Volkswagen Dieselgate update: Diesel fix 'within months', California's surprising decision, more

March 11, 2016

It's been another tumultuous week for Volkswagen--one that's brought a high-profile resignation and less-than-comforting news about the company's long-awaited Dieselgate "fix". If you've lost track of those and other stories, here's a handy recap:

Head of VW worker group begs U.S. and other countries to consider loss of jobs: Speaking to fellow workers in Wolfsburg, Germany, employee council head Bernd Osterloh expressed concerns over fines and other expenses associated with Dieselgate. He worried that the cost of repairing 11 million illegally rigged "clean diesels", combined with billions in fines, would lead to VW cutting jobs around the globe. 

Volkswagen delayed revealing its diesel cheat to the public in hopes of brokering a deal: Remember how former Volkswagen CEO Martin Winterkorn knew about Dieselgate weeks before it blew up in the press? Shareholders say that was illegal because they think they should've been told immediately about the potential loss in value of their investments. But in a new, 113-page report, Volkswagen's lawyers have retaliated, insisting that the delay was "almost advisable":

"The Volkswagen management board had a reason to assume that a consensual solution would be possible with the authorities, that would not have led to significant economic consequences for VW."

Michael Horn, CEO of Volkswagen Group of America, steps down: Horn's resignation isn't entirely surprising. Though it's not yet known how much Horn knew about the illegal, emissions-test-cheating software found on Audi, Porsche, and VW diesels, he was clearly in charge when the Dieselgate story broke last September. He was given the unenviable task of sharing the news with consumers, and he had to testify about the company's wrongdoings before Congress. He's become a lightning rod, the face of the company's wrongdoing in America, and it's probably best that he steps out of the way.

VW brand chief thinks a fix for diesels will be ready in "months": Speaking to a newspaper in Germany, Herbert Diess said that VW--and presumably its siblings, Audi and Porsche--will be able to hammer out a deal with the Environmental Protection Agency and the California Air Resources board to fix U.S. diesels within a few months. That, unfortunately, is far longer than the March deadline recently set by a federal judge.

California could let cheating diesels remain on the roads: It's no secret that CARB has set some of the strictest emissions regulations on the planet. In fact, California's tough laws may have been one of the reasons that Volkswagen engineers created defeat devices for diesels in the first place. (Remember: Volkswagen's board chair, Hans Dieter Poetsch, said that the workers "could not find a way" to meet high U.S. standards.)

Surprisingly, now that CARB knows more about the crisis, it appears to have come around to Volkswagen's way of thinking. The agency's Todd Sax says that fixing all affected diesels may not be possible, and so the state may be willing to to allow partially fixed Audi, Porsche, and VW diesels remain in operation.

Volkswagen gets subpoenaed for tax fraud: Some people who purchased Volkswagen's "clean diesel" vehicles received a $1,300 tax credit for buying an alternative-fuel car. Now that it's clear that those vehicles weren't living up to federal standards, Volkswagen may be on the hook for tax fraud. The feds have subpoenaed numerous records related to that issue and to potential bank fraud. Since fraud carries such stiff penalties, regulators may be hoping that the threat of fines will force the allegedly uncooperative Volkswagen to take things more seriously.

Note: for purposes of clarity, "Volkswagen" has been used to refer to the Volkswagen Group parent company, while "VW" has been used to refer to the company's popular mass-market brand of automobiles.

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