The Volkswagen Whee ..

[Totoro]

Down 40% or so in two days.

Try putting that in a fundamental value analysis or technical analysis model.

This is probably going to turn out to be systemic. As in: other automakers probably do the same thing.

Curious whether this will turn out to be an overreaction (as usually happens with those sort of thing). Not betting my money on it though.

 

[aaronc879]

Down 40% or so in two days.

Try putting that in a fundamental value analysis or technical analysis model.

This is probably going to turn out to be systemic. As in: other automakers probably do the same thing.

Curious whether this will turn out to be an overreaction (as usually happens with those sort of thing). Not betting my money on it though.

My best guess is it will bottom out soon then gradually go back to close to where it was. So, you could buy in soon and Likely make a very good profit. I'm not confident enough to try it myself with the limited cash I have on hand though.

 

[cooch96]

What most impresses me is that this scandal has been going on for so long. I would think international, corporate secrets would be nearly impossible to keep.

Maybe I will buy $1k of shares or so next week. I need to do a little more research first though.

 

[Midpack]

When I heard yesterday, I assumed the emissions testing 'software cheat' reduced emissions by something like 10-50% - until this morning.

WOW.

Good luck to those reselling any of the 5 VW or Audi engine/model combinations affected. Not with my 10-foot pole...

https://www.techdirt.com/articles/2...sts-welcome-to-internet-cheating-things.shtml

The "switch" senses whether the vehicle is being tested or not based on various inputs including the position of the steering wheel, vehicle speed, the duration of the engine's operation, and barometric pressure. These inputs precisely track the parameters of the federal test procedure used for emission testing for EPA certification purposes. During EPA emission testing, the vehicles' ECM [electronic control module] ran software which produced compliant emission results under an ECM calibration that VW referred to as the "dyno calibration" (referring to the equipment used in emission testing, called a dynamometer). At all other times during normal vehicle operation, the "switch" was activated and the vehicle ECM software ran a separate "road calibration" which reduced the effectiveness of the emission control system (specifically the selective catalytic reduction or the lean NOx [nitrous oxides] trap.) As a result, emission of NOx increased by a factor of 10 to 40 times above the EPA compliant levels, depending on the type of drive cycle (e.g. city, highway).

 

[easysurfer]

Definitely in the "They did what?" category. Some heads are gonna roll.

 

[jazz4cash]

I worked in an auto emission lab in the 80's where we conducted EPA dyno testing for self compliance and emission audits for EPA and CARB. A lot of info was shared with government agencies and even competitors. The potential to cheat in this form was so obvious to us that no one would have dreamed of actually trying to do it. Our software and controls were primitive compared to what is available now. A few heavy duty diesel suppliers were caught doing something similar a few years ago. It's surprising if this was going on at only one supplier and the others were completely unaware.

 

[bingybear]

Interesting.... has anyone found what would change in the car performance if they ran the cheat all the time. I would assume it would then be compliant at least with emissions.

I would assume that all cars these days modify settings based on conditions. Older cars did this more mechanically. But adjusting for the test does sound like a cheat. I just wonder if they ran the cheat all the time, what do they give up? mileage? performance? It would be interesting to know... and this could be a very easy fix... just software. But what was so important to use this cheat?

 

[Running_Man]

VW today announced it is taking a charge larger than the BP spill and the potential costs are more than 3 times what BP incurred at 18 billion. To advertise yourself as the "eco-green" company and intentionally release 40 times the pollutants in order to get the performance of the diesel engine that makes it fun to drive is going to result in 2 things - massively unhappy customers at being de-frauded and a car that will no longer perform as it did previously.

I would be surprised if VW stock did not have a long way to go down from here, the news coming out is going to be bad both PR and financially

 

[devans0]

My first thought is how many owners will accept that type of performance hit. Unless they live in a state that requires compliance, I don't see many being turned in to be "fixed". If it gets fixed and performance isn't what was in the test drive? Fraud? Refund or lawsuit? I think this will cost VW more rather than less.

 

[easysurfer]

Just curious. How was emissions gate discovered? Did someone stumble upon the software (you know, like an interception during an AFC championship game) or from a whistle blower? I doubt the VW CEO confessed just to clear his conscious.

 

[bingybear]

Just curious. How was emissions gate discovered? Did someone stumble upon the software (you know, like an interception during an AFC championship game) or from a whistle blower? I doubt the VW CEO confessed just to clear his conscious.

read link posted by midpack above. I think it was University testing that initially uncovered it.

 

[easysurfer]

read link posted by midpack above. I think it was University testing that initially uncovered it.

Thanks. Guess I shouldn't have skimmed the link

 

[frayne]

Personally I think some people should be going to jail and not in some country club federal prison. This is a blatant disregard for our laws. Fines will hurt the stockholders and be passed on down the road to the consumer. I will never buy a VW product.

 

[marko]

Waiting for someone to blame the the Patriots........

 

[MichaelB]

From the morning FT Q&A: Why would VW cheat emissions tests? - FT.com

​

The EPA in 1998 fined various makers of diesel engines for including defeat devices in the software monitoring the emissions of heavy trucks. In those cases, emissions were found to be as much as three times permitted limits. Earlier in the 1990s, both Ford of the US and Japan’s Honda paid fines for installing software that caused their vehicles to emit more pollutants than they otherwise would have done. More recently, in 2014, two Korean carmakers — Hyundai and Kia — paid fines to the EPA for overstating their vehicles’ fuel economy.

I agree with Running_Man, there's plenty of downside risk here.

 

[Nunthewiser]

^^ I also suspect VW is not alone in tweaking the numbers. We just bought an Altima that gets outrageous fuel economy for its size...wonder why?

 

[jazz4cash]

Thanks. Guess I shouldn't have skimmed the link

I read the link and it does not go into much detail about how the hack was uncovered. Interesting that VW has/had plants in the state of WV for decades, but recently built a new plant in TN...surely coincidence

As far as the tradeoff, I would think performance will take a major hit and indeed it may be difficult/impossible to get owners to bring the cars in. Eventually the software will be connected wirelessly and mandated updates will not be at the owners discretion.

 

[MichaelB]

Here's a link to a Bloomberg story that gives some additional background on how this was detected. VW's Emissions Cheating Found by Curious Clean-Air Group - Bloomberg Business

West Virginia University!

 

[Lakewood90712]

Personally I think some people should be going to jail and not in some country club federal prison. This is a blatant disregard for our laws. Fines will hurt the stockholders and be passed on down the road to the consumer. I will never buy a VW product.

I have a quirky thought on penalty . 1 prohibit the registration renewal of all affected vehicles, until re-programmed at the dealer. 2, do an actuary calc. of the fuel mileage loss . These cars have plenty of power, so with the ecm /pcm ( black boxes) re-programmed to comply , so the mileage will suffer , VW to make a cash payment for diminished value to current owners, 3, determine civil penalty per vehicle affected, split half of the fine to the government, and distribute the other half to the makes of competitive diesel vehicles. How's that for a pucker factor, VW having to give money to Benz and BMW , as punishment for un-fair business practices.

Executives never go to jail, and this thing goes a whole lot lower in the management food chain. Has to be hundreds involved.

I am sure their competitors have known about this for years, but keep their mouths shut , like the Mafia never rat's on the other guy.

 

[Totoro]

I am sure their competitors have known about this for years, but keep their mouths shut , like the Mafia never rat's on the other guy.

Just as likely they are guilty themselves. We'll know within a few days.

 

[Fermion]

I am looking at buying puts right now. The VLKAY symbol is $25.50 but I think before all is said and done it will be around $15.

The lawsuits have to be enormous for something like this. It would be on par with Apple admitting something like the Iphone causes cancer.

 

[travelover]

I worked in an auto emission lab in the 80's where we conducted EPA dyno testing for self compliance and emission audits for EPA and CARB........

My first position with MegaMotors in 1981 was in emissions certification and because Mega had had their hands slapped by the EPA in the recent past, we got a lecture on how we had to even avoid the appearance of doing anything underhanded. The EPA rules at the time specifically addressed defeat devices even giving examples like using a hood open sensor to change the control strategy. The cars were run with the hood open on a chassis dynamo meter during the test. In recent years, auto companies just self certify with occasional auditing by the EPA to ensure compliance.

 

[Midpack]

My first position with MegaMotors in 1981 was in emissions certification and because Mega had had their hands slapped by the EPA in the recent past, we got a lecture on how we had to even avoid the appearance of doing anything underhanded. The EPA rules at the time specifically addressed defeat devices even giving examples like using a hood open sensor to change the control strategy. The cars were run with the hood open on a chassis dynamo meter during the test. In recent years, auto companies just self certify with occasional auditing by the EPA to ensure compliance.

Why am I not surprised. I dealt with the EPA, OSHA, ISO, UL, etc. all my working life, and they relied way too heavily on industry/manufacturers for most of their data. Sadly, they were easily fooled, often fooled themselves with no help from manufacturers. Their audit sampling was so small it was laughable. At least some of them audited at random, some were pre-scheduled (ridiculous for a supposed 'watchdog').

In all fairness, none of them are nearly funded/staffed to do the job the public probably thinks they do. I personally had those discussions with regulators up and down the food chain, most admitted they are overwhelmed and just do the best they can...

All new cars and light trucks sold in the U.S. are required to have a economy label posted on the window sticker. The label contains the city and highway miles-per-gallon values, as well as other related information. To calculate these values, laboratory tests are performed on pre-production vehicles. Most testing is performed by manufacturers at their own testing facilities. EPA audits the data from this testing and performs its own testing on some of these vehicles to confirm the manufacturers' results.

Emission and Fuel Economy Test Data | Cars and Light Trucks | US EPA

 

[MichaelB]

At least in the US there are a number of unrelated organizations, affiliated with universities or single purpose constituencies (e.g. clean air groups, Consumers Union), that fund or conduct their own research and scrutinize the claims of others. The auto companies (among others), around the world, are not subject to "only" gov't inspections.

I expect the same hold true for Europe.

 

[frayne]

Executives never go to jail, and this thing goes a whole lot lower in the management food chain. Has to be hundreds involved.

I am sure their competitors have known about this for years, but keep their mouths shut , like the Mafia never rat's on the other guy.

And there in lies the problem. Put a few of these high fliers behind bars and maybe, just maybe the culture will change. The company paying a fine is a joke.