Volkswagen Admits To Equipping Audis, Porsches With Second Illegal Defeat Device

When last we checked in on Volkswagen and the widening emissions scandal, we learned that in addition to software installed on some 11 million diesel vehicles designed to game nitrogen oxide tests, Germany’s largest carmaker has also been habitually understating CO2 output on around 800,000 cars sold in Europe. 

In a nutshell, the company said it found “unexplained inconsistencies” while conducting an internal probe related to carbon-dioxide output.

For the first time, gasoline engines were said to be affected. 

"VW is leaving us all speechless," Evercore ISI’s Arndt Ellinghorst said.

Well Arndt, prepare to be left speechless-er, because now, the company has admitted that some 85,000 Audi engines contained a second defeat device just weeks after saying (and this is about as explicit as it gets) that “no software has been installed in the three-litre V6 diesel power units to alter emissions characteristics in a forbidden manner”.

As it turns out, software had been installed in all three-litre V6 diesel power units. As FT reports, “the luxury car brand of the VW group admitted that the software was in all three-litre V6 diesel engines manufactured by Audi and sold from 2009 until this year.”

So no big deal, just every single three-litre V6 diesel vehicle sold for the past seven years. 

FT goes on to note that after a meeting between Audi’s chief executive, the company’s engineers, and the US Environmental Protection Agency, the carmaker “sent out a statement saying that it had failed to disclose three auxiliary emissions control devices (AECDs) to regulators. Without disclosure and subsequent approval from regulators, AECDs are not legal.”

“One of them,” the company added, “is regarded as a defeat device according to applicable US law. Specifically, this is the software for the temperature conditioning of the exhaust-gas cleaning system.”

Apparently, the company will stop selling 3.0 litre TDI-equipped Audi A6s, A7s, A8s, Q5s and Q7s, VW Touaregs and Porsche Cayennes. 

According to Bloomberg, Audi "agreed to revise and resubmit data concerning the V6 TDI 3-liter diesel engine to U.S. authorities after negotiations." The cost affecting Audi, Porsche and VW for a software update is expected to be in the “mid-double-digit millions of euros” range.

To be sure, the writing was already on the wall here. As Bloomberg noted on Friday, "Thursday’s meeting between company officials, EPA and the California regulators involved technical experts who talked about three pieces of equipment on the 3.0-liter engines that should have been disclosed as auxiliary emissions control devices." According to the EPA, one of the three devices qualifies as a defeat device.

And so, it just keeps getting worse and in fact, the bad news is piling up so quick that analysts can't keep up with it. For instance, earlier today, Deutsche Bank said the following: "...the product offensive Audi is currently rolling should help to sustain a healthy pricing environment going forward. Obviously this weekend’s newflow might change this at least in the US."

Yes, "obviously", especially when one variant of every single model besides the A4 and the TT is now under a stop sale order.

Additionally, it's hilarious to note that despite it all, Germany's manufacturing PMI came in at 52.6 today, a three-month high. 

In any event, we'll anxiously await the analyst response on Tuesday to see just how much more "speechless" everyone is and in the meantime, we would note that if you thought "stability in volatile times" was a hilariously ironic tagline for a VW coporate presentation...

... then you'll love being reminded of Audi's mantra...