Yes, it’s a catastrophe. There’s no other way to describe the allegations from the Environmental Protection Agency that Volkswagen cheated on their emissions tests with nearly half a million TDI diesel cars. What’s at stake here? Potentially billions in fines, criminal prosecutions, VW’s reputation, and maybe even the future of diesel in the U.S. (The scandal has also gone worldwide; see update below.)

On Friday the EPA said VW found a way to circumvent emissions requirements during testing with a “defeat device” that lets the TDI cars detect when they are being tested and then emit far less than normal.

It’s not really a device so much as it is software. When that software is not active, and the cars are operating in regular driving, they emit 10 to 40 times more than the allowable legal levels of certain pollutants.

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Make no mistake that this scandal is a huge deal. If the EPA’s allegations are true, VW knowingly broke the law with some of their most important products and could face severe financial and criminal penalties. And even in an era of recall after recall, Automotive News puts this well: “Compared with other run-ins between the EPA and automakers, VW’s alleged violation stands out in its brazenness.”

More than that, this could be a landmark moment for emissions enforcement the same way the General Motors ignition switch crisis and its aftermath was for safety. And it’s already sent VW’s stock prices tumbling.

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No cars have been officially recalled yet, but with 482,000 TDI cars affected, that seems all but certain at some point.

Here’s what we know so far.

What cars are affected by this?

The cars are 2009 to 2015 TDI Volkswagen Golf, Jetta, Beetle and Audi A3s, and the 2014 to 2015 Passat. All are powered by the company’s 2.0-liter turbodiesel four-cylinder engines. There are other diesel engines in the greater VW stable, but those aren’t affected here as far as we know.

Has there been a recall yet?

Despite earlier news reports to the contrary, there has been no recall of the cars quite yet. The EPA’s announcement on Friday did not include a recall order, though that will almost certainly happen at some point. Both the government and VW are investigating how to fix the problem.

Was there a stop-sale order?

Yes. Dealers have been told by VW not to sell whatever remaining 2015 TDI cars are on lots. The EPA will also not grant VW a “certificate of conformity” for the 2016 cars, so they cannot be sold either.

How did this alleged cheat work exactly?

First, we need to start by talking about urea.

In order to meet tougher emissions regulations that went into effect in 2008, most automakers started supplying their diesel cars with tanks of a urea-based solution (often referred to as “AdBlue”) that cuts down on nitrogen oxide emissions.

Many larger diesel engines on big sedans and SUV, including some from Audi as well as competitors at BMW and Mercedes, use such a system. And so did some of the Passats, too.

But VW and Audi said the 2.0-liter four-cylinder engine on the smaller cars was able to meet the requirements without a urea injection system — although many people have wondered exactly how. (Update: Just to clarify, newer TDI models like the MK7 Golf, made from 2015 on, do include urea injection.)

On Friday, the EPA announced they found the TDI cars contained “a sophisticated software algorithm” which detected when the car was being tested for emissions. When that happens, the software drastically reduces the emissions as compared to normal driving, indicating to testers that the car had passed.

Basically, it’s like taking a test when you already know what the answers are. It appears the cheat was present on all TDI cars, not just ones sent for emissions testing.

Do other automakers do this?

No one knows. That’s part of what the EPA is investigating. The lab that tested the VWs also tested a diesel BMW X5, which passed.

Why did VW do this?

That’s another thing that isn’t clear at the moment. In the U.S., diesel cars tend to be more expensive than gasoline simply for the extra hardware it takes to make them run cleanly, like the aforementioned AdBlue systems. VW may have done this to keep the costs of diesel Golfs and Jettas down for themselves and for the consumers, although now some newer cars with AdBlue are included in this fiasco.

It’s also possible that restricting emissions in a way that complied with the law would have reduced the power and fuel economy that the TDI engines are known for. Here’s Green Car Reports speculating on what a possible fix could do to the cars:

... if VW is able to develop a fix and get it approved, the performance and fuel efficiency of their cars might fall. That’s more likely if the fix is only a software update, which would be far cheaper for Volkswagen.

If VW ends up having to make software changes and retrofit an entire SCR system to the cars (other than the Passat TDI)—something that would likely cost it thousands of dollars per car—performance would likely be unchanged, but interior volume might be reduced to accommodate a liquid-urea tank and associated plumbing.

What penalties could VW face?

We’re talking about a maximum possible fine of $37,500 per vehicle, which could add up to as much as $18 billion for Volkswagen and Audi. That’s astronomical even for what is now the world’s biggest automaker, but then again, this appears to be a staggering violation of the law.

In addition, the EPA is working with the U.S. Department of Justice on the case, so criminal charges could arise from the situation too. And with a self-professed renewed focus on white-collar crime, VW could be the target the Justice Department is looking for right now.

How did the EPA find out?

Independent testing, and amazingly, testing that sought to prove VW’s diesels were really clean.

Bloomberg has a good recap of how this went down: A relatively small clean-air NGO, the International Council on Clean Transportation, noticed discrepancies between tests of diesel Volkswagens in Europe, so last year they borrowed equipment from West Virginia University to test the cars’ actual emissions in real-world driving in the U.S.

Rather than trying to cast doubts on Volkswagen, they’d hoped to prove that small diesels like the cars VW made could run cleanly. As they told Bloomberg:

“We had no cause for suspicion,” German, U.S. co-lead of the International Council on Clean Transportation, said in an interview. “We thought the vehicles would be clean.”

While the VWs passed the lab tests performed by the California Air Resources Board, they failed the real-world tests, which measured tailpipe emissions.

Bloomberg reports VW engineers struggled to explain these results to the EPA and CARB after an investigation began. Regulators weren’t satisfied with that explanation, so they threatened to withhold certifications and effectively halt sales.

Only then did VW concede the cars had a cheat system. The EPA didn’t know about this before because they depend on automakers to self-certify their cars.

What was this about a recall last year?

During the course of the EPA and CARB investigations, VW agreed to a voluntary recall of nearly 500,000 TDI cars last December to implement a software patch they claimed would fix the issue. CARB reports that while this patch did reduce emissions somewhat, nitrogen oxides were still “significantly higher than expected.” Which brings us to our next point...

What pollutants are we talking about?

Specifically, nitrogen oxides, or NOx. They contribute to smog, particulate matter and a wide range of health problems for certain people, which is why they’re so heavily regulated in emissions. Via the EPA:

NOx pollution contributes to nitrogen dioxide, ground-level ozone, and fine particulate matter. Exposure to these pollutants has been linked with a range of serious health effects, including increased asthma attacks and other respiratory illnesses that can be serious enough to send people to the hospital. Exposure to ozone and particulate matter have also been associated with premature death due to respiratory-related or cardiovascular-related effects. Children, the elderly, and people with pre-existing respiratory disease are particularly at risk for health effects of these pollutants.

I thought these were good cars, what happened?

They are good cars, actually. The TDI cars have long been gems in the VW and Audi lineups. They provide good power, great fuel economy and loads of torque that happen to make them pretty fun to drive. I was thoroughly impressed by the 2015 Golf SportWagen TDI I tested earlier this year.

They’re just not as clean as they were billed, and now they represent a bunch of huge, costly headaches for VW. Also, you can’t even buy one right now, so whether it’s good in other ways doesn’t really matter.


Besides the fines and prosecutions, why is this a big deal for Volkswagen?

It’s not an exaggeration to say VW has staked quite a bit of their U.S. reputation, brand identity and sales future on their so-called “Clean Diesel” engines. Now that we’re finding out they’re not so clean, it’s a massive blow to the company and its brand.

As their competitors at Honda and Toyota moved into the hybrid realm, Volkswagen spent years trying to convince consumers that their diesel engines were clean, powerful, fuel-sipping better alternatives. They spent millions on ad campaigns — some of which have now been scrubbed from the Internet — trying to rehabilitate the tarnished image of diesels in the U.S.

It’s the same story at Audi, too. They’ve spent a ton of time and energy playing up their TDI engines, even inviting journalists (including ones from this publication) to test them in hypermiling TDI challenges.

At Volkswagen in the U.S., diesels account for 20 to 25 percent of their sales, and now they can’t even move the newest ones off dealer lots. The company has struggled with the U.S. market over the past decade with a reputation for poor reliability and a lineup that lacked many of the products Americans typically go for, like trucks and large crossovers. The growing diesel sales represented a small but shining ray of hope for them.

There’s also the issue of public outrage. Besides the fact that this is one more egregious example of automakers skirting the rules, you have hundreds of thousands of TDI owners who were sold a false bill of goods. Enthusiasts love the TDI engines for their efficiency and torque, but plenty more buyers opted in thinking they were driving clean, environmentally-friendly cars.

It turns out that’s not the case, and the result will likely be buyback demands, class action lawsuits, concerns over resale value and much more.

What does this mean for diesel in the U.S.?

It’s really, really bad.

Since the days of soot-blasting Mercedes-Benzes and horrendous Oldsmobiles, diesel has struggled with widespread adoption on passenger cars in America. While a relatively small number of buyers swear by diesels, they’ve never really hit mainstream success in this country thanks to everything from fewer filling stations to higher fuel prices and environmental concerns. The VW Clean Diesels were supposed to change the latter.

But as emissions standards get tougher and tougher here and in Europe, the diesel’s future looks increasingly dismal. European cities are increasingly cracking down on sources of poor air quality, diesel cars and buses in particular. Many industry watchers wonder if the fuel has had its day. The French government has said they’d like to eventually phase diesel out.

And here in the U.S., if a particularly ambitious, environmentally-minded lawmaker wanted to move to outlaw diesel passenger cars, VW has just given them the perfect amount of ammunition to do it.

I own one of these cars! What should I do?

Right now, nothing. If a recall gets issued it will almost certainly be news, and like all recalls owners will get a notice in the mail to get their cars fixed. For now, drive your car like you would normally.

Or you could sell it and buy a Prius. But then you’d have to own a Prius.

Update 9/21: This morning Volkswagen Canada also announced they were halting sales of TDI models. The CBC reports Environment Canada is in talks with the EPA “to further examine this issue and assess potential implications for Canada.”

Update 9/22: This morning VW announced that the cheating issue on diesel engines is much more vast than initially expected. The company admitted to cheating on 11 million diesel engines worldwide.


Contact the author at patrick@jalopnik.com.