VW, The People’s Car, Betrays the People. Whither the Innovation?

Volkswagen Group, home to storied global brands such as Volkswagen, Audi, Porsche, Bugatti, Bentley and Lamborghini was recently caught with its pants down. VW, paragon of German engineering, efficiency and reliability has apparently been running on fumes. Literally. VW decided to fake it till it made it when it came it to its fuel emissions claims. VW had everyone convinced that they had engineered relatively “clean” diesel engines. And because they’re German, no one doubted them.

The damage to the VW and German brand is surely massive, not to mention the expected fines and lawsuits that will plague the company for some time to come. Some top VW executives are even calling it an existential crisis for the company, though I wouldn’t go that far. Let’s face it: a corporation that makes 13% of the cars on the planet is just too big to fail. This is probably the one instance where Wolfgang Schaüble and his fellow German austerians wouldn’t mind abandoning all attempts at fiscal rectitude in favor of bailing out the company.

Were environmental regulations on pollution unnecessarily overly optimistic? Perhaps, as Volkswagen, GM, Daimler, BMW, Toyota, Renault, PSA Peugeot Citroën, Ford and Hyundai i.e. basically the entire global auto industry are asking for European authorities to allow a 70% increase in the nitrogen oxides their cars emit. In other words, they also may have been cheating about their vehicles’ emissions level.

But auto manufacturers have long been fudging numbers in other areas as well. It is a well-known fact that manufacturers tend to over-state fuel efficiency through a number of tricks. It's hard to be sympathetic with these attempts at getting around regulations. Auto manufacturers should be investing more in R&D, given the relatively decent profits that most are generating. Instead we get stock buybacks and other accounting shenanigans to boost stock prices. 

On the other hand we have Tesla which equipped its latest emissions-free Model X with a bioweapon defense mode that apparently is able to provide hospital-level air quality though an insanely efficient air filtration system. Allegedly. As one commenter on a Techcrunch article humorously put it, “in case you are overtaken by a Volkswagen on the highway”.

If we are serious about curbing pollution/ emissions, then the auto industry is one of the key areas that innovation is urgently required. No doubt electric vehicles will play a key part, but the transition to an all-electric car fleet is at least a few decades away. We simply require the internal combustion engine to get better, before it is ultimately phased out. And not by manipulating emissions/efficiency tests.  These are the hard problems I’d like to see more innovation around and not another “Uber for x”.