To understand this scan you have to start here, a greasy garage tucked away in the back blocks of the University of West Virginia. It is both a workshop and classroom for these mechanical engineers. Students Mark Besh and Arvind Thiruvengadam and their professors Greg Thompson and Dan Cater spend a lot of time looking into exhaust pipes.
They hardly appear to be the types who'd slay a corporate giant, but they've become the Davids who've taken on Goliath. Help me explain how the four of you, this small uni research team, has potentially bought a 120 billion dollar company, Volkswagen, to its knees. We never imagined that it would lead to what it has led to now, so it's a surprise.
It was just another project for us. It was really just let's go play out and you know have a little bit of fun on the road. A fun road trip that would reveal one of the greatest corporate frauds.
And all because of greed. Volkswagen lied about its small diesel engine to sell more cars in the lucrative American market and overtake Toyota globally. So this cheat, this lie, was born out of an... absolute ruthless ambition to be the number one automaker in the world.
Executed ruthlessly, that's it. It's a huge swindle. It's a huge swindle. Working on a small 50,000-year-old The West Virginia Uni team had the research goal of confirming that increasingly popular small diesel engine cars sold in America ran cleaner than similar models sold in Europe. And by pure chance, they started with Volkswagen.
We set out knowing to ourselves that we were going to demonstrate that these diesel engines were efficient and very, very clean. But V-Dubs boast about its cleanliness. Clean diesel technology made the team curious.
How could this engine run clean, perform smoothly and deliver fuel economy using technology other big car makers couldn't make work? Well, it turns out V-Dub's claims weren't true. As the boys from West Virginia discovered, when the cars they tested were clean and legal in the lab, But spewed illegal levels of nitrogen oxide pollution on the road. The magnitude was, that was the most alarming in this case. Alarming and nothing short of baffling.
In open road conditions, the test Volkswagens were pumping out up to 40 times more pollutants than they had in lab testing. You've discovered that this car is behaving like Jekyll and Hyde. In the lab, it behaves perfectly.
Out on the road, it's a completely different beast. In fact, we should have seen much better performance in a car. And, you know, as engineers, we knew...
You know, it wasn't behaving as per design. So us not knowing completely the story, because we couldn't know the story, you know, we're still scratching our heads as we walked away. their results and published their report.
But the results didn't make sense. So they drove the Volkswagen's 4,000 kilometres to California, which has the strictest emission standards in the world and where they hope to find the answers. It's not just some technical engineering problem.
This directly affects the air that people breathe. These are toxic substances. Stanley Young is with the California Air Resources Board. It's responsible for...
for testing all new cars entering the US market at this high-tech lab in Los Angeles. Of course, this is where it all happens, where the actual exhaust is measured. The Volkswagen clean diesels had passed with flying colors. colours, a star engine that in fact earned the German maker Clean Car of the Year awards.
So in the lab it was performing absolutely perfectly. Yes. An absolute model of a clean diesel engine.
Yes, and what was interesting is that even when you took four or five or six year old cars and put them on the test bench, they would run very cleanly. But as Stanley and his researchers were about to find out, it was all too good to be true. What the regulators had no idea of was that Volkswagen's new generation car didn't just have a diesel heart, it had a brain.
A very duplicitous electronic brain with software programmed to deceive. So the software was able to detect when the car was in what we call the test cycle. And when it sensed that it was in the test cycle, it would turn on all of the pollution control. So it was a very sophisticated, you might almost think of it as a kind of artificial intelligence inside the car that could tell when it was being tested. So buried somewhere in this car's computer is this artificial intelligence programmed to cheat.
Exactly. Since the goal was to pass the test, that's what they engineered the car to do. But out on the open road, it was anything but a clean engine, a clean car.
It was a dirty car. It was a very dirty car. The pollution experts had to become digital detectives.
They reprogrammed their own lab test, the toughest in the world, and set their new cheat-seeking software into the matrix of Volkswagen's sophisticated onboard computer, which carries millions of lines of code. Dedicated, dogged detective work to put together a test cycle that tricked Volkswagen's own software into thinking it was on the open road. And when we did that... The emissions took off again.
You'd tricked the car. We tricked their trick. Yeah. We revealed the con. The regulators informed Volkswagen of the con, hoping they had a reasonable explanation.
They took exception with our testing, with the way we approached it, with the conditions that we used, with the equipment that we used. They were essentially dismissive. ...of the results and we said fine we're going to do it again and we did it again and came with the same results.
The emissions regulators had 10 face-to-face meetings with Volkswagen officials over the last year each and every time alerting them to disparity in the data. Those in the meetings described VW's attitude as dismissive and arrogant right up until September the 3rd. When confronted with undeniable evidence, V-Dub threw its hands in the air and admitted it had all been a huge lie. They formally admitted to us.
That in fact there was what's known as a defeat device. In other words, the software was turning off the control equipment when it was on the open road. A defeat device? That's the technical term for it.
And it's expressly prohibited under the Clean Air Act and our laws. To understand why V-Dub would cheat, you have to look at what was to gain. A slice of the richest car market on Earth.
That's cool. And V-Dub spent millions... on clever advertising...
But aren't diesels dirty? Yeah, that's true. Diesel in Latin means dirty...convincing diesel-hating Americans they'd be doing good by the planet and themselves...
See how clean it is? ..by driving their clean diesels. You still have a dirty mind.
And it worked. Sales surged to half a million of these models over the last eight years in the U.S. The number one selling diesel car brand in America.
As you know, we're not particularly adept in the United States in second languages. languages. But everybody knows what Das Auto means because it's front and center now in Volkswagen's advertising. And in the 90s, they made it even more difficult and people loved it. They talked about Fahrzeugnügen, so driving enjoyment, right?
So Americans who could... could say kindergarten and beer all of a sudden can say fartfegnugen, you know. Now they probably say fraudfegnugen. Jeff Tienes was a vice president of rival auto giant Daimler-Benz.
He speaks fluent German and is a gun for hire in corporate ethics. He knows Volkswagen inside out. And explains a culture in the company that went all the way to the top with the vaulting ambition of VW CEO Martin Vinterkloof.
If you know anything about Vinterkorn's management style, he's reputed to be ruthless. There are a lot of skeletons left along the path of his career. The same CEO who set the marker that we're going to be number one, and we're going to triple our sales in the United States, all these goals that he's staking his reputation on, and nothing is more important to him than his reputation, are at risk if this technology doesn't work.
for the emissions. He says in 2008, on the eve of the clean diesel launch, one of Volkswagen's engineers made a terrible discovery. The new diesel cars would never meet US emission standards and still maintain the all-important performance and fuel efficiency VW was promising its customers.
So imagine the pressure when the US market strategy, and it's going to be based on this clean diesel, And somebody discovers down there in engineering that the technology they were betting on isn't going to meet the emission standards. Who wants to deliver that message back upstairs? And in that culture, you're saying that delivering that message would have been near on impossible.
It's suicide. It's suicide. They wanted these cars ready to go in the U.S. market, ready to bring to the market generally. And they realized, oh my God.
This emissions control technology isn't going to work. And they maybe didn't have time, or they didn't want to spend the money to fix it the right way. And a solution was found.
That solution was both brilliant and criminal. The defeat device. knew when to switch on and off the emission limits.
For example, measuring steering wheel movements and barometric pressure to sense when the car was stationary in a test lab or driving hills and bends on the open road. It was all based on clean diesel, except it wasn't clean diesel. It was really nasty, dirty diesel.
So in that sense, it's a massive con on consumers. It's a huge swindle. It's a huge swindle.
A corporate and consumer swindle, but also an environmental crime. Illegal levels of nitrogen oxide pollutants, regulators in the US are only just beginning to measure. If you understand that they put out 10 times as much pollution, then that's essentially the equivalent not of having 60, 50 or 60,000 cars out there, but having 500,000 or 600,000. If they put out 40 times as much pollution, that's the same as saying that there were two million of these cars on the road.
The West Virginia student research team was shocked when they heard the news. They'd signed off on their side of the study. and had been busy back in their garage finishing their PhD engineering degrees. I remember I was in my office and Dan came over and he's like, you know, Volkswagen admitted.
I'm like, I don't believe this. How do you think the Volkswagen executives are thinking about your report right now? Probably hoping that we never did the study. Volkswagen did become the number one automaker in the world just two months before the emissions scandal broke.
Ambitious CEO Martin Winterkorn couldn't savour the victory. The controversy wiped 30% from VW's share price. Faced with a recall and repair of 11 million vehicles worldwide, billions in compensation and a brand in tatters, Winterkorn resigned in disgrace, replaced by Matthias Muller of who issued a dire warning.
Just last week he said, Das ist eine existenzielle Drohung. It's an existential threat. It doesn't get any clearer than that. In his opinion, this is a very threat to the continued existence of Volkswagen. So what do they face here now, do you think?
What is the potential for them? Jail time. If they're found to have actually engaged knowingly in circumventing regulations of the United States, it's a crime. Hello, I'm Tara Brown. Thanks for watching.
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