Volkswagen admits 11 million diesel cars have sneaky software installed

Stock continues to slide and CEO is out, according to some reports.

Megan Geuss – Sep 22, 2015 10:29 am | 315

A 2014 Volkswagen Passat Credit: Volkswagen

On Tuesday, Volkswagen revealed that 11 million diesel cars worldwide have been equipped with software allegedly used to cheat emissions tests.

The scandal was revealed on Friday when the Environmental Protection Agency ordered Volkswagen to recall 500,000 vehicles sold in the US, including diesel Jettas, Golfs, Beetles, and Passats, as well as some diesel Audi vehicles, for including a so-called “defeat device” in their cars. The defeat device would sense when a car was undergoing emissions testing and allow the car’s emissions control to work properly. However, when the car was operating under normal driving conditions, emissions control systems would not work properly, spewing 10 to 40 times more nitrogen oxide (NOx) into the air than is allowed by EPA regulations.

In the wake of the news, Volkswagen Group’s stock has tumbled, with shares losing more than a third of their value on Germany’s stock exchange.

“Further internal investigations conducted to date have established that the relevant engine management software is also installed in other Volkswagen Group vehicles with diesel engines. For the majority of these engines the software does not have any effect,” Volkswagen said in a statement. “Discrepancies relate to vehicles with Type EA 189 engines, involving some eleven million vehicles worldwide. A noticeable deviation between bench test results and actual road use was established solely for this type of engine. Volkswagen is working intensely to eliminate these deviations through technical measures.”

The company added that it would be setting aside €6.5 billion ($7.27 billion) to “cover the necessary service measures and other efforts to win back the trust of our customers.”

Volkswagen could face up to $18 billion in fines in the US, and executives could be criminally charged.

Amid the scandal, Volkswagen’s CEO looks to be in trouble. On Monday, Martin Winterkorn released an apology for misleading the public, saying, “I personally am deeply sorry that we have broken the trust of our customers and the public.“

‘We will do everything necessary in order to reverse the damage this has caused,” Winterkorn said.

Today, a German paper wrote that Winterkorn will be ousted by the company’s board and replaced by Porsche CEO Matthias Müller. (Porsche is owned by Volkswagen Group.) According to Reuters, Volkswagen denied that Winterkorn would step down. A Porsche spokesperson told Reuters that Müller was attending a Volkswagen board meeting today. In an e-mail to Ars, a Volkswagen spokesperson wrote, “We have no comment on this speculation.”

For now, regulatory repercussions only extend to cars in the US. Speaking to the Wall Street Journal, a European Union spokesperson said that regulators would be meeting “very soon” to address the revelations pertaining to Volkswagen’s cheating software. German Chancellor Angela Merkel also called on Volkswagen to be transparent and act quickly to address worldwide regulators’ concerns.