Volkswagen – can they rebuild their reputation using renewable energy?

Since 2015 Volkswagen, the German car manufacturer, has been subject to a number of legal actions after they were found to be installing ‘emission defeating’ software in their cars.

The company has said that 11 million cars worldwide had the software, which could improve the performance of vehicles when they were being tested for emissions.

Globally the scandal has already cost the company more than €30bn in fines, penalties and buyback costs.1

Most recently, on 22nd January 2020 they were fined $196.5 million after pleading guilty in the Ontario Court of Justice to 58 counts of unlawfully importing vehicles into Canada which did not conform to prescribed vehicle emissions standards.

According to US law firm Baum Hedland “The chain of events that culminated in [the] VW emissions scandal began in 2004 when the Environmental Protection Agency (EPA) dramatically raised emissions standards on how much pollution new cars could discharge in the U.S. The new standards effectively slashed the amount of nitrogen oxide that vehicles were allowed to emit by more than 94 percent. Clearly, the 2004 requirements presented a steep engineering challenge for carmakers, especially those that were looking to offer fuel-efficient diesel model vehicles to the U.S. market.

Consumers who like diesel vehicles prefer them because they get more torque, better mileage and maintain their value better than most gas-powered vehicles. The problem is that diesel engines emit more nitrogen dioxide than most gas-powered engines.

[In the US] less than 5 percent of vehicles are diesel. Volkswagen saw the low diesel numbers as an opportunity…if it could conquer the U.S. diesel market, it could position itself as one of the top selling automakers in the world”2.

However, when Volkswagen realised that they couldn’t meet the strict US emissions targets, instead of backing away from the project, they used technology to deceive the market.

Not only has the scandal been devastating for Volkswagen both reputationally and financially, “Dieselgate” has also prompted a slump in diesel sales across Europe following a political backlash.

Recommended read: Three reasons to study energy and environmental law

In a bid to repair the damage, Volkswagen executives have admitted that the scandal has prompted them to move more quickly towards battery electric vehicles as they try to repair the company’s reputation.3

Switching from diesel to electric vehicles

Using an electric vehicle (EV) has many advantages for the environment as they mostly run on electricity from renewable energy or natural gas4. A 2018 report published by the International Council on Clean Transportation (ICCT) concluded that electric cars are much cleaner than internal combustion engine cars over their lifetime and the battery manufacturing life-cycle emissions debt is quickly paid off, “creating a significant opportunity for the decarbonization of the transportation sector.”5

Scandals like ‘Dieselgate’ have brought role of the auto industry in reducing climate change into the spotlight and made consumers more aware of their choices. To harness this, car manufacturers are heavily investing in the production of EV’s and their use is pushed by Governments via incentives – and the high taxation and other sanctions placed on diesel vehicle use.

“The electric model offensive of the German manufacturers is in full swing,” says Bernhard Mattes, head of the German VDA auto lobby. “German manufacturers will triple their electric car offerings to 150 models by 2023 and invest 50 billion euros by 2024.”6

However, in most places there isn’t the infrastructure in place to support widespread use of electric vehicles. In the UK there are currently 155,000 EVs, with around 4,500 more being registered every month. By comparison, there are around 30 million fuel-powered cars. But, as of July 2018, there were only around 17,400 public charging points in the UK7- which is a huge barrier to their adoption.

Even if consumers want to make the move to a greener vehicle, for many people car usage is an essential part of everyday life. If EV’s inconvenience them or leave them worried they will be stranded with nowhere to charge, they are unlikely to make the switch until government legislation leaves them with no choice.

However, with investment from both the manufacturers and the Government set to continue – the UK Government pledged an extra £2.5 million in 2019 to fund residential charging points as part of their £1.3 billion Road to Zero strategy8– we expect to see a continued improvement in the infrastructure to support the use of greener vehicles.

But will consumers trust Volkswagen? Only time will tell.

Our Online LLM in Energy and Environmental Law covers topics including renewable energy and climate change. Programme Director, Professor Robert Lee is also part of a team on electric mobility in the UK. If you are interested in returning to study via distance learning, please fill out our request for information form or contact a member of our Admissions Team.

References:

1UNKNOWN (2020) Canada prosecutors propose £110m Volkswagen fine [Online] Available at: <https://www.bbc.co.uk/news/business-51215786> [Accessed 31.01.20]
2UNKNOWN (2019) Why Did Volkswagen Cheat on VW Emissions? [Online] Available at: <https://www.baumhedlundlaw.com/consumer-class-actions/volkswagen-clean-diesel-vw-class-action-lawsuit/vw-emissions-scandal/> [Accessed 31.01.20]
3JOLLY, J. (2019) Volkswagen emissions scandal: mass lawsuit opens in Germany [Online] Available at: <https://www.theguardian.com/business/2019/sep/30/volkswagen-emissions-scandal-mass-lawsuit-opens-in-germany> [Accessed 31.10.20]
4RICHARDSON, J. (2019) Electric Cars Mostly Run On Electricity From Renewable Energy Or Natural Gas [Online] Available at: <https://cleantechnica.com/2018/02/06/evs-dont-run-electricity-coal-power-plants/> [Accessed 31.01.20]
5HALL, D. & LUTSEY, N (2018) Effects of battery manufacturing on electric vehicle life-cycle greenhouse gas emissions[Online] Available at: <https://theicct.org/sites/default/files/publications/EV-life-cycle-GHG_ICCT-Briefing_09022018_vF.pdf> [Accessed 31.01.20]
6SACHGAU, O. (2019) Germany Edges Out Norway as Europe’s Biggest Electric Car Market [Online] Available at: <https://www.bloomberg.com/news/articles/2019-12-09/germany-edges-out-norway-as-europe-s-biggest-electric-car-market> [Accessed 31.01.20]
7PRIDAY, R (2019) How the UK's energy grid will cope with the electric car revolution [Online] Available at: <https://www.wired.co.uk/article/electric-vehicle-car-infrastructure-charging-point> [Accessed 31.01.20]
8UNKNOWN (2019) Government doubles funding for on-street electric car charging [Online] Available at: <https://www.gov.uk/government/news/government-doubles-funding-for-on-street-electric-car-charging> [Accessed 31.01.20]

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