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Volkswagen, Former CEO Sued by SEC Over Alleged ‘Massive Fraud’ During Dieselgate

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More lawsuits around Dieselgate, hope for the Audi TT and R8 may lie in electricity, a potential cash-saving BMW and Daimler partnership on electric-vehicle platforms, a minivan recall and testing autonomous cars with virtual pedestrians. All of this and more in The Morning Shift for Friday, March 15, 2018.

1st Gear: Dieselgate Will Never End

When Dieselgate first broke in 2015, you might have thought the scandal would last a long time. Here, we are, in March of 2019, and surprise: You were right.


Reuters reports that on Thursday, the U.S. Securities and Exchange Commission filed a civil complaint against Volkswagen and former CEO Martin Winterkorn for alleged fraud on investors related to the whole thing.

Dieselgate, as you probably remember, was emissions cheating on diesel passenger cars first discovered with Volkswagen before we found out that pretty much everyone was doing it on some level, though VW was surely the most brazen. Regulators and investors say that Volkswagen should have admitted the scope of Dieselgate sooner, since bad things just kept getting unearthed, but


Volkswagen played the “We didn’t think it would be that bad” card by arguing that others got lower penalties for similar scandals.

From Reuters:

VW was caught using illegal software to cheat U.S. pollution tests in 2015, triggering a global backlash against diesel that and has so far cost it 29 billion euros ($32.8 billion). [...]

The SEC said in its civil complaint on Thursday that from April 2014 to May 2015, VW issued more than $13 billion in bonds and asset-backed securities in U.S. markets at a time when senior executives knew that more than 500,000 U.S. diesel vehicles grossly exceeded legal vehicle emissions limits.

VW “reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company,” the SEC said, adding it “repeatedly lied to and misled United States investors, consumers, and regulators as part of an illegal scheme to sell its purportedly ‘clean diesel’ cars and billions of dollars of corporate bonds and other securities in the United States.”

The lawsuit wants to keep Winterkorn, who resigned from Volkswagen almost immediately after Dieselgate broke, from being an officer or director of a public U.S. company, as well as get back “ill-gotten gains,” civil penalties and interest. Winterkorn’s lawyer didn’t comment on the SEC filing, but Volkswagen did.

From Reuters:

VW said in a statement the SEC complaint “is legally and factually flawed, and Volkswagen will contest it vigorously. The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time.”

The automaker added that the SEC “does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold” but repeats claims about Winterkorn “who played no part in the sales”.


Reuters has more on all of it here.

2nd Gear: The Audi TT Could Be Saved if It’s Electrified

The Audi TT and R8 are at risk of getting cut from the lineup in order to fund future electric and electrified models, but there’s still some hope—they could be saved if they, too, go electrified.


Motor1 reports that Audi’s board member for technical development, Hans-Joachim Rothenpieler, basically said at the Geneva Motor Show that people at the company are split on the TT.

The fates of it and the R8 aren’t decided after their current production run ends, but here’s how Rothenpieler said they could stay alive, via Motor1:

He referred to the former as being “emotional” and that Audi has been “having emotional discussions at the board level.” He admitted some people within the company want to phase out the TT altogether, but Rothenpieler and others are fighting to keep it alive.

Rothenpieler went on to mention he’ll try to convince the high-ranked officials to maintain the TT in production, but in electrified form. He will be doing the same for the R8 in a bid to save Audi’s flagship performance car from extinction.


Don’t get too excited if you’re a fan of both cars, though, because it’s better to have low expectations and be pleasantly surprised. Plus, according to Motor1, Audi boss Bram Schot said the models have to bring in a profit in order to stay around, and that they only make sense in the lineup if they’re selling well.

Ah, reality. What a sad thing.

3rd Gear: BMW and Daimler Consider Developing Shared EV Platforms to Save $8 Billion Each, Reports Say

Mercedes-Benz’s parent company, Daimler, and BMW are reportedly thinking about getting together to work on electric-vehicle platforms, Automotive News cited German outlets Sueddeutsche Zeitung and Auto Bild in writing. The move, according to the reports, would save each nearly $8 billion over seven years.


The companies already work together on things like driver-assistance systems and mobility services, Automotive News reports, and that if they include larger vehicles in their joint platform development, they could save even more money.

Here’s where things are at right now, via Autmotive News:

Auto Bild said Daimler and BMW are in talks over whether to share engineering costs for compact and midsize cars, which are designed to be “electric first,” but also have the capability of using conventional powertrains. [...]

The talks over cooperation on vehicle platforms could still fall apart, Sueddeutsche and Auto Bild said.

Both automakers have acknowledged the discussions, which include sharing engineering outlays for driverless vehicles, but BMW and Daimler have repeatedly declined to comment on whether cooperation could include entire vehicle platforms.


Automotive News reports that in November, BMW’s finance chief said he was open to more work alongside Daimler, but that it was hard to pick out win-win situations when it comes to shared platforms. BMW and Daimler declined to comment on the reports, according to the story.

Consolidation truly feels like it’s the future.

4th Gear: FCA Recalls Nearly 50,000 Chrysler Pacificas Over Potential to Lose Control of Steering

If you’re driving around in a Chrysler Pacifica from the model year 2018, you might want to pay extra attention while driving: Fiat Chrysler’s recalling around 47,771 vehicles for a recall related to certain steering components, which could mess up and leave you unable to control the direction of the vehicle.


FCA announced the recall on Thursday, saying it only applies to 2018 Pacificas made between Nov. 1, 2017, and March 1, 2018. The recall is because FCA found that certain vehicles might have steering-system joints that could separate and cause the driver to be unable to tell the van where to go. In the recall, dealers will check and secure or replace, if necessary, the faulty steering components—for free, of course.

The announcement said the recall should begin next month, and that people with affected vans will be notified. In addition to a whole bunch of Pacificas subject to the recall in the U.S., FCA said there are about 2,200 in Canada, 226 in Mexico and 551 outside of North America.


5th Gear: How Manufacturers Are Using Virtual Pedestrians to Test Autonomous Vehicle Tech

About 70 percent of Americans still aren’t super into of self-driving cars, even though they’re still much further out than companies would like us to think. But the fear is understandable, because in addition to the freaky thought of giving a machine control, there are major issues with current autonomous technology.


One of those weak points is pedestrian detection and how self-driving cars react to people on or near the road, like the Uber crash that killed pedestrian Elaine Herzberg in 2018. Reuters reports that companies like Volvo are using virtual pedestrians and closed courses to test vehicle technology without potentially harming people, and Reuters mainly attributed that to the rightfully stricter rules about testing on the road since the fatal Uber crash.

Here’s how it’s going, via Reuters:

“Everybody has revised the protocols a little bit after that kind of crash because we cannot have that again,” Dennis Nobelius, head of Volvo Cars’ Zenuity driverless software joint venture, told Reuters.

“The industry ... has really been made to do one more loop ... not only (to) make the end product safe enough but also make the testing secure,” Nobelius said from the backseat of the autonomous Volvo car at AstaZero’s track.


Reuters reports that enclosed truck testing is more complicated than car testing, because the trucks are so much bigger:

Trucks which drive themselves are even tougher to test than cars because of their size and weight and truckmakers say they are running tests at enclosed sites like warehouses, harbors and mines where human access can be restricted for safety.

Scania is trialling an autonomous truck at customer Rio Tinto’s Australian mines while an identical truck at its Swedish base runs more tests through simulation.

“In this kind of environment we’re able to test more or less what we need for public roads later on,” Lars-Gunnar Hedström, Scania’s engineering director at connected and autonomous systems, told Reuters.

“We have the possibility to be out on customer sites and run real operations much earlier, which is a big difference.”


The AstaZero track Volvo’s using is booked for the year, Reuters reports, as companies continue to update technology and begin partnerships that require them to book even more testing.

Reverse: Opulence Is Born

Rolls-Royce was established as a company on March 15, 1906, according to Time. If we had to guess, Rolls-Royce would describe its own founding as full of “excellence” and “majesty,” meant to “fascinate” and “scintillate” everyone in all of the land.


Neutral: Do Self-Driving Cars Worry You More as a Fellow Driver on the Road, or Pedestrian?

If 70 percent of Americans are still worried about self-driving cars, there’s a reason, and surely a lot of people are elsewhere as well. So, if the idea of self-driving cars freaks you out, what’s scarier: the idea of driving on the road near one, or walking out in front of one?