Volkswagen Diesel Scandal: An Ethical Decision-Making Analysis

Introduction: The Volkswagen Emissions Scandal

In 2015, Volkswagen was accused of installing secret software in its engine management computers to cheat strict fuel economy and emissions tests. In order to determine the ethical decision Volkswagen should have made, one can use ethical decision-making models such as Utilitarianism, Kantian Ethics, Ethical Rights, and Distributive Justice. Though these four models use different approaches, one or more of them can result in a justified recommendation for the correct ethical decision that Volkswagen should have made.

Facts Underpinning the Ethical Dilemma

In 2014–2015, U.S. emissions experts tested some Volkswagen vehicles and found deliberate fraud through the use of "defeat device" software that turns emissions equipment on during emissions tests and off during actual driving (Plungis & Hull, 2015). The deception was accidentally discovered. Discrepancies between the nitrous oxide emissions of some Volkswagen models compelled the International Council on Clean Transportation (ICCT) to use the University of West Virginia's Center for Alternative Fuels, Engines and Emissions (CAFEE) to test cars in 2014 and develop a functional control model (Wendler, 2015). The CAFEE team used actual road testing, and its data differed significantly from the emissions tests completed by the California Air Resources Board (CARB). For two examples: the Volkswagen Jetta easily passed CARB emissions tests, but CAFEE tests showed that the Jetta emitted 15–35 times the permissible emissions; and the Volkswagen Passat easily passed CARB emissions tests, but CAFEE tests showed that the Passat emitted 5–20 times the permissible emissions (Plungis & Hull, 2015). At that point, emissions experts knew that something was wrong.

At first, CAFEE experts believed there were testing errors, so CAFEE retested Volkswagen vehicles with actual road driving again, then double-checked and triple-checked the data. CAFEE's results were still significantly different from those of the CARB tests. The experts concluded that the substantial differences had to be caused by vehicle software (Wendler, 2015). CAFEE submitted its test results to the Environmental Protection Agency (EPA), which started an investigation with CARB in 2014. Volkswagen was evasive at first, and then asserted the "problem" was fixed and recalled nearly 500,000 U.S.-sold diesel vehicles in late 2014. CARB kept investigating and testing, continuing to discover substantial discrepancies, and advising the EPA and Volkswagen of its results in the summer of 2015.

Volkswagen remained apparently unconcerned until the company learned that many of its diesel-model vehicles would not be certified for sale in the United States in 2016. At that point, the U.S. diesel market represented almost 25% of Volkswagen's U.S. sales. In an effort to save its U.S. diesel market, Volkswagen confessed to using the "defeat device" software. The company's stock dropped $65 per share, and Volkswagen may be fined more than $17 billion by the United States alone. In order to repair its brand and assets, Volkswagen fired its CEO, Martin Winterkorn, and vowed to repair and refit the affected vehicles.

The EPA states that the affected 2.0-liter vehicles include: Audi A3 (2010–2015); Beetle (2013–2015); Beetle Convertible (2013–2015); Golf (2010–2015); Golf Sportwagen (2015); Jetta (2009–2015); Jetta Sportwagen (2009–2014); and Passat (2012–2015). The EPA also announced that the affected 3.0-liter vehicles include: Volkswagen Touareg (2009–2016); Porsche Cayenne (2013–2016); Audi A6 Quattro (2014–2016); Audi A7 Quattro (2014–2016); Audi A8 (2014–2016); Audi A8L (2014–2016); Audi Q5 (2014–2016); and Audi Q7 (2009–2016) (United States Environmental Protection Agency, 2016). As the announced number of affected vehicles expanded to 11 million vehicles worldwide (Ewing, 2016), the stunning extent of Volkswagen's deliberate deceit became clear. In fact, just days before this paper's completion, The New York Times reported that Volkswagen prepared a PowerPoint presentation for a 2006 internal meeting instructing the company's relevant personnel on exactly how U.S. emissions standards could be circumvented (Ewing, 2016), revealing a company-wide system of deceit.

Decision-Maker and Conflicting Demands

The existence of a 2006 PowerPoint presentation for an internal meeting instructing the company's relevant personnel on exactly how U.S. emissions standards could be cheated (Ewing, 2016) reveals a company-wide system of deceit. Consequently, the decision-maker was not a rogue engineer deep within Volkswagen; rather, the decision-maker or decision-makers must have been those in the highest offices who are responsible for company-wide practices. The Board of Management of Volkswagen AG (Volkswagen, 2016), the parent company of Volkswagen Group, was the decision-maker. The termination of its CEO, Martin Winterkorn (Plungis & Hull, 2015), in the wake of the diesel scandal indicates his officially vital role — or scapegoat role — in the decision to cheat on the emissions tests. The conflicting demands the decision-makers were forced to address were the legal and ethical demands of vehicle emissions standards versus competitively advantageous vehicle performance.

Ethical Dilemma Faced by the Decision-Maker

The ethical dilemma facing the decision-makers was the conflict between the ethical demands of vehicle emissions standards and competitively advantageous vehicle performance. Vehicle emissions standards are set to address the air and particle pollution that endangers all forms of life on Earth. The laws are enacted to enforce ethical considerations of preserving a vital life resource on the planet (Young, 2015). Meanwhile, diesel vehicles tend to achieve superior fuel economy over gasoline-powered vehicles; however, diesel exhaust contains more pollutants. Required emission controls are challenging in that they can hinder engine performance, reducing power and/or fuel economy.

Volkswagen's competitors Daimler and BMW technically solved these conflicts, but the required systems are costly. Volkswagen was apparently unable to create a cost-effective system that would meet emissions requirements while retaining competitively superior engine power and fuel economy for its mass-market diesel vehicles. Consequently, Volkswagen engineers designed the "defeat device" software (Rosevear, 2015), violating both the letter and the spirit of the emissions laws.