Volkswagen, product complexity and the modern economy

Volkswagen (VW) has been caught cheating on exhaust emission testing. This episode in VW's history is a good opportunity to point out some features of the modern economy.

VW is one of the greatest names in the automotive industry. It also involved two of the greatest names in history.

The Beetle, VW's first car, was designed by Ferdinand Porsche to meet two key requirements defined by Adolf Hitler: cheap and simple.

Mass manufacturing of the Beetle began in 1945. Over 21 million Beetles were manufactured from 1938 to 2003.

VW built on the success of the Beetle. The automobile industry took off and became global.

Requirements changed. People wanted more comfort and convenience. People didn't want cars to spew pollutants from their exhausts.

Los Angeles was so polluted by automobiles that when former president Ronald Reagan was asked why he was returning there to recover from the assassination attempt on his life, he said "My doctors told me I should recover in a place where I can see the air I breathe."

Exhaust emission limits were imposed. Measurement methods were developed. Test methods were defined. Legislation was passed and enforcement commenced.

Automobile companies scrambled to comply. They raced to build engines which generated less pollutants and exhaust systems which removed pollutants from exhaust gases.

Manufacturers harnessed new technologies to give customers what they wanted. They developed and miniaturised filtering systems and computer control systems; they used new materials and methods.

A big competition arose between car companies which used petrol engines and those which used diesel engines.

Through creative advertising VW "converted" people to diesel engines. VW is credited with developing small diesel engines that supposedly spew less pollutants.

VW is the world's leading automaker. Its stable includes some of the greatest names in automobiles: Audi and Porsche in Germany; Bentley in UK; Bugatti, Lamborghini and Ducati in Italy. (Also the Czech Skoda and Spanish Seat.)

But now, VW has been caught cheating. On September 18, the US Environmental Protection Agency (EPA) issued a Notice of Violation (NOV) of the Clean Air Act to Volkswagen and Audi.

The NOV was issued to the heads of these companies' entities in the USA.

The NOV says "four-cylinder Volkswagen and Audi diesel cars from model years 2009-2015 include software that circumvents EPA emissions standards for certain air pollutants.
The software... is a 'defeat device', as defined by the Clean Air Act."

Models listed in the NOV include diesel-engine Jetta, Beetle, Audi, Golf and Passat models made between 2009 and 2015.

Some owners of the affected vehicles live in areas which require vehicles to pass periodic emission testing. The EPA has addressed the concerns of such owners.

The EPA says: "It is unlikely that the presence of this (defeat) device will cause your vehicle to fail. In fact, the 'defeat device' was specifically designed to ensure that vehicles would pass inspection. The 'defeat device' has been installed in the affected VW diesels since 2009.

"To date, EPA has no indication of any pattern failures with these vehicles during inspection and maintenance emission tests."

VW sold its diesel cars on the promise of more miles to the gallon. VW depended upon exhaust filtering to reduce pollution. Exhaust filtering results in less miles to the gallon. Therefore VW put in a "defeat device".

The "defeat device" turned off exhaust filtering when the car was moving, so the cars delivered more miles to the gallon.

Since emission was tested while the car was stationary, the exhaust was filtered during the test. So the cars passed the tests. (I doubt VW can "fix" these cars so they meet the emission standards and deliver the promised miles per gallon of diesel.)

What lessons does this VW story teach us? I'll list just five.

First, the complexity of modern products makes it impossible for customers to evaluate many claims made by vendors. Therefore the people who lead the vendors must be subject to punishment if their products violate any regulations.

Second, the complexity means measurement and test methods must anticipate ways in which each test could be cheated. The Clean Air Act succeeded in doing this since it defined and made "defeat devices" illegal.

Third, the complexity makes it very difficult to test products for safety and compliance. Therefore product development budgets and timelines must make sufficient money and time for testing.

Fourth, companies must have internal training and policing to ensure requirements are complied with. This is very challenging when multiple legal jurisdictions are involved.

Fifth, the requirements lead to regulations which cause the economy to favour big companies.

It took six years for VW to be found out. Other car manufacturers are silent. They've all got skeletons in their closets. Welcome to the modern economy. – October 1, 2015.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.