VW admits using cheatware on 3-liter diesel engine since 2009; scandal deepens

VW CEO Matthias Mueller tells reporters today that the automaker was cutting planned investment by $1 billion euros today to meet expenses related to the emissions cheating scandal.

The swirling diesel emissions scandal embroiling Volkswagen deepened further today (Friday) when the automaker told regulators that emissions cheating software had been installed on its three-liter powerplant years earlier than the automaker originally reported. The Environmental Protection Agency (EPA) said that Europe’s largest automaker had informed the agency that the same cheatware that had been installed on the troubled two-liter diesel engine was also onboard the three-liter motor. This means that rather than involving only 2014-16 diesel engines, the “defeat switch”-bearing software had been used by VW since 2009.

The new admission by VW deepens the emissions cheating scandal. Until yesterday, it was believed there were only 482,000 diesel vehicles involved in the scandal that has been shellacking the automaker almost daily with bad news. The admission adds nearly pushes the number of VW Group vehicles involved in Dieselgate to more than half-a-million cars. Further, the luxury Audi and sporty Porsche lines became further involved in the scandal.

According to the EPA, Volkswagen informed environmental regulators in a meeting Thursday that “the issues EPA identified in the November 2nd NOV (notice of violation) extend to all 3.0 liter diesel engines from model years 2009 through 2016.” The agency said that they would, along with the California Air Resources Board (CARB), the other major regulator involved in Dieselgate, investigate further, ratcheting up already high pressure on VW.

VW admitted its involvement in the Dieselgate scandal in September when the EPA ordered the automaker to recall 482,000 diesel cars. At the time, EPA said it had found that the automaker had installed a “defeat switch” on its cars. The switch, which turned out to be a software subroutine, looked for emissions testing. If it found the vehicle was under test, the software branched to a routine that turned on full emissions mode so the vehicle met EPA standards. When the test ended, the vehicle turned off the emissions enhancement and restored performance and mileage settings. Emissions suffered. EPA found that some vehicles failed its tests with emissions of oxides of nitrogen that were as high as 40 times over the limits.

In short order, things blew up around VW. Before the end of September, the automaker announced that as many as 11 million cars worldwide were equipped with the “switch.” In addition, the automaker later admitted that it may have misstated carbon emissions levels for another 800,000 vehicles. Now, the three-liter engine has joined the two-liter engine on which the cheatware was originally installed.

Dieselgate has proven costly for the automaker. Not only has its stock been devalued by 40 percent, Moody’s Investment Service has also downgraded its bonding ability. And, the automaker has taken a writedown of 6.7 billion euros this quarter to cover costs related to Dieselgate. In addition, the automaker announced today that it is deferring as much as 1 billion euros ($1.2 billion) in new investment, an eight percent cut from earlier plans. Plus, it is expected that by the time the dust settles from the scandal, the automaker will have paid more than 25 billion euros, a huge amount.

Meantime, the automaker is conducting an internal probe that is focusing on 40 engineers and managers as the source of the problem code. And, it is facing criminal probes in France, Italy and Germany, as well as lawsuits by 28 states in the United States. This is in addition to hundreds of lawsuits launched as a result of Dieselgate.

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