Not More Hogwash!

It’s still too early to be sure, but apparently Volkswagen may not be the only company that has been defrauding customers – and the EPA – on how clean their diesel engines really are. Last week the US Department of Justice announced indictments of six VW executives involved in the use of “Defeat Devices” that allow the so-called “Clean Diesel” engines to pass air pollution tests despite being as dirty as any other diesel engine the rest of the time. To their credit, the company owned up to the wrongdoing with surprisingly little fuss and appear to be accepting the massive fines our government is hanging on them, although so far they have not agreed to hand over the five executives who are currently believed to be in Germany. Personally, I was very disappointed to learn that the widely-hyped technology that could make diesel engines much cleaner than regular gasoline engines was a hoax; I still believe that we need Clean Diesel, and will need its potential more than ever as alternative fuels become more important. But unfortunately, it seems that things are even worse than we thought…

You can pick up the ongoing story from the Bloomberg site, and I’ll update the link if there are updates. Apparently, the EPA is now charging Fiat-Chrysler with using specialized software in their car’s engine computers to lower the emission levels during testing – essentially a software version of what VW was doing with hardware. There’s no indication as of yet that Chrysler was also using hardware systems to produce false results, but that may just mean that the EPA hasn’t been able to prove anything so far. The other major difference in the stories is that the CEO of Fiat-Chrysler dismissed the allegations as “unadulterated hogwash” when he was asked about the case, and so far the company is stonewalling any attempt to resolve the issue…

Now, we should probably acknowledge right off the top that the US Department of Justice, and law enforcement in this country in general, has not had the highest possible levels of credibility in recent years. It really is possible that somebody at Justice is jumping the gun and attempting to bully Chrysler into confessing to the wrongdoing because they don’t have enough evidence to actually bring the case. And it is important to note that emission-control software isn’t actually illegal in the US; as the Bloomberg article notes, it can be used for a limited time under some conditions to prevent engine damage. But if that software has actually been programmed to detect test conditions and alter the engine’s emissions for the duration of the test from the profile it maintains during normal operation, then that is fraudulent. Whether the charges will stick, or whether anything will be done about the situations if they do, is another matter…

At the moment, the EPA’s enforcement people are saying that it is up to Chrysler to prove that they aren’t using defeat devices, but unless somebody in our government actually has proof that they are using such devices it does not seem likely that the charges would hold up in court. You can’t prove a negative, and you generally can’t ask someone to prove that they aren’t doing something without any evidence that they are, or at least that’s what they taught us in business school. The change in government that is set for the end of next week may also shake things up, since the incoming administration is expected to be much more business-friendly than the outgoing government has been. What remains to be seen is how the customers will react to this – and what impact that will have on sales…

When the EPA called them on it, Volkswagen owned up to their malfeasance and accepted the penalties without much further discussion. This may not make the affected vehicles look any better, but it definitely improved the company’s issue, turning the potential scandal into old news much more quickly than a drawn-out battle of words and accusations would have. By choosing to fight, Fiat-Chrysler is going to keep this case in the public eye for much longer, and if they are eventually proven to have defrauded their customers and the EPA the penalty and the impact on their reputation will probably both be much worse than if they had just come clean…

We should also consider that, if the company does turn out to be innocent of these accusations, then this is the correct course of action and they will have reason to be proud of their resolve once they win the court case. The question there is how much damage this situation will do to their sales and their public image in the meanwhile – and whether they will still be around when the dust settles this time…