Volkswagen Admits That It Has Been Cheating The Emission Tests – Stocks Plunge By 25%

Volkswagen has been dazzling auto enthusiasts in Frankfurt these days. But, their actual attention will be drawn to the US where a criminal investigation has been initiated in the US Justice Department in the wake of the auto giant’s admittance of rigging emission tests in their favor. Volkswagen has halted its sale of the affected models in the US, and we will have to wait what the investigation will have to say about the matter. Most likely a hefty fine will be implemented, and several key management personnel will be fired from their jobs. It is a famous case of criminal deception towards state laws, and the implications could be even worse if the matter gets dragged on. Now that the company has admitted guilt in the case, the House Energy Committee is also planning to hold a hearing with the automaker shortly and dole out extra fines if needed be.

It seems that the newer and tougher emission laws are bearing down hard on the automakers throughout the globe. It’s a two-front war now since lower emissions will also mean lower efficiency that they had worked so hard to achieve. Volkswagen and other German auto manufacturers boast better fuel efficiency than most and thus it is their competitive advantage to be so. But, we never expected that this kind of rule-breaking can be done by a company of Volkswagen’s repute. Other auto giants like Toyota and General Motors have paid hefty fines in faulty ignition switches and acceleration cases in recent times totalling 2 billion $ alone.

Some effects of this fraud were immediate as the stocks of the company fell 25% in the aftermath of this admission of guilt. It is currently being traded at 132 Euros, shedding more than 30 Euros on the go. Although no potential life risk were present in this case, it was a blatant violation of state laws, and the prosecutors want the company to be heavily punished to set an example for rule breakers.

The fraudulent software works in such a way that when the engines are supposed to be tested by the authorities, it releases much lesser emissions and when it is being driven on roads, it jacks up its NOx levels to increase the efficiency. This was particularly present in the Volkswagen’s Diesel 2.0 liter cars. As a direct consequence, the company has stopped further sales of these cars till the verdict comes out. The affected lines of cars are Beetle, Jetta, Golf and even Audi A3 itself. These Nitrogen Oxides can increase the risk of Asthmatic attacks in patients up to forty percent, so it is pretty serious. The regulatory authority can enforce a fine of 37,500 $ on each vehicle on its own which can amount to 18 billion $, but it is highly unlikely that this much figure will be slapped on the auto giant. And this is just in the US alone. Other countries including the European nations will also be forced to look into the designs of the company since it has lost the trust of the law and come up with more fines and strict supervision in the future.