Germany’s car giants struggle to clean up their image

The reputation of diesel technology is in tatters following growing claims that the car firms have been playing – and in some cases cheating – regulatory regimes

Activists attach a banner that reads “Welcome to Fort NOx” to Germany’s ministry of transport as ministers and car executives meet to discuss ways to cut inner-city pollution. Photograph: Reuters/Hannibal Hanschke

Activists attach a banner that reads “Welcome to Fort NOx” to Germany’s ministry of transport as ministers and car executives meet to discuss ways to cut inner-city pollution. Photograph: Reuters/Hannibal Hanschke

 

This week’s stage-managed “diesel summit” in Berlin did little to clean up the tarnished image of the German auto giants. Choreographed presentations from the bosses of BMW, Daimler and VW Group promised to introduce measures to reduce the emissions of nitrogen oxides (NOx), the byproduct of diesel most harmful to human health. More than five million vehicles on the roads of Europe are likely receive a software “update” or fix.

Details of how the software will work, what knock-on effect it may have on the vehicle’s reliability, or whether it will pass the required tests, are still unclear. Many are understandably sceptical.

Too little too late? The reputation of diesel technology is in tatters following growing claims that the car firms have been playing – and in some cases cheating – regulatory regimes meant to limit harmful emissions and thereby protect the environment and human health.

For years, there seemed to be no alternative to fossil fuels for our transport needs. Petrol was linked to global warming through CO2 emissions; diesel’s lower CO2 seemed to solve this problem. As a result, diesel was portrayed as the clean, green alternative.

Through tax policies and promotional claims, motorists were encouraged to turn to diesel. In Ireland a Fianna Fáil/Green Party coalition upended the Irish motor tax regime in 2008 to reflect the new thinking and encourage motorists to move to diesel. In 2007, the diesel share of Irish new car sales was 28 per cent. By 2010 it was 71 per cent.

Yet authorities, in Europe at least, seemed to turn a blind eye to the other toxic emissions from diesel, notably NOx. Limits were applied, but measured under specific laboratory standards that environmental groups have demonstrated through tests bear little relationship with what’s coming out of tailpipes when the cars are on the road. Car makers played to the testing regime rather than to the road.

‘Clean diesel’

Stricter NOx tests in the US, particularly in key states like California, limited the potential of European car firms to get their diesel models into that lucrative market. In 2005 VW Group seemed to come up with a solution with its new EA189 diesel engine. Suddenly “clean diesel” Audis and Volkswagens were on US forecourts. In September 2015, the truth came out: VW Group was fitting so-called defeat devices to its vehicles to cheat the tests.

In March, VW pleaded guilty to conspiracy and obstruction of justices charges in the US. It has already paid out $4.3 billion in civil and criminal penalties. On Friday a US court is expected to hear a guilty plea from Oliver Schmidt, the former head of Volkswagen’s environmental and engineering centre in Michigan. Schmidt is one of eight former Volkswagen executives who have been charged in the US. A multibillion dollar class action has been settled with US customers but thousands of European motorists are now pursuing legal cases through the courts.

The scandal has grown exponentially over the months, as the focus moves from the nefarious activities at one German car giant to wider issue of how environmental standards are being enforced on vehicles. Questions are being asked of all car firms. The EU emissions test regime is being overhauled.

Legislators now face the tricky manoeuvre of u-turning on pro-diesel tax regimes without destroying the values of cars currently driven by motorists, or denting a lucrative tax revenue stream. In Ireland, new and used car sales contributed €961.1 million in VAT and VRT tax receipts in the first half of 2017. A further €1.4 billion was collected in taxes and levies on motor fuel in the first five months.

Yet after decades of false dawns, alternatives now seem to be viable. This is giving politicians the confidence to make some bold statements.

By 2040, the UK government, as proposed by the environment minister Michael Gove, wants to ban the sale of new petrol and diesel cars and only allow the sale of hybrid, electric or hydrogen models.

‘Diesel museum’

The move comes in the wake of a similar promise by the French president Emmanuel Macron. In the face of this, attempts by the German government to help traditional car industry giants defend the status quo are drawing ridicule.

According to Oliver Krischer, a leader of Germany’s opposition Green Party: “While China, California, Norway and many others are tackling electromobility, the government is turning Germany into a diesel museum.”

The question then is, can we really make a wholesale switch to a new age of transport, enforced by a government ban, in a mere 23 years? After all, it is less than a decade ago that the Irish Government pledged to have 10 per cent of all new car sales taken by electric cars. So far this year electric cars have made up 0.4 per cent of new car sales.

As yet, there is disturbingly little in the way of solid information on the British government’s proposal (it was only several days after the announcement that Toyota’s UK arm was able to get confirmation that hybrids and plug-in hybrids could still be sold, post-2040). And once you begin digging a little, it looks rather like summertime political clickbait.

And the reality is that the global motoring landscape will not be set by European city councils or even by British government ministers. The big legislative decisions on whether car makers will be allowed to continue with internal combustion will be made at EU level and in the major markets like the US and China.

There’s also the sense that this is a case of politicians finally catching up with reality. In the last few years, we have witnessed major evolutionary jumps being made by hybrid, electric, and hydrogen technologies.

Despite the clamour by German car makers to save diesel’s future, many of the car giants – including those same German auto behemoths – are already well on the road to alternatives.

Volvo has said that, by 2019, every car it makes will be either hybrid or fully electric. BMW says that it wants to see electric and hybrid sales climb by 15-25 per cent of its total sales by 2025, but that this will depend on factors such as regulation, incentives and “charging infrastructure [which] will play a major role in determining the scale of electrification from market to market”.

Toyota is looking at even more ambitious plans. Two years ago, at the presentation of its Mirai hydrogen fuel cell car, the Japanese giant confirmed that it was going to end internal combustion engine production, almost totally, by 2050.

“Emissions while driving will become close to zero,” senior managing officer Kiyotaka Ise said. “There will be a shift in the energy used by vehicles.”

Irish plans

Can Ireland follow suit, though? The Department of Communications, Climate Action and Environment is still at the consultation phase of its own clean air strategy, and it is known that both penalties for diesel and petrol cars, and further incentives for electric cars, are being considered, but nothing like the commitments made in the UK plan is yet being seriously worked on.

Matthias Mueller, chairman of Volkswagen: Germany’s car industry faces existential crisis after the emissions scandal and a cartels investigation. Photograph: Steffi Loos/Getty Images
Matthias Mueller, chairman of Volkswagen: Germany’s car industry faces existential crisis after the emissions scandal and a cartels investigation. Photograph: Steffi Loos/Getty Images

The ESB is confident that power for a mass migration towards electric cars could be coped with by the national grid. Paul Hand from the ESB’s corporate centre told The Irish Times that “because electric vehicles make much better use of energy, the energy used by the national car fleet when it becomes fully electric in the future will reduce to about a third compared to “business as usual”.

As a result, the Republic’s total primary energy requirement will reduce significantly with the displacement of petrol and diesel.

“In fact, it has been stated that the European electricity system has sufficient generation and transmission capacity to accommodate the full electrification of personal transport, provided that the charging is managed correctly. Studies carried out in Denmark, a country with a similar population of 5.6 million and 2.3 million vehicles and an annual electrical energy requirement of around 34 TWh, found that the full electrification of those vehicles would add just 12.5 per cent to the energy requirement.”

The ESB says it can foresee the use of very high-speed 350kW chargers, which could potentially reduce charging times to few minutes, by establishing them at large sites similar to filling stations. Each station would need its own megawatt-transformer to be able to cope with the power demand but, according to the ESB, the investment in such a system would be quite similar to that needed to build a new filling station from the ground up. Not cheap, but do-able.

Pressure will be brought on the Government and the car makers by the likes of campaign group Transport & Environment. Its Irish representative, Eoin Bannon, told The Irish Times that “our efforts are on fixing the laws and the testing system so that this won’t happen again – not an easy task.

“We’ll be feeding into the clean air strategy, which is already being worked on and we’re pushing for more charging points but also incentives for purchasing electric vehicles.

“What we want at a broader level is a California-style sales quota for carmakers, so a percentage of new cars sold by each manufacturer would have to be electric. The law would have a significant lead-in time obviously. We hear this is under serious consideration by the European Commission. It may be part of their wider proposal on new car CO2 limits, due to be published in November.”

As yet, the legal route, to compel the Irish Government to act with more haste when it comes to electric vehicles has not been considered, although it has worked elsewhere. German environmental lobby group DUH, which is allied to Transport & Environment, recently won a landmark court case which could see the city of Stuttgart, home to both Mercedes-Benz and Porsche, compelled by law to ban diesel cars from the city centre.

“We will not be fobbed off with a half-baked proposal,” said DUH head Jürgen Resch. “We will make use of all available legal possibilities.”

Fast-charging network

Recent plans jointly made by BMW, Ford, Mercedes-Benz, Volkswagen, Audi and Porsche will see all six brands investing in a pan-European fast-charging network for electric cars. Meanwhile in the US, Nissan and BMW have joined forces with charging company EVgo to install an additional 230 fast-charging points across 33 US states.

The moves are seen as, essentially, an admission that governments and utility companies are not investing sufficiently quickly in electric car charging networks, and the car makers have to get their skates on to drive up EV sales if they’re going to meet new emissions regulations from the EU and California.

The European plan calls for an initial roll-out of about 400 ultra-high capacity fast charging points, starting in 2017, but the intention is that by 2020, “customers should have access to thousands of high-powered charging points”.

So despite the headline-grabbing political statements, it does seem as if politicians are merely catching the curve of technological developments. The realisation that diesel isn’t as clean as portrayed is providing the impetus to push on with the new technology and – albeit tentatively – wean ourselves off a dependency on fossil fuels for private cars.

The question then is whether the reputational damage to the current European giants of the car market – and the costs imposed to make clean the current fleet – will mean they could be overtaken by newcomers with the latest tech. At a time when research and development spending is more critical than ever, the diesel scandal is becoming a major burden on these established firms.

On Wednesday, a clearly annoyed VW chief executive Matthias Müller seemed to bristle when faced with calls for car firms to carry out hardware fixes to clean up emissions from older diesel engines.

“I would like to let my engineers work towards the future and not work on engines that are 10 or 15 years old.”

If the current car giants are forced to focus on the past, it offers the greatest opportunity in more than a century of motoring for newcomers to map out the future.

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