U.S. $30 billion Drifting Volkswagen "Emission Door" Sounds Clean Diesel Technology Bell

For the Volkswagen Group, its "emission gate" storm has not been able to stop as expected. On September 29, 2017, the German Volkswagen Group declared that the Group will invest approximately US$ 3 billion in the maintenance of vehicles equipped with exhaust gas cheating software on the US market. At this point, the scandal revealed that for two years, the total amount of fines, compensation payments, maintenance fees, etc. that the public required to pay for the "emissions gate" had totaled close to 30 billion U.S. dollars.

Although the momentum of the auto industry's strides forward is still strong, the revenue space of auto giants is still expected, but the impact and lessons learned from the “emission gate” have continued to persist, failing to subside, and the “discharge gate” is already The bell of a clean diesel car was ringing.

The "falling door" continues

Two years ago, on September 18, 2015, the EPA (United States Environmental Protection Agency) accused some of the diesel vehicles sold by Volkswagen AG with special software for tail gas emission detection. It could identify whether the vehicle was in a detected state and then inspected the vehicle. When the car was secretly started, the car could pass the "high environmental protection standard" during the vehicle inspection. However, during normal driving, these cars emit a lot of pollutants, up to 40 times the legal standard of the United States.

Vehicles involved in illegal emissions include the Jetta, Beetle, Golf, Audi A3, and Passat 2014 to 2015 that were sold after 2008. According to the U.S. Clean Air Act, each vehicle that violates regulations may be fined up to $37,500.

According to statistics, the number of VW-powered diesel vehicles involved in illegal emissions is expected to be 11 million, mainly for models equipped with EA189-type diesel engines, of which about 2.8 million are in the German market and about 482,000 in the US market.

At the hearing of the US House Energy and Commerce Committee on October 8, 2015, Michael Horn, the president and chief executive officer of the US subsidiary of Volkswagen AG, represented Volkswagen AG on behalf of the company. The installation of software to defraud the U.S. government of vehicle emissions testing indicates "sincere apology." He said Volkswagen Group will "take full responsibility for this illegal behavior."

The full responsibility of the Volkswagen Group that Michael Horn mentioned at the beginning did not diminish with the passage of time, although the aftermath of the Volkswagen "emission gate" was already as high as $26.7 billion. On September 29, 2017, a spokesman of Volkswagen Group announced that the time and technical difficulty of hardware maintenance for the affected 2-litre diesel vehicles exceeded expectations, and VW would spend 2.5 billion euros for this. About 2.95 billion U.S. dollars). "We have to do more work on the hardware," said the spokesperson. He also stated that the repair time of American vehicle owners' engine will be dragged even longer.

Volkswagen Group said that the spending will be reflected in the Group's third-quarter financial report released on October 27 this year. Affected by this news, on September 29, the stock price of Volkswagen (VOW.F) fell by as much as 3%. When the stock price of the public stayed at more than 130 US dollars on that day, when the “discharge door” was just exposed in September 2015, this house had 80 The annual share price of international car giants once fell to more than 80 US dollars, and has never returned to the level of more than 160 US dollars before the scandal was exposed in the past two years.

"This is another unexpected bad news from the public. Whether it is from the point of view of profitability and cash flow, or from the assessment of the credibility of the company's management, this is all bad news." American Evercom International Strategy and investment group analyst Arndt Ellinghorst said.

In fact, Volkswagen has been working hard for the aftermath of the “discharge gate”. In mid-2016, Volkswagen reached an agreement with the owner of the US 2-litre displacement diesel engine. According to the agreement, Volkswagen buys cars from car owners or repairs their car engines to meet American environmental standards.

For about 8.5 million vehicles in Europe that install such software, the public needs to update the software and slightly handle 3 million of them. A Volkswagen spokesman said that the aftermath of the European region is proceeding in an orderly manner.

Ever since the public's “emission gate” exposure, there have been car companies that have been exposed to similar exhaust gas tests. In March 2017, France Media cited a report from DGCCRF (French General Administration for Competition, Consumption and Anti-fraud) that France’s second-largest automaker Renault was suspected of fraudulent vehicle emissions and lasted for more than 25 years.

In June 2017, the German government confirmed that tailgear cheat software was also found on several Audi vehicles including the Audi A8. This is the first time that Audi subsidiary Audi has been exposed to cheating in Germany.

In July 2017, another German car company, Daimler, was involved in a similar scandal and announced in the European market that it recalled more than 3 million Mercedes-Benz diesel vehicles.

The German "Spiegel" weekly magazine even revealed in July 2017 that German auto giants Volkswagen, BMW and Daimler privately collaborated on technologies, costs, and suppliers to manipulate the market. These car makers reached an agreement on the design of the diesel vehicle exhaust gas treatment system and deliberately reduced the size of the tail gas treatment liquid storage tank. The European Commission and the German regulatory authorities subsequently stated that they would investigate the matter.

The French "Le Monde" reported in early September 2017 that France's No. 1 car manufacturing trademark has caused the tail gas emissions cheating on the 9 diesel vehicles owned by the Citroën Group. Investigators believe that many former PSA Peugeot Citroen executives not only knew about tail gas emissions cheating, they even intended to use tail gas emissions as a production and business strategy.

"A lot of car companies have problems. Car owners who understand cars, understand engines, and understand relevant experiments understand that the reason why car companies deceive governments and consumers in every country actually reflects the profitability of enterprises." Shanghai Jiaotong University Automobile Yin Chengliang, director of the Institute of Energy Saving Technology, said in an exclusive interview with the First Financial Reporter.

"Examination" and "U.S. Edition"

Unlike pure-electric, hybrid and other new energy automotive technologies, clean diesel engines belong to another group. Diesel power has always been a clean energy technology that is strongly promoted by European automobile companies, including the German public, and is also being promoted by European companies to the US market.

Clean diesel technology refers to the exhaust post-processing technology of diesel engines. The diesel engine adopts the compression ignition method, and the combustion method uses the diffusion method to perform the combustion. In this way, the burning speed of the fuel depends on the mixing speed of the fuel and the air, so the diesel engine can achieve lean combustion in a stable state.

It is reported that the lean emissions of diesel engines are characterized by low emissions of carbon oxides. Compared with gasoline engines, diesel engine emissions of greenhouse gases are about 45% lower. For European countries that reduce carbon emissions as the primary concern, this advantage of diesel engines is self-evident, so European companies are more focused on the promotion of diesel engines.

“Japanese cars are not affected by the 'discharge door' because Japanese people have almost no passenger cars that use diesel engines. Chinese people are basically not. The most affected are still in Europe. Diesel passenger cars worldwide are mainly in Europe. Americans also have very few diesel vehicles," said Yin Chengliang.

In fact, the lean combustion of diesel engines is oxy-combustion, and the characteristic of this type of combustion is that the emissions of nitrogen oxides and particulate emissions are higher than those of pre-mixed combustion of gasoline engines. Therefore, traditional diesel vehicles also have the image of black smoke. The clean diesel technology is said to be the post-treatment of this nitrogen oxide and particulate matter.

At present, the internationally accepted post-treatment methods for reducing the emission of nitrogen oxides and particulate matter from diesel engines include SCR (selective catalytic reduction) and EGR+DPF (exhaust gas recirculation plus particulate trap). The vast majority of models use the technology of EGR+DPF. The 2.0L TDI diesel engine involved in Volkswagen's "drainage gate" is also a technology used.

One of the necessary conditions to sell a new car in the U.S. market is to conduct an emission assessment in accordance with the requirements of the EPA (United States Environmental Protection Agency). Most of the examination rooms are located in the depot's own laboratory and open-book exams. However, scoring standards are the most difficult in the world, and measurement methods are also strictly regulated. For the self-inspection report provided by the manufacturer that meets the requirements, the EPA will directly sign it, but only conduct a random inspection of 15% for supervision.

“The reason why the public has deceived the government and the public in the United States is that the main reason is that the energy saving and environmental protection technology of the diesel engine is contrary to the driving pleasure that many consumers pursue.” Yin Chengliang said that the power and emissions of clean diesel vehicles There is a huge contradiction between the two. In fact, it is difficult for both to have both, and it is difficult to reconcile. The masses choose to falsify, in fact, they want to reduce the emissions of cars, but they are not willing to sacrifice too much of their power.

According to previous media reports, in order to meet the EPA test to get satisfactory transcripts, Volkswagen's engineers prepared a set of standard problem-solving solutions to reduce the fuel injection rate and other aspects to reduce the combustion temperature of diesel engines, thus ensuring the nitrogen oxides Emissions are met because nitrogen oxides are the product of high temperature oxidation of nitrogen in the air inside the engine cylinders. Lowering the combustion temperature or shortening the high temperature residence time can significantly reduce emissions.

It is understood that the Volkswagen diesel car is based on a variety of parameters to make a comprehensive judgment, such as the steering wheel angle, vehicle vibration, air pressure around the body, this is the so-called Defeat Device (failure device), but also the "discharge door" protagonist. With this disabling device, Volkswagen kept its emissions for eight years in a row until it was punctured by the EPA when it submitted the 2016 model.

The problem is that the "exam version" of the VWV will result in a drop in power performance during actual driving, leading to consumer complaints. As a result, Volkswagen prepared another version of the "utility version." Once the car leaves the examination room, the actual operational version immediately restores fuel injection. With other calibrations, economic, dynamic, and maneuverability are all guaranteed. As for harmful emissions, it will naturally increase.

At the end of 2008 before the incident, the United States' "Green Car Journal" compared the five cars that won the best green car award of the year, saying that "to achieve fuel economy and environmental performance are similar to cars." Higher and higher requirements are not an easy task." The 2009 Volkswagen Jetta TDL ranked top because the car's "creative clean diesel" engine not only met the strict US exhaust emission standards, but also had "high fuel efficiency," "satisfactory performance," and "price." Very reasonable."

However, after all, it is a tree without roots. As the “discharge door” was exposed, Martin Winterkorn (Martin Wendorn), who was the CEO of the Volkswagen Group, quickly resigned and executives came out to apologize. Many engineers involved were suspended. In addition, Bosch and other international mainstream auto parts suppliers are also involved in the public's fuel system supplier.

Clean diesel technology also suffers from "looks beautiful" in China. Zhang Xiang, an independent auto industry researcher who had participated in the research and development of new energy models by a number of automakers such as SAIC, recalled to the First Financial reporter that he had visited Yunnan Kunnei Power (000903.SZ) in Kunming many years ago. It is necessary to supply SAIC's MG with a diesel engine, but it was not done later."

Zhang Xiang explained that the promotion of clean diesel technology in China is a reason for the specific national conditions. In foreign countries, diesel is approximately 20% to 30% lower than gasoline, but in China, diesel is only about 1 cent less than gasoline. In addition, some domestic gas stations do not have diesel supply, and they have bought diesel passenger cars to inconvenience fueling. The enthusiasm of diesel owners for private cars is not high. Some domestic manufacturers have also developed diesel-powered SUVs, including SUVs that Great Wall Motor (601633.SH) had developed diesel, which is higher in power than gasoline vehicles, but consumers do not buy it.

Not pessimistic public, not optimistic technology

In early October, San Francisco, a major city on the west coast of the United States, Charles Young, who was working in the United States after the 85s, drove his Honda CR-V to enjoy the city’s golden autumn season. Although he was driving a Japanese car, Charles told the reporter’s reporter. Many American friends around him are still willing to choose the popular brand.

Charles said that in San Francisco, Volkswagen Tiguan’s old models sold for $22,000 and the new model was $25,000. Volkswagen cars are basically two or three thousand dollars more expensive than Japanese cars of the same type. According to Charles, a car enthusiast, the main selling point of Volkswagen in the North American market is power and design, and local middleware purchases are more. "However, none of the new models are currently shipping TDI (turbo direct injection diesel engine) versions."

"I have an overly biased attitude toward cars. I feel that ordinary Americans have the same attitude toward cars as they do with home refrigerators, washing machines, etc." Charles said that American consumers had queued up to purchase the remaining VW diesel models. This at least reflects the attitude of some ordinary American consumers to the Volkswagen diesel model, that is, they think there is no problem with these cars themselves.

The recent sales of the public are not pessimistic. According to its August 2017 sales data released by the Volkswagen Group, the Volkswagen Group has delivered a total of 820,000 new vehicles worldwide, which is 8% higher than the same period in 2016. From a regional perspective, both Central and Eastern Europe and South America achieved an increase of more than double digits, and North America and the Asia-Pacific region also achieved different degrees of growth.

Arndt Ellinghorst also stated that it is still optimistic about Volkswagen stocks and forecast that Volkswagen Group’s pre-tax income in the third quarter of 2017 may be EUR 4.04 billion (USD 4.77 billion).

VW Group's sales in the Asia-Pacific region in August climbed 9.2% year-on-year to 379,200 units. The Chinese market remains the most important driving force for growth in the region, with a total of 353,500 new vehicles delivered, up 9.2% year-on-year.

When attending the 15 millionth vehicle off-line ceremony of FAW-Volkswagen on August 21, 2017, Jochem Heizmann (Hazman), president and CEO of Volkswagen (China), recalled that after 25 years of joint venture development, he said that The new products and technologies will continue to be launched in the Chinese market to help FAW Volkswagen launch a higher impact.

Jochem Heizmann also revealed during an interview with the First Financial Journalist that Jianghuai Automobile (600418.SH), the new partner of the Volkswagen Group, will be an important support for China in the future. When talking about the cooperation between Volkswagen and JAC in the field of new energy vehicles, Heitzman said that if all goes well, both parties plan to launch the first pure electric passenger car in 2018. In the future, the main direction of the attack is the economical pure electric passenger car, and the economical pure electric vehicles with more competitive prices will be introduced around this target market.

“China is an important profit point for the public in the world. When the Chinese market is over, mass dismemberment is not far behind.” Yin Chengliang said, he pointed out that it can be said that Volkswagen is once again in danger in China, and China’s new energy vehicles have “double points”. The policy had previously given a grace period of one year. In 2018, the points for electric cars were not considered. The public became an important winner of this change.

However, Yin Chengliang expressed an unoptimistic attitude towards clean diesel technology. In his opinion, the aftermath of the "emission gate" has continued for two years. It is the public's idea to spend money on disasters. Future events will slowly fade away, but the impact on the public will be even for the entire German automotive industry and even for Europe. For the automotive industry worldwide, the impact of "emission gates" is very large and far-reaching.

The most important thing is that for the Europeans, who used to be scoffing at the purely electric and hybrid power lines, the so-called clean diesel engine's energy saving and environmental protection technology route was actually blocked because of the "emission gate". People once thought that a good clean diesel technology route proved to be technically fatal, that is, clean diesel technology can make the car's emissions cleaner, but it will also make the car's performance be lowered. "A lot of consumers hope that when they step on the accelerator, the car will be able to sprint very fast. However, if the diesel engine is to achieve emissions of Euro V or Euro VI, then the power of the vehicle will be very low. Consumers will not buy it."

"What is certain is that Euro VI has reached the top and there will be no Euro VII and Euro VIII standards." Yin Chengliang bluntly stated that while the Americans smashed the masses for a few hundred billion dollars, they also deceived the lies about cleaning diesel engines. Europe has already stopped the development of emission regulations for engines after Euro VI.

In addition, in the just-concluded Frankfurt Auto Show 2017, mainstream car dealers across the world are pushing for electric vehicles. At the same time, many developed countries ban the sale of internal combustion engine vehicles have also been introduced. "This is actually the direct consequence of the Volkswagen's emissions gate."

On September 11, 2017, Matthias Müller (Mullen), CEO of the Volkswagen Group, announced that the "Roadmap E" electric strategy was officially launched. The important point is that by 2030, the entire Volkswagen Group's entire lineup will be electrified. This comprehensive electrification strategy means that the Volkswagen Group's brands, covering more than 300 models in each market, will launch at least one electric version by 2030.

Charles, who has lived in San Francisco for many years, also lamented the CBN reporter. As the headquarters of Tesla (TSLA), the charging pile facilities in San Francisco are now very popular. There are more and more consumers who purchase Tesla, including car purchases. Many of the enthusiasm are even old American old men.