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What was the Real Root of the Automotive Industry Emissions Scandal?

April 10, 2017

Source: With the list of automobile manufactures that had “cheated” on their vehicle emissions and/or fuel economy results growing weekly, many are quick to criticize the auto industry; however, is there more behind the reasoning why so many manufactures had allegedly lied about their results? We take a look at several factors that contributed to this systemic issue.

First there was Volkswagen, which included all of the VW Group (Audi, Bentley, Lamborghini, Bugatti, Porsche, Ducati, Scania, Seat, and Skoda); then there was Mercedes; then fell Mitsubishi, joined by Fiat, Peugeot, Renault, Hyundai and Kia, BMW, and even American vehicle manufacture mainstays Ford and General Motors offered their fair share of having to make amends with consumers for representing false fuel economy and/or emissions results on their window stickers. You would think that these corporations with vast research and development departments would be able to breeze through testing protocols with ease, however many of them still have not been able to obtain the peak efficiencies to meet mandated benchmarks. Or is the problem more complicated than that? So with so many manufacturers having this issue, what is the core of the problem?

My own investigative research has found there are a number of factors which has contributed to the auto industry having issues during testing their products; some which are technical in nature, and some which are due to the complicated regulation in place which pushes the envelope beyond reason.  Some of the pre-existing market conditions are responsible for manufacturers having to push their limits in order to stay competitive.

Manufacturers have had to put their reputations at risk in order not to be responsible for hefty gas guzzling taxes and pollution penalties associated with the Corporate Average Fuel Economy Standards (known as CAFÉ), and GHG emissions standards.  Traditionally, these standards would be raised incrementally, so manufactures were given ample time to develop technology that would help engines become more efficient without compromising either better fuel economy or vehicle performance. In 2009, it was announced that vehicle manufactures would have to jump up from 22.5 miles per gallon average, to 35 miles per gallon by 2016. In 2011, the Obama Administration announced that that standard would now be pushed up to 54.5 miles per gallon average by year 2025. Vehicles models with a higher gas guzzler tax would suffer a slide in sales due to consumers not wanting to pay the extra price for not meeting these benchmarks.

This cat and mouse game did not begin in 2015 with the VW scandal; it has gone on since these two sets of standards, both CAFÉ and GHG, were introduced in 1975 and 1978, respectively. Since these laws were instituted, Cadillac in 1995 had its bout with the Environmental Protection Agency (EPA) over the issue of pollution controls related to the line of 4.9-liter V-8 engines. The company then, General Motors was forced to cough up a whopping $45 million over to the U.S. EPA to settle out the matter. In 1998 the diesel engine manufactures of Caterpillar, Cummings, Detroit Diesel, Mack, International, Volvo and others had to deal with a major investigation into their potential violations of environmental laws under the Clean Air Act, which cost the companies combined over $1 billion dollars, which was doled out to regulatory civil penalties. That same year, Ford and Honda had their rounds with the U.S. Justice Department over emissions control manipulation.

I predicted that when VW was found to be allegedly cheating on their results, that this was just the beginning. There would be more car manufactures that would either be investigated, or would come forth on their own as a good faith measure in exchange for leniency on fines and penalties. But the issue is larger than just manufactures using tactics to “cheat.” It is like the unspoken issue auto racing—in order to catch the cheaters, you must sometimes cheat yourself. But why cheat when you can innovate or adopt innovation from third-party sources?

When one manufacturer hears that another manufacturer just achieved x-number of more miles per gallon more out of their product, and that number exceeds the current record holder, the competitive race is on to catch up to the adversary. With limited market share of car buyers in the world, the United States being one of the largest markets in the world (having over 300 million vehicles on the American roads, that is one car per-person, regardless of age and their eligibility to drive), it is no wonder why manufacturers are willing to take such risk. There are over 28 major brands of vehicles which account for 80 percent of the entire new vehicles manufactured in the world (65 million new vehicles manufactured in 2012); over 7 million were sold in the United States. In order to capture market share, manufacturers have had to find ways to better market their product, even if that meant exaggerating their emissions and fuel economy results. Once another vehicle manufacture would one-up everyone, then it forced others to follow.

Part in of the issue is self-pride. No manufacturer after spending hundreds of millions of dollars on research and development, wants to tell their shareholders that they could not meet regulatory benchmarks and that instead of paying out to dividends, net earnings would now have to fork over taxes, penalties and fines for not meeting regulatory benchmarks. In some cases, manufacturers don’t want to admit that they cannot solve the problem. When millions of dollars are dedicated to a program, such as emissions reduction innovation, most companies desire to develop their own solutions than go outside their labs. This becomes more of a pride issue which in turn becomes a momentary issue. The last person to turn to outside research and development teams as an answer to expedite product development on a wide scale was Lee Iacocca while he led Chrysler.

The public policy and incentive based policies where vehicle manufacturers would get special tax credits that could be passed down to consumers, only amplified the situation. As each manufacturer jockeyed for position of whom was going to be first in line for these incentives that could push the market toward potential consumers, this would be a tactical advantage for any auto manufacturer that could capture the lion’s share of incentives, thus driving the sticker price down for consumers at the time of their new vehicle purchase.

Then there is the technical perspective of why vehicle manufacturers “cheated,” or did they not “cheat” at all, but were trying to follow one set of guidelines, which forced them to have to tweak other programs in order to meet these more stringent regulations? Here is where it gets complicated, and so I will do my best to present these arguments in laymen terms.

When vehicle inspection procedures were changed from having to test vehicle pollution and emissions at the tailpipe to having to be checked via the car’s on-board diagnostic port (OBD), the rules of engagement significantly changed for the auto industry. Auto manufactures had to adopt computer protocols, a system of Readiness Monitors and drive cycles that must cycle completely in order for the vehicle to come into compliance before it is able to either be tested for a repair verification, or worst yet, a regulatory emissions test. These protocols can sometimes conflict with the existing engine controls and components on a vehicle and in order for one to be functioning, sometimes other controls and/or modules have to be delayed or shut off for an extended period of time. In some cases, this very protocol is conflicting with other mandated protocols. This is where the technical confusion begins to be introduced.

I also argue that some of the testing procedures are out of date. The auto industry has evolved where your vehicle is a giant computer with an engine attached, and as a result there are far more variables to take into consideration, such as all the added technology, yet these tests protocols for emissions and fuel economy have not changed since their introduction. Some of these test are incapable of measuring the true impact of some of the added-on technology manufacturers have adopted in order to make the engine run more efficient. I had personally experienced this when we were conducting test for retrofit emissions technology formally under development, called the Smart Emissions Reducer.

Then there is the issue of “cold start” conditions. This is when a vehicle emissions is looked at when a vehicle is to be tested after sitting for a period of 24 hours, the vehicle is tested at start-up for emissions and is ran through a series of testing procedures until the vehicle reaches benchmarks of operational speeds, and then is brought back down to slower speeds. This is called coast up and coast down. The issue is that these tests can be conflicting with the vehicles’ need to cycle through “drive cycles” before it is ready to come into compliance and offer accurate data information. Upon cold start, most vehicle controls are not yet fully functional since they are now operated by the vehicles computer.

Furthermore, vehicle manufacturers are mandated on many areas of technical competency of what they can and can’t do to solve some of these obstacles. For instance, there are some measures that are defined by mandate and have been a mainstay, such as the catalytic converter, and EGR. Manufacturers have to find a fix using outside the box thinking, yet must stay confined to regulation and mandates.

When you combine all of these factors, you can see why the issue of so many vehicle manufacturers having skewed emissions and/or fuel economy testing results has run away in the industry. This is by no means meant to be a free pass to the auto industry; they have a responsibility to deliver to consumers a product that is aimed at providing the best measures and quality, including emissions and fuel economy; however, they are not the only ones at fault. So what are the fixes you ask? Well that is content better saved for another article.

Samuel K. Burlum is an investigative reporter who authors articles related to economic development, innovation, green technology, business strategy and public policy concerns. He is also a career entrepreneur who currently is the CEO/President of Extreme Energy Solutions Inc., a green tech company located in Sparta, New Jersey. Samuel K. Burlum lends his expertise as a consultant to start-up companies, small businesses, and mid-size enterprises, providing advisement in a number of areas including strategic business planning, business development, supply chain management and systems integration. He is also author of the books, The Race to Protect our Most Important Natural Resource and Life in the Green Lane – in Pursuit of the American Dream.

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