Volkswagen's Very Bad Week: The News 'Til Now

September 25, 2015

To say that this has been a bad week for Volkswagen would be like saying that John Boehner's resignation this morning was a little surprising, or that Kim Kardashian likes a bit of attention now and then.

What began last Friday as a handful of accusations from the Environmental Protection Agency has turned into an avalanche of revelations, recriminations, stock tumbles, leadership changes, and, inevitably, lawsuits.

Because this story is still evolving -- and may continue to do so for months -- it's impossible to sum up the situation in a few tidy paragraphs. There are so many threads unraveling at VW and its subsidiaries, we think the best way of explaining the crisis is to share a brief timeline of the high (or low) points. Just click through the boldface links for a deeper dive: 

2014: The scandal begins to break. Daniel Carder and a team of researchers at West Virginia University discover that Volkswagen has been cheating on emissions tests by using clever software. Basically, the software determines whether a car is being tested for emissions. If it is, the vehicle's full emissions controls activate. If it's not, they shut off. Pollution from Volkswagen diesels is up to 40 times higher in vehicles with the emissions controls turned off.

August 21, 2015: After denying the accusations for a year, Volkswagen finally fesses up, admitting that it has been cheating on diesel emissions tests since 2009.

September 18, 2015: The schnitzel hits the fan as the EPA publicly accuses Volkswagen of wrongdoing. Volkswagen issues a brief statement on the matter: "Volkswagen Group of America, Inc., Volkswagen AG and Audi AG received today notice from the US Environmental Protection Agency, US Department of Justice and the California Air Resources Board of an investigation related to certain emissions compliance matters. VW is cooperating with the investigation; we are unable to comment further at this time."

September 21, 2015: Volkswagen has stopped sales of all U.S. diesels. The automaker sets aside $7.3 billion to repair software in 11 million diesel vehicles worldwide, roughly 500,000 of which are registered in the U.S. There's much speculation that Volkswagen's troubles could affect other VW brands like Audi and Porsche

September 23, 2015: Volkswagen CEO Martin Winterkorn steps down. (Don't worry: he's got a $67 million severance package.) There's a great deal of debate about other VW top brass resigning or being fired, including U.S. chief Michael Horn.

September 24, 2015: Another German automaker, BMW, is hit with accusations that it, too has been cheating on regulatory tests. BMW issues a statement denying it, and experts distinguish it as a workaround rather than cheating. Meanwhile, here in America, dealers file a lawsuit against Volkswagen for basically ruining their lives.

September 25, 2015: The Volkswagen board prepares to announce Porsche chief Matthias Mueller as VW's new CEO. On this side of the Atlantic, despite outcry from America's VW dealers, Michael Horn is expected to resign. Also, to no one's surprise, the EPA announces plans to toughen diesel emissions tests. And California plans to give VW quite a whuppin'.

Going forward, even though the fix for VW diesels should be simple, the outlook is dim for diesels as a whole. The scandal at VW has highlighted the difficulty of making diesels meet increasingly cleaner emissions goals. After all, if diesels were really as clean as VW claimed, they wouldn't have had to cheat, right?

This could cause many drivers and many countries to turn their backs on diesels, focusing instead on today's cleaner gasoline and hybrid engines, as well as electric cars. That would leave diesel-loving automakers -- and the refineries that deal in diesel -- in the lurch.


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