magazine cover story

The Fall of the House of Wolfsburg

Symbolbild zur Krise bei Volkswagen und der Vielzahl an drohenden Klagen: Logo VW auf erodierender Straße Symbol image to Crisis at Volkswagen and the Variety to threat Injunctions emblem VW on erosion Road
The damage from Volkswagen's unconvincing response to its emissions-rigging scandal could be greater than the illegal pollutants from the 11 million vehicles under scrutiny.
  • Why it matters

    Why it matters

    If VW does not help in clarifying how it systematically tricked regulators and consumers of more than 11 millions customers, the automaker could face an existential threat and lasting damage to its reputation.

  • Facts


    • VW tricked regulators into thinking emissions on 11 million of its vehicles met local environmental standards.
    • The company used software to turn on emissions controls during tests, and to turn them off when they left testing facilities.
    • The scandal caused the resignation of VW CEO Martin Winterkorn, and could lead to major job cuts and downsizing.
  • Audio


  • Pdf


Arnold Schwarzenegger is “mad as hell” at Volkswagen. Writing on his Facebook page, the former California governor was furious at the automaker for taking him for a ride. Seven years ago, when Schwarzenegger toured the 2008 Los Angeles Auto Show, he listened to VW of America CEO Stefan Jacoby sing the praises of the “clean diesel” Jetta TDI, which had just pocketed the prestigious “Green Car of the Year” award. With its stellar fuel economy and sports car-like acceleration, the new Jetta even passed California’s recently introduced tailpipe emissions standards, the toughest in the world. In combining these three traits in a diesel car at reasonable cost, Volkswagen’s brilliant engineers had squared a technological circle.


Volkswagens U.S. Market Struggles-01 (2)


As all the world now knows, the engineers achieved no such thing. Volkswagen’s automotive miracle was a case of crude deception. The car’s newly-developed EA 189 diesel engine was only clean on the test stand. Out on the road, it turned into a stinker, emitting up to 35 times California’s legal limit of nitrous oxides, highly toxic pollutants that play a crucial role in creating smog. A piece of software installed by Volkswagen’s engineers detected the difference between test conditions and the open road. For the tests, the engine ran clean by sacrificing fuel economy and acceleration. For regular driving, the engineers programed the engine to run without pollution controls so drivers could enjoy the car as it was advertised, including the expected acceleration and speed.

What the German press calls “Dieselgate” is now the biggest case of fraud in automotive history. More than 11 million cars worldwide were delivered with the EA 189 engine and the deceptive software installed, requiring a massive global recall. Criminal investigations, lawsuits and regulatory probes have been launched by the U.S. Justice Department, the states of Texas and West Virginia, as well as countries around the world from Australia to Spain. At company headquarters in Wolfsburg, German police raided offices and apartments. Hundreds of class-action suits have been filed by consumers and investors. On the stock market, Volkswagen lost over one-third of its market value, or €27 billion ($29 billion), in just a few days after the scandal broke.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.