PDF fileVW’s Passat and Jetta. ... VW...
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Innovation & Technology PRECISE. PROVEN. PERFORMANCE. Introduction Volkswagen Group, based in Wolfsburg, Germany and founded in 1937, are one of the largest car manufacturers in the world, with an annual revenue of around €200 billion [1]. The company sold in excess of 10 million vehicles in 2014, manufactured in 119 production plants across 31 countries [2]. At the beginning of 2014, in an effort to prove that diesel cars could run with cleaner emissions than European laws demanded, a team of US scientists conducted an experiment to test the real-world emissions of a selection of cars, including VW’s Passat and Jetta. By using a portable emissions testing system, the scientists discovered that the Volkswagen cars were exceeding US emissions limits by factors of 5 to 20 and 15 to 35 for the Passat and Jetta, respectively, as show in Table 1 [3]. Emissions Figures (g/km) US Limit Lab Test Real-world Measurement VW Passat 0.043 0.016 0.610 – 1.500 VW Jetta 0.043 0.022 0.340 – 0.670 Table 1: Results of West Virginia University’s road tests VW Emissions Scandal Subsequently, on the 18th September 2015, the United States Environmental Protection Agency (EPA) served a Notice of Violation to Volkswagen Group accusing the company of violating emissions standards on 480,000 vehicles sold in the US [4]. Initially citing technical glitches for the discrepancy, Volkswagen acknowledged wrongdoing when presented with evidence that it had installed “defeat devices” in its vehicles. As the story broke and unfolded, the estimate of worldwide number of vehicles affected grew until reaching 11 million, with 1.2 million of those in the UK [5] [6]. Emissions In the normal operation of an internal combustion engine, fuel is mixed with air and ignited, releasing a variety of gases as exhaust fumes. In the case of petrol, which is highly refined and contains a uniform mix of simple hydrocarbons, ignition is initiated by a spark plug, as shown in Figure 1. This results in a consistent combustion profile, therefore the chemical composition of petrol exhaust is well known and easy to clean. Simple catalysts allow the removal of harmful gases, such as platinum, which binds to the poisonous chemical carbon monoxide (CO). Figure 1: The petrol engine uses the Otto Cycle shown in the images above [7]
Transcript of DPS30015 VW Emissions Scandal - Moore · PDF fileVW’s Passat and Jetta. ... VW...
Innovation & Technology PREC ISE . PROVEN. PERFORMANCE .
IntroductionVolkswagen Group, based in Wolfsburg, Germany and founded
in 1937, are one of the largest car manufacturers in the world,
with an annual revenue of around €200 billion [1]. The company
sold in excess of 10 million vehicles in 2014, manufactured in
119 production plants across 31 countries [2].
At the beginning of 2014, in an effort to prove that diesel cars
could run with cleaner emissions than European laws
demanded, a team of US scientists conducted an experiment to
test the real-world emissions of a selection of cars, including
VW’s Passat and Jetta. By using a portable emissions testing
system, the scientists discovered that the Volkswagen cars were
exceeding US emissions limits by factors of 5 to 20 and 15 to 35
for the Passat and Jetta, respectively, as show in Table 1 [3].
Emissions Figures (g/km)
US Limit Lab TestReal-world
MeasurementVW Passat 0.043 0.016 0.610 – 1.500
VW Jetta 0.043 0.022 0.340 – 0.670
Table 1: Results of West Virginia University’s road tests
VW Emissions Scandal
Subsequently, on the 18th September 2015, the United States
Environmental Protection Agency (EPA) served a Notice of
Violation to Volkswagen Group accusing the company of
violating emissions standards on 480,000 vehicles sold in the
US [4]. Initially citing technical glitches for the discrepancy,
Volkswagen acknowledged wrongdoing when presented with
evidence that it had installed “defeat devices” in its vehicles.
As the story broke and unfolded, the estimate of worldwide
number of vehicles affected grew until reaching 11 million, with
1.2 million of those in the UK [5] [6].
EmissionsIn the normal operation of an internal combustion engine, fuel
is mixed with air and ignited, releasing a variety of gases as
exhaust fumes. In the case of petrol, which is highly refined and
contains a uniform mix of simple hydrocarbons, ignition is
initiated by a spark plug, as shown in Figure 1. This results in a
consistent combustion profile, therefore the chemical
composition of petrol exhaust is well known and easy to clean.
Simple catalysts allow the removal of harmful gases, such as
platinum, which binds to the poisonous chemical carbon
monoxide (CO).
Figure 1: The petrol engine uses the Otto Cycle shown in the images above [7]
Innovation & Technology PREC ISE . PROVEN. PERFORMANCE .
However, diesel fuel, which is less refined than petrol, contains a
complex mixture of long chain hydrocarbons and relatively
unknown compounds. This fuel-air mixture does not readily
ignite solely in the presence of a spark and diesel engines
therefore use a combination of high pressure and high
temperature to cause spontaneous combustion, as shown in
Figure 2. These factors lead instead to a complex and
unpredictable exhaust composition, which is harder to clean.
The attraction of diesel engines to both manufacturers and
consumers is the high fuel efficiency and power output they can
achieve – the longer hydrocarbons and efficient combustion
provide much more energy per litre than petrol, resulting in cars
that are cheaper to run and a fuel with a lower carbon
footprint. This is contrasted by higher and more harmful
emissions. Emissions are tightly regulated and controlled, with
the intention of reducing the negative effects of vehicle exhaust
– in London, it is estimated that as many as 9,500 deaths per
year are attributable to air pollution [8] [9].
Alongside other harmful substances, a primary focus of
emissions regulations are nitric oxide (NO) and nitrogen dioxide
(NO2), grouped as nitrogen oxides and commonly referred to as
NOx. These compounds form in high temperature combustion
reactions and are therefore prevalent in the exhaust released
from a diesel engine. The gases, which are harmful both to
human health and to the environment, are difficult to detect
and remove from exhaust fumes [10].
Figure 2: The diesel cycle (shown in the figure above), differs from the petrol cycle in that the induction only takes in air which is then is compressed significantly to get it hot enough. The fuel is then injected and ignited to produce the power stroke. [7]
Defeat DevicesIn recent years, there has been increasing pressure to reduce the
emissions given out by diesel-fuelled engines. In order to meet
emissions regulations and to market towards a more
environmentally conscious customer base, the motor industry
has been developing techniques to reduce the emissions
implications of their vehicles’ exhaust fumes. These techniques
include catalytic converters, which convert toxic fumes into less
toxic substances by passing them over a particular material;
diesel particulate filters, which remove soot from exhaust gases;
and other innovative technologies such as urea-based exhaust
treatment systems [11].
In 2009, Volkswagen introduced a new fuel injection system
using electronic controls and high injection pressure, which in
theory could reduce emissions by ensuring a stable fuel-air
mixture [12]. However, the company discovered that the new
system, even when combined with filters and exhaust treatment
systems, could not achieve the desired fuel economy within the
emissions regulations. In order to ensure that the vehicles
passed emissions tests while maintaining the high fuel efficiency
that it had hoped to achieve, Volkswagen installed a “defeat
device” on their engines.
Innovation & Technology PREC ISE . PROVEN. PERFORMANCE .
The device is a specially written piece of firmware, built into the
engine management unit, that detects the position of the
steering wheel, vehicle speed, the duration of the engine’s
operation, and barometric pressure. These criteria are based on
the EPA’s testing procedure, and are designed to determine
whether or not the vehicle is currently being tested for emissions
on a dynamometer. If so, the management unit would switch to
a low-emission compliant mode whereas, under normal driving
conditions, the software suppressed the emissions controls. This
allowed the engine to produce more torque and get better fuel
economy, at the expense of emitting up to 35 times more
nitrogen oxides than allowed by law [13].
AnalysisDefeat devices that trick emissions tests are by no means a
new concept. Since 1973, Chrysler, Ford, General Motors,
Volkswagen, Honda and a host of heavy truck manufacturers
have been accused of, and paid fines for, installing a variety
of measures to change the vehicles’ operations during test
conditions [14]. However, the 2015 Volkswagen emissions
scandal has been described by commentators as by far the
most widespread, sophisticated and audacious case of
emissions rigging in history. As a result of the scandal, the
company’s share price fell by a third, dropping to a record
4-year low, and it faces both massive fines and lawsuits from
disgruntled owners.
In the short term, Volkswagen is expected to recall a significant
number of vehicles, and retrofit vehicles with emissions controls
to bring them within regulation. The impact of the scandal,
however, has been predicted to cause an impact on the motor
industry far wider than just to Volkswagen. Questions have been
raised over the true emissions of all cars, and whether emissions
controls are unfeasibly restrictive or still not tight enough.
These events may also have an effect on research and
development in the motor industry. In 2013, Volkswagen were
the biggest spender globally on R&D, spending $13.5 billion,
representing 5.2% of their revenue [15]. It remains to be seen
whether the 2015 scandal will have a positive or negative effect
on this figure, and what will be the impact on the future of next
generation vehicles. With a reduced public opinion towards
diesel engines and the introduction of more stringent emissions
regulations possible, manufacturers worldwide may need to
spend more on R&D to stay competitive.
Innovation & Technology PREC ISE . PROVEN. PERFORMANCE .
Laurence Kingdon
Dr Tariq Ahmad
Eyad Hamouieh
Moore Stephens LLP
150 Aldersgate Street, London EC1A 4AB
T +44 (0)20 7334 9191
www.moorestephens.co.uk
We believe the information in this factsheet to be correct at the time of going to press, but we cannot accept any responsibility for any loss occasioned to any person as a result of action or refraining from action as a result of any item herein. Printed and published by © Moore Stephens LLP, a member firm of Moore Stephens International Limited, a worldwide network of independent firms. Moore Stephens LLP is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Authorised and regulated by the Financial Conduct Authority for investment business. DPS30015 November 2015
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