VW and BMW Fined Almost $1 Billion for Colluding in Emissions Plot

Climate change continues impacting lives and the environment in various ways. For that reason, everyone has a part to play in conserving the environment. That includes companies like Volkswagen Group as well as the authorities. That explains why automakers are investing in technology that focuses on reducing emissions. Doing so yields a significant impact because it ensures that gas-powered vehicles do not leave Mother Earth gasping for breath due to air pollution. Unfortunately, when car manufacturers collude in emissions plots, such as in the case of Dieselgate, they deal that objective a blow. When that happens, the environment, as well as humans, remains at risk.

VW, BMW, and Daimler emissions plot

A Volkswagen (VW) power plant at its headquarters in Germany
A Volkswagen power plant | RONNY HARTMANN/AFP via Getty Images

Surprisingly, German automakers known for producing high-end vehicles spent years colluding to slow the deployment of cleaner emissions technology, which is illegal. The scheme is not dissimilar to Volkswagen Group’s massive Dieselgate scandal. The VW scandal involved the installation of software on Volkswagen diesel vehicles to fake compliant emission ratings. The intention, in this case, was to fool environmental regulators into believing that the company was compliant.

Unfortunately, the firm’s vehicles were polluting far more than the acceptable limit. Eventually, Dieselgate ended in nearly $40 billion in legal fees, fines, and buybacks. Volkswagen Group had to bear this burden. Additionally, Daimler also installed software on some of its diesel vehicles. The plan was to cheat emission tests, and the organization has since paid billions of dollars in fines.

The collusion around diesel emissions dated back to the 1990s, which revealed the existence of an emissions cartel. That is when EU authorities announced a probe into the allegations. They also raided the accused automaker’s corporate offices, searching for evidence. A formal accusation of the car manufacturers by the EU happened in 2019. However, the conduct for the fines for the firms in question took place between 2009 and 2014.

BMW and VW get half-billion-dollar fines each

According to The New York Times, a collective fine of $1 billion was levied against BMW and Volkswagen by the EU’s executive branch. Both organizations were fined for participating in the emissions plot. On its part, Daimler evaded the fine it should have paid since it revealed details about the collusion to the regulators. It is also worth mentioning that the center of the fines that the EU levied was “exhaust gas purification.” 

Also, according to the authorities, Daimler, VW, and BMW agreed on details regarding the sizes of the tanks used to house AdBlue, which is a common solution that mixes with a diesel car’s exhaust to neutralize harmful pollutants. That action means that the vehicle manufacturers had the technology to make cleaner cars but agreed not to compete on the issue, according to what the authorities argued.

Such issues affect the financial position of companies. Interestingly, the settlement agreement will probably not leave a huge dent on either Volkswagen’s or BMW’s bottom line. The reason is that VW made almost $14 billion, and BMW raked in just over $6 billion in before-tax profit in 2020. Still, the settlement is another blow to the German automakers’ image. Remember that these car manufacturers dominate the high-end car market.

It is a fact that German car manufacturers have lost some ground in the market. That is the case, especially after Volkswagen admitted that most of its cars had software to dupe official emissions testers in 2015 during the Dieselgate scandal. Additionally, BMW and Daimler were involved after the EU accused them of illegally agreeing with VW on specifications for emissions treatment technology in 2017.

Was the emissions plot illegal or unethical?

The aspect of agreeing to deploy illegal technology was not part of the European Commission’s accusation against BMW and Volkswagen. On the contrary, the commission said that the vehicle manufacturers had illegally agreed to deploy emissions technology that met minimum legal standards. The firms did so even though this was not the most environmentally friendly option available. 

Since the automakers avoided competing on using the right technology, the accusation against them was how legitimate technical cooperation went wrong. The technology in question reduces harmful emissions by cleaning better than what the law demands. So, the bottom line here is that the emissions plot was unethical and not illegal.

RELATED: Dieselgate 2: Volkswagen and BMW Fined in Another Emissions Scandal