In the wake of the VW emission scandal, a recall is all but certain. In the U.S. alone, half a million cars are driving around with the manufacturer’s “defeat devices” installed, and many of them are driven in states that will not allow the vehicles to remain on the road without a fix. Unsurprisingly, experts are forecasting serious damage to the company, and some even believe it will be the single most expensive recall in the history of the industry. That sounds like bad news for the iconic German automaker, but that’s only the beginning. The EPA and Justice Department are considering actions that could send executives to jail, and once other nations join the fray, the situation could become that much more dire for Volkswagen.
A recall is normally enacted when a dangerous defect is detected in a vehicle currently sold on the market. It’s a costly action for a company to take, but it is required by law to keep people safe. In Volkswagen’s case, though, the problem isn’t one of safety, but of violating U.S. environmental law. The company has long marketed its diesel engine vehicles as a greener option, claiming that models like the Audi A3 produce fewer airborne pollutants. Test results seemingly confirmed this, and the manufacturer sold hundreds of thousands of vehicles on the back of its pro-environment marketed approach.
Now, though, it’s clear it was all a lie. Volkswagen installed what are known as “defeat devices” in its diesel engine vehicles. The device is programmed to detect when the vehicle is being tested and to keep the vehicle in a low performance mode to reduce emissions. Once out of testing mode, the device would deactivate, allowing the vehicle to spit out 40 times more nitrogen oxide than what is permitted by law.
The VW emission scandal means a recall, and it means many lawsuits and billions of dollars in damages to the company. In fact, it has already set aside more than $7 billion for fines, lawsuits, and other damages, which would be more than any other company has spent in the wake of a safety issue. And many experts believe that figure will be too low. Dozens of lawsuits have already been filed, and it’s unclear how Volkswagen will be able to make amends with every vehicle owner. Removing the device will mean reducing engine performance to some degree, and that might provoke additional claims. The EPA could drive a nail in the company if it chooses to maximize fines – a figure that could reach up to an estimated $18 billion.
People who have bought one of the affected vehicles may have to go without them all of a sudden, forcing them to find alternate transportation. The coming months will make it clear just how damaging the VW emission scandal, and resulting recall will be, but it will likely be the costliest attempt to lie to consumers the industry has ever seen.