If you recently purchased any shares in the Volkswagen Group, I suggest you read no further. When the market closed on September 18th (a Friday) the stock price for Volkswagen was sitting at a comfortable €162. When the market opened the following Monday, the stock price had fallen to €132. By Wednesday morning, it had fallen to its lowest at €102. This is a price drop of around 37%, equivalent to almost 30 billion euros of the company’s value. What caused the huge depreciation of value of this global company? And what does any of this have to do with environmentalism? Volkswagen seriously screwed up.
These kind of price changes don’t occur unless something really big happens, and in this case the big thing was cheating on emissions tests. This was done by installing a “defeat device” on diesel cars, reducing the engine performance of them while it was being tested and causing the cars to have greatly reduced emissions, up to 40x lower than regular emissions for certain pollutants. During regular driving, emissions would return to a level much higher than that allowed. This wasn’t on just a few cars either, Volkswagen has admitted to installing it on 11 million cars worldwide. This could result in a maximum fine of 18 billion dollars, although it won’t likely be this large. Although Volkswagen initially denied any involvement, increased pressure from the U.S. Environmental Protection Agency led to their admittance of cheating on these emission tests. Since the scandal, Volkswagen CEO Martin Winkerton has stepped down claiming responsibility for irregularities in the tests but “not knowing about any wrongdoing”. BULLSHIT if you ask me.
So why is this an important issue? Well first of all, it serves as a warning to all the automotive companies out there: if you cheat, you will get caught and you will get screwed over. Secondly, it shows just how seriously the EPA handles these issues; that they’re doing their job. Of course there are still huge issues of corruption and there likely were environmentalists, economists and officials working with the Volkswagen group covering this up and are working with other automotive industries as we speak, but it's good to take the small victories where we can. Volkswagen will likely rebound from this massive hit, although it will take a great deal of time. These big companies aren’t immune to rules and regulations and rest assured Volkswagen won’t be cheating on any emissions tests in the future (or maybe they’ll just get better at it).