The federal government paid out as much as $51 million in green car subsidies for Volkswagen diesel vehicles based on falsified pollution test results. VW deceived millions of car buyers into purchasing one of their “Clean Diesel” models. The German automaker used software in 482,000 of its diesel vehicles since the 2009 model year to cheat on U.S. emissions tests.
The VW diesels qualified for the federal incentives in the same year the automaker first installed the software trick it used to cheat on emissions tests. The so-called defeat device employed an algorithm that automatically detects when the vehicle is undergoing pollution tests and changes the way the engine performs.
The algorithm senses whether the car is in a testing environment by analyzing a variety of data – steering position, speed, duration of engine operation and barometric pressure.
The Environmental Protection Agency and the California Air Resources Board discovered the software. The Justice Department has lately taken on a leading role in major investigations of automakers, usually leveraging the threat of criminal charges to exact huge fines.
In September 2015, General Motors agreed to pay a $900-million fine to settle an investigation into why it did not quickly recall defective ignition switch vehicles that led to car accidents leading to 124 deaths. Last year, Toyota paid a $1.2-billion dollar settlement due to deceiving regulators about deadly safety defeats allegedly causing sudden-acceleration incidents that were unintended.
VW has admitted to installing the defeat device software after it was confronted by regulators. VW Chief Executive Martin Winterkorn said, “I personally am deeply sorry that we have broken the trust of our customers and the public.”
VW will face civil lawsuits on two fronts, including consumer fraud cases and class-action litigation for what is called a “diminished value” lawsuit. VW could face a fine of as much as $18 billion, or $37,500 per car.