VW Diesel Scandal Exposes Conflicting Regulatory Mandates

The Environmental Protection Agency on 18th September charged that Volkswagen had sold approximately 480,000 diesel cars in the U. S. that contained “defeat devices” that allowed them to pass EPA’s emissions tests, while pollution levels increased by up to forty times in normal driving. VW quickly admitted they had cheated and had sold 11 million vehicles worldwide with the devices.  The company set aside $7.6 billion to pay for penalties, recalls, and liability judgments, but many analysts thought that the total costs would eventually be much higher.

VW cheated because they are caught between regulations to reduce pollution and regulations to increase fuel economy and reduce greenhouse gas emissions.  Meeting both these conflicting goals results in cars that few people want to buy.  Diesel engines are significantly more fuel efficient than gasoline engines, but they are also dirtier.  Making them cleaner results in lower performance and more fuel consumption. 

Mercedes and other high-end diesel car producers have gotten around that by installing very expensive technology, which increases the costs of their vehicles.  Adding five or ten thousand dollars to the cost of a car can work for luxury cars that cost over $50,000 to begin with, but not for VWs and other cars in the $20-30,000 range.  It remains to be seen how the major automakers will continue to produce cars that people want to buy as the 54.5 miles per gallon CAFÉ standard begins to take effect.