Holy Fahrvergnugen!

News is breaking this morning that Volkswagen’s tampering of emission control software is much larger than the 500,000 or so diesel models reported over the weekend: the true number may be as high as 11 million VWs. Yesterday a spokesperson for the EPA said that VW could be liable for fines as much as $37,000 per vehicle, or $18 billion for the 500,000 or so models then reported to be offending vehicles. If that same scale were used for 11 million scofflaw VWs, the fine could be over $400 billion, which is likely higher than the total market cap of VW, though who can tell as VW stock fell 17 percent yesterday, and is down another 20 percent today on the European bourses. (I wonder: how you say “Government Motors” in German?)

In case you missed it, here’s the nub of the story:

Regulators in the U.S. said Volkswagen cheated on environmental standards by programming engine management software in some diesel cars to turn on emission controls only when being tested. Cars equipped with the device would run up to 40 times more emissions when on the road, the EPA said.

Regulators have ordered Volkswagen to recall the vehicles, and the company said it was halting sales of some cars in the U.S.

There are some questions that the media, typically, is not reporting. First, even if the cars run at 40 percent higher emissions than during the phony test phase, are they emitting above the tailpipe standard? No one has reported data that I can see. One news story said that the disparity between on-road performance and the test results meant that southern California—the premier smog basin the nation—would have experienced about 3,000 pounds of additional nitrogen oxides (NOx) emissions. That’s not very much. It is possible that “40 times higher emissions” than the bogus test conditions is still a very low rate of emissions, and would otherwise be considered compliant cars. NOx emissions and smog generally continue to fall in Los Angeles and everywhere else in the country. I’ll want to see some real data before making final judgment about the actual air pollution effects of VW’s perfidy.

So why phony-up the test software if an unadulterated model was likely compliant with regulatory standards? Perhaps to collect special subsidies for “super-clean” cars, and be able to market them as “eco” models? That’s what the Los Angeles Times reports:

The federal government paid out as much as $51 million in green car subsidies for Volkswagen diesel vehicles based on falsified pollution test results, according to a Times analysis of the federal incentives. . .

The Times analysis matched Internal Revenue Service data with Volkswagen sales figures to determine the value of subsidies VW diesel buyers were eligible to collect in 2009, the first and only year the vehicles qualified. The $1,300 tax credit would have been available to buyers of about 39,500 Jetta and Jetta Sportwagen models that sold that year, according to Motor Intelligence, an industry research firm.

Ah, now we’re getting somewhere. In the absence of “green car” subsidies and incentives, there would have been no reason for VW to doctor its emissions testing software. (Incidentally, I and others have for a long time advocated getting rid of vehicle-by-vehicle emissions testing, and going to on-road monitoring instead. Like the cameras now used at toll bridges and toll roads to send you a bill, we can use infrared equipment to monitor emission from individual cars and send you a notice to fix your car if it is out of compliance. Now you have to wait two years to catch a car out of compliance. The technology has existed for over 20 years, but has not been adopted for the usual reasons of bureaucratic inertia.)

Next, I wonder if VW is alone in this emissions software gimmick. Could other car makers have done the same thing? Seems likely. This could be the next major corporate scandal, caused in large part, as I say, by perverse and unsound government incentives. But that’s not the lesson the media and political class will draw from it. Let the witch-burning begin!

One final note: the initial wave of scofflaw VW cars were diesel models. Diesel emits much lower CO2 than gasoline cars, and thus makes them preferable if you’re a global warming nut. Another likely consequence of this “scandal” is that we’ll slow down using diesel.