The positive effects of the diesel-gate

As part of a late nineties settlement between the U.S. Justice Department and several heavy duty diesel engine makers, a West Virginia University team led by Daniel Carder pioneered portable emissions testing. His team performed road tests around Los Angeles and up the West Coast to Seattle. The tests recently generated results so strikingly anomalous, initially they suspected a defect in their own research due to huge discrepancies. With one of the tested vehicles showing 15 to 35 times the promised emissions levels, and another car 10 to 20 times, something had to be wrong with the tests.

But the errors were not in the tests. The diesel vehicles chosen for the study were the Volkswagen Jetta, the Volkswagen Passat and the BMW X5. Unlike the VW vehicles, the test showed out that the X5 “performed nicely: at, or even below the certification emission levels.”

As we all know by now, Volkswagen has apologized for the irregularities on diesel-emission readings, and the implementation of software specifically designed to evade government pollution tests. Volkswagen estimates the amount of cars with ‘fraudulent’ or improper software, at around 11 million vehicles globally. According to the U.S. Environmental Protection Agency, Volkswagen could face penalties of dozens of billions of dollars. More than its entire operating profit for 2014 and probably more than the company holds in cash. Does Volkswagen now has to be very concerned about its competitive position?

Let me first state that fiddling with software in automobiles is unacceptable. Knowingly and willingly defrauding governments and consumers is absolutely unacceptable. And in my opinion it does not match the solid, reliable image of Volkswagen. But this ´emission fraud´ undeniably brings a number of advantages.

Somewhere around 2008 Volkswagen realized that it would be a tough and costly challenge to beat the emission rat race. But at the same time, the organization was dominated by its ambition in being a steady top 3 global automobile manufacturer. At that time the US market was of great importance to achieve that ambition. With sales of gasoline powered cars in the US market only expected to fall short of that ambition, Volkswagen aimed for a high amount of diesel engines too. Contrary to Europe, in the US, diesel has an image of pollution and diesel is nearly as expensive as gasoline.

Moreover, there is an annoying contradiction in diesel cars. In order to meet the NOx requirements, the engine and after-treatment system for exhaust gas have to be adjusted in such a way that the car is less efficient. Unless you use very expensive additives like AdBlue.  So, possibly Volkswagen resorted to other means. And built in intelligent software into the cars in order to seduce Americans to buy “clean”, and fuel-efficient diesel cars. But pride goes before a fall. And it is plausible, to some extent the (American) consumer will turn away from Volkswagen and it’s – in the opinion of the consumer – fraudulent diesel engines.

If there is a silver lining for Volkswagen, it would be that the ‘Diesel’-gate will hurt the manufacturer’s competitors as well. Despite the test results of the BMW X5 mentioned, the already bad image of diesel engines in general will definitely be harmed even further in most automobile markets. But hey, we still need mobility don´t we? So consumers possibly will seek for other options, cheap and reliable. And that is precisely the area where the opportunities lie.

So for now, regardless of the builder, forget diesel engines and let us briefly focus on one major phenomenon: the desire for sustainability. Even if this phenomenon is driven by economic reasons – in many European countries the add-up income tax is determined by the amount of pollution a car produces – consumers are making a shift towards (hybrid or even) electric vehicles. Although rational will vary from consumer to consumer, there are some obvious reasons. Firstly, electricity is cheap and can be ´produced´ at home via solar cells. Secondly, electric cars benefit from the best parking lots equipped with charging stations. And last but certainly not least, the add-up income tax on electric cars is much lower than on cars with regular engines. So even if they are not as green or sustainable as they want others and themselves to believe, consumers still seek cheaper options than polluting cars.

With a little imagination, we can say that the diesel fraud is not as bad as it seems. It indicates that the emission requirements are so stringent now, that it becomes increasingly difficult and extremely expensive to comply with the rules. And as automakers increasingly face difficulties to meet the demands for clean cars, it definitely opens the way to other systems, other engines.

Now you might say “but hey, what about the motorization downsizing trend? We can still be mobile with smaller and more efficient gasoline engines!”. That’s right, partly. But it is not without reason that Serge Naudin, the boss of BMW France, stated that “we cannot do without diesel vehicles to achieve the CO2 targets”. And it is not without reason that Volkswagen has also tampered with the measurement of CO2 emissions and fuel consumption of 98 000 gasoline cars. The manufacturer confirmed that the fraud was not limited to diesel only. “Irregularities” found in the measuring equipment which determines the CO2 emissions have shown that Volkswagen lowballed the amount of CO2 during emission testing.

It’s generally accepted that diesel-engines consume less fuel than their gasoline counterparts. Lower consumption means less CO2, the emitted amount of which is, rather opportunistically, used to calculate the add up income tax. But when also start aiming for the reduction of other pollutants, manufactures will have to use techniques that increase fuel consumption, use costly additives such as AdBlue, or … switch to hybrid or full electric systems. Maybe Volkswagen’s emission fraud demonstrated that the extent to which increasingly cleaner fossil fueled engines can be developed is finite. Or simply too costly. If it’s true we cannot really solve the seesaw relation between CO2 and NOx in diesel engines why don´t we simply stop making impossible compromises and use the scandal as a catalyst for the development of really cleaner cars. Whether it will be for the environment or for our wallets, let´s use the fraud momentum and convince ourselves that we should all switch to driving hybrid or even fully electric vehicles.

Thank you Volkswagen. You have shaken us – consumers and governments – awake unintentionally. Hopefully it will have served a purpose.

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