Dieselgate Will Never End

Photo: AP
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

Volkswagen’s CEO charged by German prosecutors, Carlos Ghosn is still a thing, and Uber gets a short reprieve in London. All that and more in The Morning Shift for Tuesday, Sept. 24, 2019.

1st Gear: Dieselgate? Dieselgate! (This Time It’s Stock Market Manipulation)

Volkswagen’s CEO is Herbert Diess, who came to the company from BMW just before the Dieselgate scandal began to unfold in 2015. He’s now been charged by German prosecutors for stock market manipulation for not warning stockholders that Dieselgate was coming.

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Per The New York Times:

Hans Dieter Pötsch, the chairman of Volkswagen’s supervisory board; Herbert Diess, the chief executive; and Martin Winterkorn, a former chief executive, are accused of failing to inform stockholders of an investigation in the United States that led to charges of emissions cheating.

Volkswagen shareholders did not learn of the cheating until the Environmental Protection Agency issued a notice of violation in September 2015. Volkswagen’s share price fell by almost half and the cost of the scandal has since topped $30 billion in court settlements and fines.

All three of the accused men issued statements denying accusations that they violated their duty under German law to warn shareholders of events that could affect the stock price.

Awkwardly, lawyers for Diess say that he will keep running the company. More awkwardly, The New York Times calls Diess “Mister” and his lawyers call him a “Doctor.”

“Neither the facts nor the law justify the charges,” lawyers for Mr. Diess said in a statement. “Newly arrived in July 2015, Dr. Diess was not in any position to foresee the magnitude of the economic consequences actually resulting from the diesel emissions fraud.”

Mr. Diess “will continue to carry out his duties in the company with absolute commitment,” the statement said.

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2nd Gear: The Saga Of Nissan And Carlos Ghosn May Never End Either

They were each fined by the Securities and Exchange Commission, according to Bloomberg. Ghosn, you may remember, was CEO of Nissan for over a decade before possibly getting whacked and now fighting charges of financial misconduct.

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Per Bloomberg:

Nissan was fined $15 million over the allegations, while Ghosn, 65, was hit with a $1 million penalty, the Securities and Exchange Commission said in a Monday statement.

The SEC said the Japan-based automaker granted Ghosn broad authority over the company’s pay decisions, with the startling power to set compensation for himself, other executives and directors. That ultimately led to Ghosn — with substantial assistance from his subordinates — excluding more than $90 million in his own pay from Nissan’s public statements to investors. Ghosn additionally took steps to increase his retirement allowance by $50 million, according to the regulator.

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Ghosn is out of jail for now as he fights the allegations. That may be only the slightest consolation, since the rest of his life will probably be spent in dimly-lit rooms filled with lawyers.

Ghosn had a system.

Because of an impending change in Japan’s disclosure rules in 2009 for corporate directors, “Ghosn became concerned about criticism that might result in the Japanese and French media if his total compensation became publicly known,” the SEC said.

Every year from 2011, a senior employee “would prepare for Ghosn’s approval a document summarizing Ghosn’s total fixed compensation, his paid compensation that was being disclosed, and his remaining compensation that was not paid and was not being disclosed,” the complaint said. About $94 million of Ghosn’s undisclosed compensation was determined in this manner, the agency said.

In order to pay out the undisclosed compensation, “Ghosn and his subordinates sought multiple ways to pay his undisclosed compensation through Nissan-related entities without disclosure,” the complaint said. While they considered paying this out using Nissan subsidiaries, they instead decided to postpone the payments for a later undisclosed date, according to the agency.

The total remuneration, paid remuneration and postponed remuneration were tracked each year in a spreadsheet, according to the SEC. A Nissan employee “showed or provided to Ghosn the reports he prepared each fiscal year to set Ghosn’s total, paid, and postponed compensation, as well as the spreadsheets he maintained and updated each year that tracked the same information,” the complaint said.

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3rd Gear: Ford Is Recalling Over 322,000 Cars Because Of Possible Battery Fires

The cars are all in Europe, per Automotive News.

The recall affects Mondeo, S-Max and Galaxy vehicles built between February 2014 and February 2019, a Ford spokesman told Automotive News Europe.

Ford said leaking battery acid around the battery’s negative terminal could cause the battery monitoring system sensor to fail. As a result, the battery could overheat, presenting a potential fire risk.

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Love some leaking battery acid.

4th Gear: NIO Isn’t In The Best Of Places

A company that some call the Tesla of China is losing cash much faster than Tesla itself.

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Per Bloomberg:

Shanghai-based NIO Inc. is poised to report Tuesday that it lost another 2.6 billion yuan ($369 million) — around $4 million a day — during the second quarter, according to the average of two analysts’ estimates. That would bring accumulated losses at the company, which is backed by technology giant Tencent Holdings Ltd., to about $5.7 billion since William Li founded the carmaker in 2014.

Cost overruns, weak sales, and major recalls have led NIO to plunge about 74% since its market value hit a record $11.9 billion about a year ago. More broadly, the company’s reversal of fortune illustrates why concerns are mounting that China created an electric-vehicle bubble that may be about to burst.

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The Financial Times says that there will also be layoffs.

Recall costs of thousands of vehicles over battery concerns and sliding sales pushed the group to a Rmb3.3bn ($478.6m) net loss in the three months to June, sending US-listed shares down 10.5 per cent in pre-trading on Tuesday.

Chief executive William Li said the group will have to cut 2,000 of its roughly 10,000 staff and sell off noncore businesses by the end of the year in an attempt to rein in cash as the company edges close to collapse.

It was also forced to cancel its second quarter earnings call.

Nio blamed a slowdown in the Chinese car market, as well as lower demand for its vehicles and services, for its poor performance.

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Making cars is hard.

5th Gear: Uber Buys Some More Time In London

Uber probably does not have a sustainable business model, but in London, at least, it has now obtained a license to operate for two months. Its existence in that city has been in jeopardy for some time.

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From Reuters:

Transport for London (TfL) rejected the Silicon Valley company’s license renewal request in 2017 due to failings it said it found in its approach to reporting serious criminal offences and driver background checks, prompting legal action.

A judge in 2018 then granted Uber (UBER.N) a probationary 15-month license, which expires on Sep. 25, after the firm had made several changes to its business model in London, its most important European market.

TfL said the new two-month license comes with “new conditions to ensure passenger safety” and it wanted more details from the company.

“Uber London Limited has been granted a two-month private hire operator license to allow for scrutiny of additional information that we are requesting ahead of consideration of any potential further licensing application,” said a spokesman.

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The conditions involve things like checks on drivers and insurance. Also I enjoyed this quote from the mayor of London.

Mayor Sadiq Khan, who is also the chairman of TfL, has long been critical of Uber, telling LBC radio last month that they need to play by the rules.

“You will know my track record which is standing up to the big boys, and they are boys, and make sure everyone plays by the rules,” he told listeners to a phone-in. “I don’t care how many lawyers you employ or how big your PR budget.”

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Reverse: Honda Is Older Than You Think

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Neutral: What Is Your Favorite Honda Vehicle?

You meet the nicest people on a Honda, I’m told.

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About the author

Erik Shilling

News Editor at Jalopnik. 2008 Honda Fit Sport.