Posts

VW For Sale

Volkswagen TDI “Dieselgate” Update

Volkswagen TDI Dieselgate Update

It has been just over a month since we first heard about the EPA’s Notice of Violation to Volkswagen regarding the discrepancies between Volkswagen’s real world emissions levels of NOx and the as tested levels for EPA certification.  As we predicted then, this has turned out to be a pretty big deal in a lot of different ways.  This article is an update on what we know now and what the immediate future looks like for Volkswagen and TDI’s.

As is often the case in these kinds of situations, there has been a lot of misinformation and general mayhem perpetuated by the media and politicians. This has resulted in some panicking by a few TDI owners and certainly some undesirable effects for Volkswagen owners, Volkswagen dealers, and of course Volkswagen itself.  We will attempt to cut through some of the hype and misinformation and break down some of the technical aspects so that you can understand what is really going on.

We will start with some news updates from the US and Europe.  Then we will look at some of the technical information regarding emissions and Volkswagen’s TDI diesel emissions in particular.  Following that we will offer some commentary on class action lawsuits, resale value, and the status of potential recalls and solutions.

News Updates

Some of the biggest news to surface in the last month is that Volkswagen has admitted that over 11,000,000 (Yes 11 Million) of their diesel engines around the world but mostly in Europe, also have similar programming to those manufactured for the US market.  This means that both the financial costs as well as the costs of reputation for Volkswagen are much more significant than we might have anticipated a month ago when we were talking about only ½ million vehicles sold in the US.  Later in this article we will take a look at the differences between US emission standards and European emission standards and how that will affect the actions of Volkswagen.

And as we predicted in the last article, other manufacturers have also come under scrutiny by regulatory agencies.  And it is no surprise to find out that many of them, have employed methods similar to Volkswagen.  In the US, Volkswagen is pretty much the only significant player in the small diesel passenger car market but in Europe almost every manufacturer sells small diesel cars.  When those cars have been tested in real world conditions, they are found to exceed the European emissions standards for NOx.   Interestingly enough, in one Recent European Study Volkswagen cars were actually found to have lower NOx emissions in the real world than almost all of their competition.  But since Volkswagen was “caught” first, they will unfortunately have to bear the brunt of the negative publicity and government action while other manufacturers probably will get little more than a slap on the wrist.

Volkswagen’s response to this whole mess has also been the subject of lots of media interest.  Right off the bat Volkswagen has taken full responsibility.  The CEO of VW launched both an internal investigation and an independent investigation by an outside law firm.  Then the CEO resigned as well as some other top company officials.  VWoA’s CEO has appeared before the media and Congress and promised full disclosure and full cooperation with regulatory agencies.  They have promised to make this right by their customers and dealers.   Time will tell how well they do at all of this, but so far this situation has been a good example of a company doing the right thing when they screw up.  Volkswagen has offered free financing for their dealers for TDI’s that they cannot sell while under the stop sale order and they have offered $2,000 off for any of their existing customers who wish to trade their TDI in on a gas powered model.

Now For Some Technical Information

The media has been using words like “dirty” and “polluting” to describe Volkswagen TDI engines.   But this is actually pretty misleading.  We will take a brief look at emissions in general and TDI or diesel engine emissions in particular.

So just to recap, the emissions component that is in question with the emissions scandal for Volkswagen and diesel engines is NOx or Nitrogen Oxides.  There are couple chemicals in this family – Nitric Oxide (NO), Nitrogen Dioxide (N02), and Nitrous Oxide (N20).  All of these chemicals are naturally occurring in our atmosphere in one form or another.   Somewhere around 60% or more of Nitrogen Oxides are produced naturally.  In nature, they are a result of bacterial processes, biological growth and decay, lightning, and forest and grassland fires. The primary source of man-made nitrogen oxides is from the burning of fossil fuels.  Nitrogen Oxides are not necessarily toxic by themselves but can cause some undesirable compounds such as smog or acid rain when they react with other atmospheric compounds.

Although Volkswagen TDI cars were found to be emitting more NOx in real world driving conditions than the EPA specified quantities, this by itself doesn’t tell the whole story and doesn’t necessarily make them “dirty” or “polluting.  You see there are many other emission compounds besides NOx and most of these other compounds are also regulated by the EPA.  These include, hydrocarbons sometimes referred to as Volatile Organic Compounds (VOC), Carbon Monoxide (CO), Non Methane Organic Gas (NMOG), Particulate Matter (PM), Formaldehyde (HCHO), and Carbon Dioxide (CO2).  When diesel fuel is burned it produces more NOx than gasoline but it produces fewer VOC’s, NMOG, and much less CO2.

The trade off that Volkswagen and other manufacturers had to make is that in order to reduce NOx you must burn more fuel and create more of other kinds of pollutants.  This is especially a factor when you consider emissions produced in the drilling, refining, and transporting of fuels.  So while TDI engines were emitting more than the allowable NOx, they were emitting far less of other emissions compounds.  And they were much more fuel efficient overall – thereby actually producing fewer total emissions.  So it isn’t like Volkswagen set out to cause more pollution or sell a “dirty” car, it’s just that the logistics of reducing NOx to the level mandated by the EPA make it very difficult to also provide good fuel economy and lower overall emissions while having a reliable vehicle.

In the US the NOx specifications for diesel and gasoline engines are the same.  In Europe they do things a little bit differently.  They understand that diesels have overall less emissions and so they make allowance for more NOx in comparison to gasoline powered vehicles.  The latest European standard is .13 Grams/Mile of NOx for light duty diesels in passenger cars compared to the US standard of .05 Grams/Mile.  This is a much more sensible solution especially when you factor in the benefits of significantly higher fuel mileage from diesel powered cars.  Diesel powered vehicles use about 2/3 -3/4 the amount of fuel that a comparable gasoline engine uses.  This equates to a lot less pollution in the process of drilling, refining, and transporting fuels.

So the bottom line is that Volkswagen TDI’s really aren’t dirty and their pollution levels are actually in many cases better than other vehicles when taking the whole spectrum of emissions into consideration.  Just as an anecdote to illustrate part of this.  We have a 2010 Volkswagen Jetta TDI that has 110,000 miles on it.  Over the life of this vehicle so far it has burned about 1,200 gallons less fuel than a gasoline powered Jetta and the tailpipe is so clean inside that you can wipe your finger in it and not get any black on your finger.  I wouldn’t consider that “dirty” or “polluting”.

Recalls

It is clear that Volkswagen will be required to recall all the 2009-newer TDI vehicles sold in the US and some other countries will probably also require recalls based on their specific emissions standards.   Some people are getting quite impatient because there hasn’t actually been a recall issued yet.   This is a complicated process and will take quite some time, so settle down and be patient.

Here are some of the issues.  Volkswagen manufactured three different designs of TDI engines since 2009.  Each of these designs will require a different solution.  Furthermore, the EPA standards changed in 2011 so the TDI’s made before 2011 may not require the same reduction of emissions as the later ones.  In each of these cases, Volkswagen must engineer a solution which reduces the NOx emissions to an acceptable level, then they must test this solution to make sure that it is going to work over the long haul and they must try to discover what the unintended consequences of making such a change might be.  After Volkswagen is satisfied, they will present this solution to the EPA for approval.  The EPA will want to run their own tests to verify that the solution does indeed meet the standard.  The EPA certainly will not just take Volkswagen’s word for it this time and they will probably not get in any hurry to get these tests done.   The last time it took them 6 months to verify the changes that Volkswagen made.

So don’t look for any recalls anytime soon.  Our best guess is that the recalls will start rolling out sometime after the first of the year.  They will probably start with the latest generation of TDI’s installed in 2015-2016 vehicles because those will be the easiest to bring into compliance and there is a lot of incentive to get those vehicles certified so Volkswagen can start selling new TDI’s again.  It might be another 6 months or more before we have recalls for some of the older TDI’s.

What Might Possible Solutions Be?

Starting with the newest TDI’s it should be fairly easy to bring them into compliance.  The CEO of VWoA has indicated that these cars will most likely only need a software update.   These new generations of diesels starting with the 2012 Passat TDI and then all 2015-newer TDI’s have a Diesel Exhaust Fluid (DEF) injection system also called a Selective Catalyst Regeneration (SCR) which injects a urea/ammonia mixture into the exhaust system.  The urea mixture reacts with NOx to form plain nitrogen and water – neither of which are pollutants.  In order for these cars to be compliant there may need to be a greater dosage of DEF which will require filling the vehicles DEF tank more often.  This will probably not affect fuel mileage or performance.  DEF is not very expensive ($2.50/gallon) and currently TDI’s use less than 1 gallon/thousand miles so an increase usage will not be very costly for TDI owners.

For the older generation TDI’s the solution may require more than just a software update.  Volkswagen has indicated that they expect to need to do some hardware changes as well.   The most likely and cost effective scenario would be  to retrofit an SCR system into these cars.  To do that would require the addition of a tank, tank heater, pump, injector and lines, control module, and sensors.  This would also need to be integrated with and wired into the engine computer which may or may not need to be replaced depending on its built in capabilities for expansion.  These components would certainly cost a substantial amount and Volkswagen would need to pay dealer technicians for quite a few hours of labor to install them.  But this is probably better than the alternatives because it would allow the cars to potentially be more efficient and reliable while retaining full power and performance levels.   If they were to try to reduce NOx emissions using only existing equipment on the car it would probably reduce fuel mileage, performance, and long term reliability significantly.  In that case they would potentially need to reimburse TDI owners for the reduced performance and fuel mileage as well as pay for more repairs to the emission system.  If they add an SCR system, I would hope they might give TDI owner’s some coupons for free DEF.

Lawsuits

Many class action lawsuits are already in the works threatening Volkswagen with legal damages for loss of vehicle performance, fuel mileage, reliability, and resale value.  In fact the ink was hardly dry on the EPA notice of violation one month ago when the lawyers sprang into action.  Volkswagen TDI owners are being bombarded by legal firms asking them to join in class action lawsuits.    Now unless you are a lawyer yourself or really like lawyers, you would be advised to stay away from these class action lawsuits.   In a class action lawsuit the only people that really benefit are the lawyers. When it is all said and done you might get a coupon for a free oil change or $500 towards the purchase of a new car but the lawyers will get millions of dollars and Volkswagen will lose millions.  So please – don’t get caught up in all that mess.  Let the dust settle and when everything gets sorted out Volkswagen will probably do the right thing by you.  These lawsuits will wind their way through the court systems for months and years and eat up huge quantities of money.  Nobody wins but the lawyers.

Resale Value

One of the concerns that TDI owners have is resale value.  Will my TDI be worth anything if I want to trade or sell it?  Some TDI owners are already panicking and rushing for the exits – trying to sell or trade their cars.  And they report that Volkswagen dealers or other dealerships won’t give them much of anything on trade or won’t even take their trade at all.  This has led some people to believe that resale value really has plummeted.  The reality is somewhat different. Volkswagen dealers cannot sell any new or late model TDI vehicles.  So they certainly they don’t want to trade any of these cars in because they can’t sell them. But other dealers can sell them and other dealers are still buying these cars.  In fact wholesale auction prices for used TDI’s has held fairly steady over the last month.   There are still people buying these cars.  Once Volkswagen issues a proposed solution and the uncertainty of all of that blows over I predict a sharp increase in resale values.  It will be many months before Volkswagen will be allowed to sell diesel cars and that will drive up the demand for used ones.  If you want to buy one the best time is right now and that window is probably closing pretty fast.

Contact us at Mountain Valley Motors if you want us to find you a clean, well maintained TDI.

Drive More, Worry Less !

Volkswagen and EPA Notice of Violation for 2009-2015 TDI Vehicles: Commentary and Analysis

At Mountain Valley Motors we specialize in Volkswagen and particularly Volkswagen TDI diesel powered vehicles. So it is with special interest that we have taken notice of the recent news and developments regarding the Environmental Protection Agency’s (EPA) notice of violation (NOV) to Volkswagen of America (VWoA) regarding the emissions performance of 2009-2015 TDI vehicles.  Many of you – our customers own Volkswagen TDI’s and are faced with a barrage of information and questions about this.  Hopefully we can help cut through some of the confusion or misinformation and provide a commentary and analysis that can be helpful.  At this point we have limited information and will be updating this note as more information and developments are forthcoming.

Background Information:

Beginning in January 2007, stringent emissions standards were phased in for the United States by the EPA for all highway diesel vehicles. These standards required a drastic reduction of allowable Nitrous Oxide (NOX) emissions as well as other emission components including diesel particulates (soot).  These standards were and are even more strict than European standards and were very difficult for manufacturers of diesel vehicles to meet.  The EPA must certify the emissions compliance of each vehicle sold in the US.  They do this by a standardized testing of a sampling of vehicles on a stationary dynamometer.  The test that they run is meant to mimic real world driving. They also use this test to help calculate fuel consumption for the EPA estimates that are found on the window sticker on new vehicles.  The conditions and parameters of this test are published and made available to the vehicle manufacturers so they know exactly what the car must do to pass and under what conditions the car will be run while tested.

The Issue:

A number of years ago European researchers discovered that real world NOX emissions of diesel powered vehicles in Europe were significantly different than the standardized emissions testing of new vehicles should indicate.  Since the US had much more stringent NOX emission control standards it was decided by one researcher to conduct a study of US diesel vehicles to see how the standards were being met in the US in an effort to learn how things could be done differently in Europe.  They teamed up with West Virginia University to conduct this study.  The researchers hooked up emission monitoring equipment to three different diesel powered vehicles and drove them around in different real world environments.  They also ran the standardized EPA dyno test on these same vehicles.   They found an interesting anomaly.  When they tested the VW diesel cars in the lab they met the EPA standard just fine.  But when they drove these same cars on the road the emissions of NOX were significantly higher than the EPA standard.  This study was published in May of 2014

Once the EPA and California Air Resources Board (CARB) were alerted to this anomaly, they conferred with Volkswagen to see what the discrepancy was all about.   Volkswagen did their own tests to try to verify the test results.  They came up with a revised software program that was supposed to result in lower real world NOX emissions and they recalled all 2009-newer TDI cars in December of 2014 to apply this software update.  In May of 2015 the EPA tested the recalled cars and found that NOX emissions had been improved in real world driving conditions but that the standards were still not being met.  They threatened to withhold certification for all 2016 Volkswagen diesel cars unless Volkswagen could prove that they had fixed the issue that allowed higher real world emissions than the standardized tested emissions.

Volkswagen then admitted that they had designed the engine management software in these diesel vehicles to recognize when a dyno test was being run or when the car was being driven on the road and they had written the software in such a way as to make sure that when it was on the dyno it would meet the emission standard.  When the car was being operated on the highway the tuning could be different and might not meet the emissions standards under all conditions.

Needless to say, the EPA and CARB are not very impressed and have issued a Notice of Violation to Volkswagen requiring that they recall all the affected vehicles (approx. 500,000) and fix them in such a way as to make certain that they will meet the standards in effect when the vehicles were manufactured.  They have also threatened criminal investigations and large fines.

What this means for Volkswagen:

This is a big deal and could be very detrimental to Volkswagen.  So far Volkswagen has not issued any public explanation but they have stopped the sale of all new and used 2009-newer TDI’s by their US dealers, they have pulled and scrubbed all their online ads for TDI diesel cars, they have promised to cooperate with the EPA and find a solution, and the VW CEO has apologized and promised an outside independent investigation.  Potentially VW could be exposed to millions or billions of dollars in fines and legal costs.  They also will be required to recall all 500,000 TDI vehicles made since 2009 and either retune or refit them so that they will meet the EPA standard.  And they will not be able to sell any new TDI’s until they can satisfy the EPA that the new cars will actually meet the standards in real world driving conditions.  This is not a good time to be Volkswagen and it certainly will hurt their dealer network as well.  Just the negative press alone will be very costly.  Hopefully Volkswagen has or will be able to develop a good solution fairly quickly.  But this could mean the end of TDI diesel sales in the US if the costs of compliance get too high.  And it certainly won’t strengthen VW’s position in the marketplace or their ability to develop new models for the US market.

What this means for you the TDI owner:

Many TDI owners are panicking and all bent out of shape over this news.  Just calm down.  The sky is not falling.  Your TDI car is still a good car that performs very well and gets excellent fuel mileage.  Its emissions are remarkably clean by any standard except perhaps the EPA NOX standard.   Even before the last recall VW TDI vehicles in the University of WV test were running much lower NOX emissions than previous generations of diesel engines.  For example, the 2013 Passat TDI had an average of .24 grams per mile of NOX.  Previous generations of TDI diesel engines were EPA certified at 1.0 gram per mile. The EPA standard is .05 grams per mile.  All other emission gasses were below the EPA limits in every test.

Some owners are worried about resale value. The resale value on your TDI might actually go up – especially if VW can’t sell any new ones for an extended period of time.  And if the values of diesel trucks are any indication, the vehicles with fewer emissions controls tend to hold their value better over time due to better fuel mileage and reliability.  In the short term resale value may go down, but these cars are already a great value and nothing has really changed that yet.

Once Volkswagen does come up with a solution and a recall then owners would be advised to be cautious.  You see these cars can indeed be made to meet the standard.  They have done so repeatedly on the dyno test.  What we don’t know for sure is why VW didn’t want to run that same programming all the time on the highway.  They were probably concerned about decreased service life of emissions components and reduced fuel mileage.  This might get a little technical, but you see in order to reduce NOX formation in a diesel engine you must reduce the temperature at which the fuel is burned.  This results in a less efficient use of diesel fuel and also causes increased production of soot which must then be trapped and burned in the diesel particulate filter (DPF).  The re-burning of the soot in the DPF is called a DPF Regeneration and what is left in the filter is small amounts of ash which accumulate over time and eventually clog the filter. The more soot that is created, the more fuel that must be used to perform the Regeneration and the more quickly the DPF will get permanently clogged by ash requiring replacement of the filter.  On the 2012-newer Passat TDI and on all the 2015 TDI’s VW installed a Selective Catalyst Regeneration (SCR) device which uses Diesel Exhaust Fluid (DEF) to reduce NOX after the combustion.  This allows for a higher burn temperature and fewer DPF Regenerations.  It should be easier to bring these vehicles into compliance without any negative side effects other than an increased consumption of DEF.  The older TDI’s might be more difficult to bring into compliance without sacrificing fuel economy, power, or reliability.  So don’t rush to your Volkswagen dealer for the recall as soon as soon as it comes out.   Wait and see what the results will be and make an educated decision about whether or not it will actually be beneficial in the long run. And also be aware that once the recall is issued VW dealers will be required to apply the recall to every car that comes through one of their service centers. So if you don’t want the recall applied to your car right away then take it to a shop other than a VW dealership for service. Also if you are thinking about buying a used TDI the best time is probably right now while everybody else is panicking.

What this means for Mountain Valley Motors:

At Mountain Valley Motors we will continue to provide exceptional service and aftermarket solutions for Volkswagens and TDI’s.  We will stay abreast of developments and apply our technical experience and knowledge to give you good advice regarding maintenance and repairs to your TDI.  Because we are not a VW franchised dealership we have more options and alternatives to offer than VW dealers do.  We will continue to sell used VW TDI’s and anticipate higher demand and values over the long term.  We have a number of them for sale right now and just purchased several more units when this news broke.

What this means for the rest of the industry:

Almost all manufacturers of vehicles sold in the US have designed their vehicles to specifically meet the EPA standards under test conditions.  Under other conditions results may vary.   These revelations of what Volkswagen has been doing will probably result in a wide spread push to re-evaluate emission standard testing for other vehicles.  We are probably only seeing the tip of the iceberg here.  Many auto manufacturers are probably pretty nervous about now.  This will probably also effect manufacturers in Europe and other places around the world. This issue might stall the development of more diesel technology for passenger vehicles in this country.  Several manufacturers such as Mazda and Honda have promised diesel cars for a couple years now but have had difficulty meeting the EPA standards and so have not brought those cars to market in this country yet.  This certainly won’t help.

So all in all this looks to be a pretty big deal on a couple fronts.

But our advice is come see us at Mountain Valley Motors for all your automotive needs!

Drive More. Worry Less.