Our Editorial: Punish VW without destroying it
Revelations that Volkswagen Group cheated on emissions testing in more than 11 million vehicles is sending lightning bolts through the Germany-based company — as it should.
Just how many layers of deception it took for the company to sell diesel cars that didn’t meet the EPA’s standards for nitrogen oxide emissions is still unknown, but CEO Martin Winterkorn has already stepped down and been replaced.
Those within the company responsible for cheating should be punished, perhaps even with criminal fraud charges, and the message that such behavior is unacceptable should be loud and clear. But authorities should punish individuals rather than take overly harsh measures that could jeopardize VW’s investments in the United States. That could put American plants and workers at risk.
The company admitted to permitting up to 40 times allowable pollution in diesel cars manufactured between 2009 and 2015 in the United States. The cars contained software with pollution control systems that functioned normally during testing, but shut off when the cars drive normally.
No doubt federal regulators will make an example of VW’s wrongdoing, and the company has already set aside $7.3 billion to address growing issues with recalled vehicles, reparations and whatever fines will be slapped on them. It could face fines of up to $18 billion, along with criminal prosecution.
VW’s deception is quite different from the recent major safety failings on the part of General Motors and Toyota, which were more systemic and certainly less willful.
But the company certainly isn’t alone in having tried to evade increasingly tough pollution standards. GM had a scuffle over so-called defeat devices decades ago, and in the 1990s, seven U.S. manufacturers of heavy-duty diesel trucks implanted devices to disable NOx controls after testing was finished.
Those cover-ups were also wrong. But they point to a broader issue that EPA regulations often thwart vehicle performance as well as fuel economy, which the agency ironically also mandates. Diesel engines combust differently and more efficiently than gas engines, reducing carbon emissions while creating higher pressure and temperatures, which in turn create more nitrogen oxide.
Trying to balance reduced carbon emissions with reduced nitrogen oxide emissions no doubt frustrates carmakers, and perhaps this episode will encourage the EPA to re-evaluate some emissions regulations.
The feds should consider that American and global consumers will likely punish VW through the marketplace. The goal of government action should be to penalize VW in a way that sends a message to it and other manufacturers that willful cheating is unacceptable, but doing so without destroying jobs and investment.
Consumers don’t like to be fooled or treated with such disdain, and what may unfold quickly is a collapse of VW sales. The company’s stock is already down nearly a third.
Decreased sales inevitably will fall heavily on the workers at the Chattanooga, Tennessee, plant, which employs about 15,000 between VW employees and the indirect jobs supported by its production. The company announced last summer it was investing almost $1 billion in the plant, along with 2,000 new jobs.
What VW did was wrong, and it reflects poorly on the entire company. The challenge for the feds is to punish the culpable individuals and deter the company from bad behavior while sparing American workers.