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How Volkswagen Mocked Corporate Social Responsibility: “Diesel Gate” Outs Sustainable Business Sham



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How Volkswagen Mocked Corporate Social Responsibility:

“DieselGate” Outs Sustainable Business Sham

In September 2015, the automotive industry played witness to the largest scandal among its ranks in recent history, as Volkswagen was caught cheating with its pants down. The German car manufacturer had recently overtaken Toyota in sales, in the first half of 2015, to establish itself as the leader of the global car market. Though, this shouldn't have been a surprise to anyone, since VW was largely leading the automotive industry in terms of revenues, profits, and assets even in 2013.

The world was left with jaws agape in early September, as the German giant admitted to placing “cheat” software in roughly 11 million of its diesel-engined cars worldwide. Carried out since 2009 onwards, this subterfuge was perpetrated in an effort to deceive pollutant emissions testing in developed markets like US and EU. As investigations into the fraud continue, the primary reason seems to be that Volkswagen did not wish to install a Urea-based exhaust system marketed as AdBlue – roughly $336 per unit – into the “clean diesel” engines which they'd spent years developing for their 2009 models. In-house testing into the engines revealed that they emitted roughly 35 to 40 times the amount of nitrogen oxide, linked to smog, acid rain, asthma, and other illnesses, above the limits allowed by clean air legislation in developed nations.

Suddenly, the car manufacturer was faced with two options – go back to the drawing board and miss out on the 2009 car season, or spend exorbitant amounts of money to fix the problem by retro-fitting their engines with AdBlue. They chose option three – cheat through a “defeat device” software. Ironically, the test which ultimately uncovered the deception was carried out by independent American researchers – working for an NGO, rather than the EPA or other bigwig agencies – to show their European counterparts that diesel engines can be used with cleaner emissions. Despite their published efforts coming to light in 2014, however, the EPA was unable to make Volkswagen admit to the cheat till September 2015 – after threatening to withhold approval for VW's and Audi's 2016 diesel models.

Now, after having lost its CEO in the wake of the scandal alongwith almost a fifth of its share value, Volkswagen is looking at criminal investigations from the US and Chinese governments, a legal penalty for $18 billion for the roughly 482,000 cars it sold in US, and class-action lawsuits from owners of post-2009 VW Jetta, Golf, Beetle, and Passat, as well as similar Audi diesel models. Even though the firm has set aside roughly $7.3 billion to deal with this scandal, early projections show that this amount may be grossly insufficient.

By now, we're sure that you have a flood of unanswered questions – What are these “defeat devices”? How do they affect the car's performance?

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How Volkswagen Mocked Corporate Social Responsibility: “Diesel Gate” Outs Sustainable Business Sham

  1. How Volkswagen Mocked Corporate Social Responsibility
  2. Cars, Pollution & the EPA’s Efforts Through Corporate Social Responsibilty
  3. In a perfect engine, oxygen in the air would convert all hy- drogen to water, and fuel carbons to carbon dioxide – but in reality, engines emit several types of polutants.
  4. Motor vehicles are responsible for nearly 50% of smog-forming compounds, more than 50% of acid-rain con- tributing nitrogen oxide, and account for 75% of carbon monoxide emissions in US.
  5. The Clean Air Act of 1970 gave the Environmental Protection Agency broad authority to regulate motor vehicle pollution, which gave the agency authority over pollution control standards for the automotive industry.
  6. However, while the EPA created the standards, automotive companies were left to self-regulate through corporate social responsibility practices in order to create sutainable business models.
  7. How Volkswagen Mocked Corporate Social Responsibility & the EPA
  8. Volkswagen’s diesel engines were known for their great fuel economy, but their engine could stay within pollutant emission limits only when more diesel was being burnt, which would wreck the mileage.
  9. Under normal conditions, when less fuel was used in on- road conditions, the diesel engines released up to 40 times the legal limit of pollutants.
  10. According to New York Times, in 2008, VW discovered that the new “clean diesel engines” it spent years developing would fail US and EU modern air quality standards by significant margins.
  11. To clear their pollutant-vomiting cars through testing, VW installed “defeat devices” in their diesel cars, including Skodas, Audis, and commercial VWs totalling roughly 11 million in number, from 2009 onwards.
  12. The “defeat devices” would sense emission testing procedures, and adjust engine output to reduce pollutant emissions.
  13. How Does The “Defeat Device” Work Anyway?
  14. Modern cars have several software and hardware computing elements which sense, read, and calculate various metrics to make thousands of small, continuous adjustments to the vehicle.
  15. The “defeat device” was a specialized software which read steering wheel position, tire rotation, atmospheric pressure, duration of engine run-time, etc. to determine if car was “on-road” or in “emission testing”.
  16. If the software determined that the car was be- ing tested for emissions, it would increase the amount of fuel being burned in the engine, and so lower nitrogen oxide pollutant emission levels.
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  18. How Was Volkswagen Caught?
  19. The EPA never caught on to Volkswagen’s software cheat
  20. The scandal was unearthed by a team of researchers at West Virginia University who used a mobile testing rig to test the pollutant emissions of a VW Jetta and VW Passat while driving on-road.
  21. The team published their findings in spring 2014, and their research was used by the EPA to make Volkswagen admit to the “defeat device” in Septem- ber 2015.
  22. Volkswagen’s Fallout From Largest Global Au- tomotive Scandal
  23. Volkswagen CEO Martin Winterkorn resigned due to the scandal.
  24. The US Justice Department is reported to have opened a criminal investigation into Volkswagen.
  25. Matthias Muller, Porsche chief and new VW CEO, has ordered tiered mass recalls for upgrade on roughly 11 million affected cars to remove “cheat” software.
  26. The company is facing roughly $37,500 in US federal fines per vehicle for the roughly 482,000 cars sold in the country – bringing a whopping tally of $18 billion to be paid.
  27. The German manufacturer, which had recently become the largest automotive company in the world, has put aside $7.3 billion for expenses relating to this fiasco, though preliminary data suggests that this figure may be grossly inadequate.
  28. Class-action lawsuits from car owners already underway in US against Volkswagen, on grounds of misrepresentation of vehicular performance, breach of contract, increased fuel costs for drivers, and heavier depreciation of vehicular value.
  29. EPA to step up testing emission standards and procedures in the wake of VW scandal.
  30. Government Measures to Prevent Future Software “Cheats”
  31. Researchers only caught VW thanks to physi- cal testing, not software analyses.
  32. All software products, including those controlling cars, are copyrighted content, preventing inde- pendent researchers from studying code for vul- nerabilities.
  33. Copyright office considering making an exception for automotive software, so independent researchers can check software for future cheats and vulnerabilities, but EPA ironically just opposed that exemption, according to The Verge.
  34. “So long as the DMCA hinders or chills law- abiding researchers from casting their eyes on code, more bugs – and insidious code – will end up in the devices we trust our livelihoods and lives to.” Sherwin Siy, VP of legal affairs at Public Knowledge to The Verge.
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