While German Automakers Colluded, Tesla Pursued Clean Energy

German Automakers

AUG 15 2017 BY EVANNEX 29

VW Rounds Up Its Non-Compliant Diesels, and other German automakers are under investigation (via YouTube/Teslarati)

WHILE TESLA PURSUED CLEAN ENERGY, GERMAN AUTOMAKERS COLLUDED TO CHEAT ON EMISSIONS TESTS

The dirty diesel debacle has entered a new chapter. All five of the the major German automakers are now under investigation by European and US authorities, accused of participating in a cartel that thwarted competition and stifled innovation.

As the German news magazine Der Spiegel reports, not only did Daimler, BMW, Volkswagen, Audi and Porsche all game emissions testing systems, but they did so as part of a pattern of illegal collusion that has been going on for years.

Tesla

Groundbreaking story at Der Spiegel uncovers collusion by German automakers (Source: Der Spiegel)

“The diesel scandal would not have taken shape as it did, and perhaps not even at all, without the agreements among German automakers,” write Frank Dohmen and Dietmar Hawranek. “It is not the work of a few criminal managers in the Volkswagen Group, but ultimately the result of secret agreements within the entire German automobile industry.”

The European Commission has launched an investigation, questioning witnesses and seizing records from the companies. Some of the five little birds have already begun to sing. Back in July 2016, Volkswagen confessed to its “participation in suspected cartel infringements,” and told authorities that the automakers cooperated in more than 1,000 secret meetings. VW and Daimler have provided agendas and minutes of these meetings to the authorities.

They have not done so out of public-spiritedness, but in hopes that blowing the whistle on their partners in crime will help them to avoid massive fines. In antitrust proceedings, the European Commission and Germany’s Federal Cartel Office can provide immunity from prosecution to companies that cooperate. In 2016, truck manufacturers Daimler, Volvo/Renault, Iveco and DAF were hit with €2.9 billion in fines for coordinating pricing for their trucks. Munich-based MAN, which was also part of the truck cartel, received no punishment, because it had offered its services as a witness early in the game.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris.

Tesla

Is your new clean diesel less clean than you thought?

Volkswagen and Daimler are now jockeying to be seen as the first company to come clean to the authorities. Under German cartel law, the greatest penalty reduction is granted to the company that confesses first and provides the most extensive documentation. As Der Spiegel wryly notes, at least this is one case in which Daimler and VW are truly in competition with one another.

Meanwhile, two antitrust lawsuits have been filed in the US. As reported by Bloomberg, a class-action suit on behalf of drivers was recently filed in New Jersey federal court, alleging that the automakers created an anti-competitive culture in the US and conspired to increase prices of luxury vehicles while sharing technology to skirt emissions norms. A similar complaint has been filed in San Francisco federal court.

“These coordinated actions enabled the manufacturer defendants – the self-named Circle of Five – to impose a German automobile premium on consumers premised on superior German engineering, while secretly stunting incentives to innovate,” the suit alleges. The supplier of VW’s cheat software, Robert Bosch, was also named as a defendant in both lawsuits.

Last week, executives from the five German automakers, plus Ford, met with ministers and state leaders at the Transport Ministry in Berlin, a meeting that Bloomberg described as “a last-ditch play to save diesel.” Protesters forced the meeting to be moved down the road to the more secure Interior Ministry.

The Circle of Five

Der Spiegel describes the relationship among Audi, BMW, Daimler, Volkswagen and Porsche as a cartel that coordinated the activities of the five German automakers “The collusion over diesel engines is the most spectacular case, but only one of many in which the five German carmakers may have violated cartel law. The system of collusion encompassed almost all areas of automobile development.”

German Automakers

Germany automakers’ ‘circle of five’ embroiled in cartel allegations (Image: Newsonia)

Der Spiegel tells the story of how the German automakers coordinated the development of their vehicles’ convertible tops.  Company representatives agreed that there would be “no arms race” when it came to the maximum speed at which a driver could open or close the top. Has anyone ever wondered why the soft tops on the convertibles sold by Daimler, BMW, Audi, Porsche and Volkswagen can only be opened and closed at speeds of up to 50 km per hour? It was a decision of the “working group for mechanical attachments.” There were many other such groups, including working groups for braking control systems, seating systems, air suspensions, clutches, gasoline engines and diesel engines.

The agreements among the German automakers, which “likely constitute one of the biggest cartel cases in German industrial history,” began in the 1990s and were expanded to include more and more issues, as industry executives viewed violations of competition law as harmless rule violations. Only recently has the European Commission begun imposing substantial penalties on companies that secretly collude on pricing or technology.

The seeds of the diesel debacle were also sown in the 1990s, as the automobile industry began to come under pressure to limit CO2 emissions. Toyota was already selling the Prius hybrid, which offered considerably fuel consumption and carbon emissions. The European Commission discussed imposing a mandatory quota for hybrid drives, but the German automobile industry wasn’t having it. Instead, it chose a 100-year-old technology – diesel engines – as its answer to the threat of climate change.

Diesel engines emit less CO2 than gasoline engines, but they produce nitric oxides, which contribute to air pollution, especially in cities. Under pressure from US regulators to reduce nitric oxide emissions, the automakers adopted a technology that was already being used in trucks, and touted it using the now-ridiculed slogan “clean diesel.”

German Automakers

Tailpipe emissions for diesel cars 

Many have asked why the German auto industry was not able to find the technical means to comply with emission limits for diesel cars. The answer is that, because there was no competition among manufacturers, they didn’t bother to try.

So-called clean diesel technology relies on a substance called AdBlue, a urea mixture that is used to split nitric oxide into water and nitrogen. Rather than compete to develop the most efficient version of the technology, the automakers got together and discussed the issue in their working groups, seeking a way to harmonize their efforts. As Der Spiegel reports, the individual carmakers were using different tank sizes for AdBlue, and, at a meeting in Sindelfingen in April 2006, the working group of chassis managers concluded that this was unacceptable.

The larger the tank of AdBlue, the more effectively nitric oxides can be reduced, and the less often the driver has to refill the tank. However, a larger tank is naturally more expensive, and takes up more room. The automakers agreed to standardize and limit the size of the AdBlue tanks to 8 liters, which left enough space for golf bags in the trunk. The only problem is that 8 liters of AdBlue is only enough for a range of about 6,000 kilometers. Meanwhile, US regulators were demanding tanks that would only have to be refilled during an inspection at 16,000 kilometers. Following heated debates in the secret Circle of Five meetings, in June 2010 the companies agreed that the 8-liter size would remain the standard in Europe, while 16-liter tanks were planned for the US market. Later, stricter environmental regulations in the US and Europe required the amount of AdBlue to be increased further, so now the tanks were much too small. No one could expect customers to refill the tank every 2,000 to 3,000 kilometers.

Rather than installing larger tanks, and making the cars cleaner, the companies got together to figure out how to get by with the smaller ones. If one manufacturer had installed larger AdBlue tanks, regulatory authorities would have asked questions. In a May 2014 email, an Audi employee warned against any company seeking its own solution. Using larger amounts of AdBlue could “expand into an arms race with regard to tank sizes, which we should continue to avoid at all costs.”

German Automakers

A look at how AdBlue works (Image: Fuelogic)

Some of the automakers had already begun to deceive licensing authorities and customers about the true amount of their vehicles’ emissions. VW installed software that detected when a car was in a testing facility and injected a sufficient amount of AdBlue during that short period of time. Audi used similar software.

US authorities discovered the scam in September 2015, and eventually presented a bill to the Volkswagen Group for €20 billion for fines, compensation for US customers, and electric vehicle infrastructure. The company will be paying out similar amounts in Europe.

The Stuttgart public prosecutor’s office is investigating allegations that Daimler implemented similar software. The company recalled 3 million cars for a software update to improve emissions control, but Der Spiegel reports that this is unlikely to satisfy the public prosecutor’s office and the US authorities, which are also investigating Daimler.

The fallout

The effects of the collusion go beyond theoretical damage to the free market system that Western democracies supposedly revere. The millions of owners of diesel cars are the most obvious victims of the criminal behavior. They have already seen the resale value of their vehicles plummet, and now face the prospect of not being allowed to drive their cars in some cities. Shareholders have seen the value of their investments erode. Suppliers are also getting the short end of the stick – if the five German automakers agree to buy from only one company, others stand no chance of winning orders. Anyone who breathes in crowded cities is a victim, and so are taxpayers, who will end up footing most of the bill for increased pollution.

German Automakers

An infographic looking at the scandal unfolding among German automakers (Image: Dhaka Tribune)

Stockholders and employees have been making their displeasure known. Shares of Volkswagen, Daimler and BMW have been battered since the Der Spiegel article appeared. Michael Brecht, head of Daimler’s works council (roughly the equivalent of a labor union) told Bloomberg that “workers are rightly horrified and angry” by the antitrust allegation, and “there must obviously be consequences” if they’re confirmed. “Management has the duty to thoroughly inform the supervisory board. That hasn’t happened yet,” the Volkswagen works council said in a statement. “Trust in company leadership is dwindling more each day.”

The scandal has become an issue in the German national elections, which are scheduled for September. After Britain announced a plan to ban internal combustion vehicles by 2040, reporters have been asking if Germany plans to make a similar move, but that doesn’t seem to be on the table. Chancellor Angela Merkel has been called the German auto industry’s de facto chief lobbyist. She once complained to California officials about the state’s strict nitrogen oxide limits, and her administration lobbied the EU to provide subsidies for diesel fuel.

“[Chancellor Merkel] has often warned against demonizing diesel motors – diesel motors emit less CO2 and are therefore more environmentally friendly, but of course we need to work honestly and of course we continue to look for other solutions,” German government spokeswoman Ulrike Demmer told Reuters, adding that Merkel was also promoting electric vehicles.

German Automakers

Germany’s Chancellor Merkel seen to be close with German automakers, and she’s advocating change.

Others in Merkel’s Christian Democratic (CDU) party favor quicker action. “We need to start getting rid of combustion technology in the short term,” Oliver Wittke, a CDU transport expert, told Deutschlandfunk radio, saying that it was unacceptable to let Britain lead the way while Germany’s auto industry fell behind.

“If the antitrust violations were to prove true – and there’s a lot to suggest that – then one must really say the clear sentence: the rule of law also applies to the car industry,” said CDU caucus leader Volker Kauder.

Diesel is doomed

Whatever happens to the companies involved, the future’s not bright for diesel cars. As the New York Times reports, “Sales of diesel vehicles are in free fall. During the first six months of the year, sales of diesels declined 10 percent in Britain, 9 percent in Germany, and 7 percent in France.”

As The Guardian puts it, “diesel technology has been a dead duck since the emissions-cheating scandal erupted, followed by the revelations of how polluted London’s atmosphere has become, with emissions of nitrous fumes from diesels being blamed for much of the problem.” In January, UK registrations of new diesel cars were down 4.3% compared to the previous year, while petrol car sales were up by 8.9%. “Ultimately, the game is up for the internal combustion engine.”

Numerous cities in Europe, including Madrid, Paris, Stuttgart (the headquarters of Daimler) and Munich (the headquarters of BMW), are considering banning older diesels. Customers fear they may be prohibited from driving into city centers.

On the other hand, ditching diesel is a painful proposition. Germany’s auto industry provides a fifth of the country’s exports, and supports around 800,000 jobs. Massive fines or other penalties that substantially weaken the companies seem unthinkable. Automakers are hoping that they’ll be able to make a few software updates and keep cranking out the diesel engines. “The manufacturers will play their part to improve air quality in cities and make diesel fit for the future,” said Matthias Wissmann, head of the German auto lobby VDA. “Diesel is enormously important for climate protection as well as prosperity in Germany.”

Above: More into the accusations of a German automakers’ cartel (Youtube: TRT World)

However, with pressure building on so many fronts, elected officials are realizing that diesel has become a political liability. A return to business as usual seems increasingly unlikely.

“The political system, the parties, the government in Germany has part of the responsibility for the current situation,” said Ferdinand Dudenhoeffer of the University of Duisburg. “Our politicians and our car industry want to save the past [but] diesel is a mess, and they need to find a solution for the future.”

The only long-term solution may be for the government to force automakers to do what they should have done two decades ago: start investing in electrification.

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

Categories: Tesla

Tags: , , , ,

Leave a Reply

29 Comments on "While German Automakers Colluded, Tesla Pursued Clean Energy"

newest oldest most voted

What a surprise, Not.

Meanwhile the Europian commission isued a new directive. Vacuum cleaner to have max power of just 800Wats. Very very important about the climate change endeed.

About time to eliminate that Soviet style dictatorship. It will be dissolved in the near future, leaving a bankrupt destroyed Europe.
The responsible politicians probably have to escape the continent and get a new identity.

The Soviet-style dictatorship will be replaced by the European Koch Brothers, who will impose all the worst features of Trump’s neo-Victorian America on you. Bye bye minimum wages, workplace safety, and of course any barrier to any form of pollution at all.

But then, that’s your real agenda, isn’t it? Survival of the fittest: the same crap spouted by libertarians and Nazis, with only a supposed difference in the form of the contest.

GO TESLA GO DESTROY DIRTY GAS GUZZLERS and American Nazis driving gas guzzlers

With almost 65% of US electric energy deriving from coal, oil or gas fired thermal power plants with an efficiency of less than 55%, the tailpipe is just moving from the electric vehicle to the power plant. There is another 10 to 15% of transmission loss until you bring the power from the plant to the battery.
ONLY 15% of electric power in the USA comes from a renewable power source.
Is the electric car is not a pipe dream, but is only a transition to different propulsion system somewhere in the future.
The ICE will be around for generations to come.

Canard. And you know it.

Oh, i see you want to talk about that…let’s!
California has over half of the evs in America, its energy mix is 54% gas and 44% clean energy (3% nuclear included). As of this writing, 36% of the mix is solar and wind! THIS IS NOT INCLUDING RESIDENTIAL ROOFTOP SOLAR which California is number 1 at!
How is that for an inconvenient truth?

In case you missed it, the mix hit 80% renewables in a spring day earlier this year. Sleep tight!

Might work for California, but not for the rest of the USA. How many more vehicles can you put on your power grid until you have rolling brown-outs?

A ton more! In fact, many propagandists predicted more flex alerts and blackouts with the addition of renewables…guess what?…they are actually becoming less frequent. Smart charging can support the grid even further and let’s not talk about the many energy storage projects that will happen in the next years. Don’t worry about us, we are fine!

It’s easier to control pollutants at a few big power plants than in one hundred million tailpipes – especially with these auto gangsters running around. Oh, but you don’t believe in a government able to control pollutants at all, do you?

Are you Scott Pruitt taking a 10-martini lunch?

He is a paid troll, bot, or just stupid.

I vote that this troll is all three! Scott!

Yep, it’s hard for most people living the pipe dream to cope with the facts.
The truth is like a salty finger in an open wound.

Oliver Houser posted the very tired, very old “long tailpipe” EV-hater argument, apparently believing that there is still any EV fan who doesn’t know it’s B.S.: “With almost 65% of US electric energy deriving from coal, oil or gas fired thermal power plants with an efficiency of less than 55%, the tailpipe is just moving from the electric vehicle to the power plant.” This B.S. ignores the fact that EVs are about 3.5 times as energy-efficient as the average gasmobile. It also ignores all the pollution emitted and energy wasted by oil refineries. That “tailpipe” from EVs isn’t merely a lot longer, it’s also much, much smaller than the one attached to gasmobiles. “There is another 10 to 15% of transmission loss until you bring the power from the plant to the battery.” Average electrical grid transmission losses in the USA are only about 7%, but perhaps it’s different on whatever planet you live on. “ONLY 15% of electric power in the USA comes from a renewable power source.” And another 20% from clean nuclear energy, which also uses no fossil fuel and emits no CO2. But the renewable percentage is much larger in States where most EVs are sold,… Read more »

Agreeing on the size of the diesel additive tank and agreeing that the soft top shouldn’t open at speeds above 50km/h is collusion?
What a joke! These ugly greedy lawyers sitting like ambulance chasers and hungry vultures to enrich themselves on any object they find. They are the most destructive part of our society.
Don’t tell me that US or Japanese automakers do not communicate?

Please read the article first. Not even the German auto companies defend their actions.

If US and Japanese automakers collude, they harmed their buyers in doing so. Look at the uniformly crap cars that the Detroit oligopoly was building in the ’60s and ’70s – only temporarily disguised by a horsepower race that was shut down not by Big Government but by Big Insurance. You’re such a big fan of freedom – how do you feel about the well-known gentleman’s agreement between Japanese automakers limiting the maximum horsepower of their cars during the 1980s?

So… you’re actually defending the actions of these German auto makers, in conspiring to commit fraud and pollute the very air we breathe?

I must say, very few people would defend a hardcore, long-term, widespread criminal conspiracy whose intent is to cover up poisoning our breathing air!

Are you for real, or are you just punking the readers here?

🙄

Even though most of this article is objective, it’s kind of ironic. EVANNEX, an indirect competitor of Daimler, BMW, VW puts out an article about violation of competition laws, which is a violation of competition laws in many european countries. As icing on the cake, they throw in a video from TRT, fully owned by the Turkish government.

Yeah, we all know that Der Spiegel is part of the fake news conspiracy against freedom-loving patriots, like Time and the Washington Post and the National Geographic and the Congressional Budget Office.

Spiegel is usually well researched and fact checked. The cartel article is however a clear miss…

And yet BMW for instance uses a different system than eg Daimler and the ad blue tank sizes differentiate by each manufacturer and model. So hardly any collusion on one size as proposed by Der Spiegel.

The cited newspaper is just trying to blow the news up…

Nevertheless the responsible government agencies should investigate this issue but I am not a fan of judging someone in advance before the company/person is proven guilty.

I think more facts would be helpful. Throwing around unqualified, binary statements and claiming that’s the beginning and end of the matter, probably isn’t a good way to cover the issue.

If — and please note I’m just speculating here — if there were just a few exceptions to the limit on tank size imposed by the cartel, then that doesn’t mean there wasn’t collusion, and it doesn’t mean they didn’t agree to a limit. It may mean nothing more than there were a few violations of the unwritten agreement.

A few exceptions to a rule doesn’t necessarily mean the rule doesn’t exist; it may merely mean that there are a few exceptions to that rule.

Go to prison. Do not pass go. Do not collect $200.

The internet is dead. Look at the troll work on this thread.

“As the New York Times reports, ‘Sales of diesel vehicles are in free fall. During the first six months of the year, sales of diesels declined 10 percent in Britain, 9 percent in Germany, and 7 percent in France’.”

You call that “free fall”? I must say I’m quite disappointed that the fallout has been so limited. If the reaction from car buyers is that limited even when the scandal is still in the news, then it seems that auto makers won’t have much incentive to actually stop making them!

However, I’m very glad InsideEVs is giving coverage to this scandal. We had good reason to believe it went a lot farther than a few auto makers deciding to program their cars to cheat the emissions tests, but I had no idea the collusion between the different German automakers was so very widespread, to the point of even routinely holding meetings on how to avoid the emissions standards!

I really hope the various governments, in Europe and North America and British Commonwealth countries, really hold these auto makers’ feet to the fire. The penalties must be sufficiently strong that they won’t ever be tempted to engage in this kind of criminal conspiracy again!