With V-6 Engine Settlement OK, Judge Closes Books On Dieselgate

With last week’s action in the U.S. District courtroom of Judge Charles Beyer, Volkswagen can start to close the U.S. books on Dieselgate. The jurist approved a final settlement for the owners of 80,000 3.0-liter V-6 turbodiesels that were caught up in the scandal.

Dieselgate is Volkswagen’s self-inflicted emissions scandal. The scandal had its origins in 2004-06 when the automaker was developing a new block for its turbodiesel line, the EA189. The block was designed to use urea formaldehyde doping, a process developed by Mercedes-Benz and which the VW was to license. The engineering manager at the time was an outside-VW hire, so the licensing deal was pro-forma, the rest of the industry did it.

If It’s ‘Not Invented Here,’ It’s Not Volkswagen

For the VW veterans on the engine development staff, this was a slap in the face. VW has had a long tradition of inventing its solutions so if something was “not-invented-here,” it was immediately suspect.

For whatever reason, the original manager – the exec who okayed the license -- left VW and the EA189 project and responsibility for work on the engine became the property of the self-same VW vets. They canceled the licensing deal with M-B and determined a new solution to controlling oxides of nitrogen, the nasty chief emission from diesel engines. The fix was emissions trapping and high-temperature reburn. Since the early 1980s, reburn only had limited success. The engineers believed they could make it work – they couldn’t. The EA189, 2.0-liter four was dirty, and with 2008 and a new set of tough emissions standards bearing down on them, the engineers knew they had to do something. Their plan was simple -- cheat. Dieselgate was born.

Suffice to say, that the cheating scheme, which involved “defeat switches” that made it appear as if the 2.0-liter four was clean, turned out to be momentous. The settlements, fines, and penalties, already invoked, have turned Dieselgate into the largest single-corporation scandal in history. The costs have been massive and are likely to become heavier.

At the moment, they stand at about $25 billion. And, there are still criminal probes in Europe; stockholder suits in Europe, and consumer inquiries in Europe that will kick the final price tag to the upper reaches of the atmosphere.

Dieselgate Was a Two-Part Cheating Scheme

In reality, Dieselgate was a two-part cheating scheme. Part I applied to the EA189, 2.0-liter four; Part II applied to the 3.0-liter V-6 turbodiesel. In Part II, the automaker agreed to at least $1.22 billion to fix or buy back 80,000 3.0-liter vehicles in the U.S.

Separately, Judge Charles Breyer granted final approval to a settlement to a $327.5 million settlement for German auto supplier Robert Bosch GmbH. Breyer called the settlement “fair, reasonable and adequate.”

Source: Automotive News