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The Volkswagen Emission Scandal

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The Volkswagen Emission Scandal

On the 18 September 2015 the Environmental Protection Agency (EPA) revealed that Volkswagen manipulated emission tests with a special software to achieve better results and boost their sales.

The software is able to detect if the car is in a test environment so it can lower the performance of the engine to improve the emission results. Originally it was believed that the  software was only installed into 1.4-2.0 litre diesel motors but on the 2 November a new allegation came out. The Environmental Protection Agency (EPA) claims that the 3 litres diesel motors are also affected by the manipulation. That includes cars from Audi and Porsche.

Later it was found out that not only cars in the United States were affected. According to Volkswagen 11 million cars were built with the software and 8,5 millions of those were sold in the EU. There are a lot of investigations in many different countries because of the scandal. Volkswagen could get fined billions.

As a consequence of the scandal the Volkswagen CEO Martin Winterkorn stepped down and other managers were on leave. His successor is the former Porsche CEO Mathias Müller.

The value of Volkswagen shares dropped more than 60% and the image of the company took a big hit. Volkswagen responded by recalling millions of cars worldwide and putting £4.8 billion aside to cover upcoming costs. This and the falling shares resulted in a loss of €2.5 billion, the first loss the company has made in the last 15 years.

Unfortunately  for Volkswagen the costs can exceed their expectations since the EPA alone can set a maximum fine of $18 billion. VW themselves admit that costs of possible legal action by car owners and shareholders “cannot be estimated at the current time.”