Regulators cracking down on fuel economy and emissions reporting in major global markets

Volkswagen diesel recallThe Volkswagen diesel car emissions reporting scandal has triggered a wave of regulatory pressure in the U.S., Europe, and Asia. It’s going way beyond the VW brands, as Mitsubishi faces pressure on honest mpg fuel economy reporting that harkens back to Hyundai, Kia, and Ford in 2012-14. Mercedes-Benz is now facing diesel exhaust emissions reporting pressure in the U.S. and Europe.

As covered last week in Green Auto Market, China is setting the pace on where sustainability and emissions reporting is heading in the auto industry. Beyond incentivizing electric vehicle sales, the Chinese government is setting the strictest standards on reducing air pollution.

Regulators around the world are getting tougher on automakers after a series of cheating scandals on fuel economy and emissions, with China set to become the strictest, said Ford CEO Mark Fields. While stricter standards are being adopted around the world on greenhouse gas emissions and fuel economy, China will be the toughest regulatory regime over the next five years “given some of the societal factors around air pollution,” Fields said.

Fields spoke to reporters on the eve of the Beijing Auto Show, China’s largest car show. Ford faced a reporting scandal of its own in 2013 and 2014, when it twice lowered the mileage ratings of several hybrid models. Fields said that Ford is supportive of Europe considering on-road testing for emissions and would comply if China follows suit.

VW settlement in U.S.: On Thursday, VW agreed to a tentative plan with the U.S. Environmental Protection Agency and the California Air Resources Board  to buy back or repair 500,000 diesel-powered cars sold in the U.S. Consumers now have the choice of whether to sell their vehicles back to Volkswagen or get repairs. The deal includes “substantial compensation” for owners of cars powered by two-liter “clean diesel” engines that were fitted with software to cheat emissions tests, U.S. District Judge Charles Breyer said during the hearing in San Francisco. VW will be required to invest funds to “promote green automotive” initiatives and establish an environmental remediation fund to offset the years of cars putting out nitrogen oxide emissions at harmful levels.

The judge issued a gag order and scolded parties for leaking previous details to the media as more finalized details on the settlement will be released later affecting the VW, Audi, and Porsche brands. VW still faces as many as 50 attorney general fraud cases for false advertisement, having made claims that its vehicles are a clean alternative to hybrids. VW also faces lawsuits from dealerships and customers.

Recall in Germany: The vehicle recall related to diesel emissions management software has added two more automakers – Daimler and General Motors – in a German government ruling. That government has ordered recalls and testing for NOx emissions in diesel cars for VW, Audi, Porsche, and Daimler’s Mercedes-Benz and GM’s Opel brands with about 630,000 diesel cars being recalled for a software fix. BMW was not part of the recall. German motor transport authority KBA had done extensive testing on diesel cars and determined automakers have been using a legal loophole allowing them to throttle back emissions treatments under certain circumstances, with OEMs claiming that’s been done to protect engines.

The decision in Germany is yet another challenge VW is facing in global markets. VW Group is recalling 8.5 million cars in Europe that are among 11 million diesel cars sold worldwide by its VW, Audi, Porsche, Skoda, and Seat brands equipped with emissions-cheating software. The U.K. government just released results after testing 37 car models on NOx emissions reporting; it found that only VW has been using so-called defeat devices.

Mitsubishi mileage scandal: Mitsubishi has admitted manipulating fuel economy ratings for its vehicles sold in the Japanese market. The company said it had overstated the fuel efficiency of 625,000 cars. Media outlets have reported that the Japanese automakers had submitted misleading mileage data on its i-MiEV electric car, which is also sold overseas. The automaker is also suspected of using non-Japanese test methodology on its RVR, Outlander, Pajero, and Minicab MiEV models.

The scandal expanded on Friday as the U.S. National Highway Traffic Safety Administration said it was seeking information; it may affect at least one more model than disclosed and likely several others. In Japan, the government may mandate that Mitsubishi will have to reimburse consumers and the government if investigations find the vehicles were not as fuel-efficient as claimed.

Daimler diesel emissions: Along with its recall in Germany, Daimler AG is facing more scrutiny in the U.S. market. On Thursday, the company said it is conducting an internal investigation of its certification process for diesel exhaust emissions at the request of the U.S. Justice Department.

The latest action stems from an EPA request in February for information from Daimler coming from a lawsuit filed by U.S. Mercedes owners. In early April, owners of U.S. Mercedes diesel cars filed a new class action suit by U.S. law firm Hagens Berman, which had already filed a complaint in February. The suit claimed its vehicles likely contained a “defeat device” used to cheat emissions testing, an accusation that Daimler denied.

Daimler said the lawsuits “are considered to be without merit and Daimler will defend itself against them with all available legal means.” The automaker has committed to cooperate fully with U.S. government investigations.


Big Picture: EPA releases finalized Tier 3 standards on emissions; Tesla Motors has another revolutionary goal: a Gigafactory

EPA gasoline sulfurThe US Environmental Protection Agency (EPA) yesterday finalized what it calls “Tier 3 standards” requiring gasoline sulfur levels to be reduced by two thirds from 30 parts per million (ppm) to 10 ppm. EPA says that its new emission standards for cars and gasoline will significantly reduce harmful pollution and prevent thousands of premature deaths and illnesses, while also enabling efficiency improvements in the cars and trucks. Smog emissions, including nitrogen oxides and volatile organic compounds, are expected to drop 80% compared to today’s vehicles and particulate matter (soot) will drop by 70%. These standards will begin being implemented in model year 2017. The Tier 3 standards are being supported by automakers, labor, consumers, and public health advocates. Once fully in place, the standards will help avoid up to 2,000 premature deaths per year and 50,000 cases of respiratory ailments in children, according to the EPA.

And in other clean transportation news……

  • Tesla Motors has yet another potential breakthrough concept in the works –its “Gigafactory” concept could bring more affordable electric vehicles to market through a large scale lithium battery factory. It would mean investing up to $5 billion with partners in a battery plant that can supply 500,000 electric vehicles a year by 2020, after opening up in 2017.  Panasonic may be considering joining in; Panasonic is currently Tesla’s largest supplier of lithium ion batteries. “In cooperation with strategic battery manufacturing partners, we’re planning to build a large scale factory that will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead,” Telsa posted last week on its blog. By the end of the first year of production, the per kilowatt cost of the battery pack could be reduced by more than 30%. Tesla is looking for plant locations in Nevada, Arizona, New Mexico, and Texas and said that site selection will be happening soon. When you view the charts Tesla compiled, the first one shows that its new battery factory will be producing more batteries by 2020 than all the other lithium battery makers combined are making today – that’s quite a claim.
  • Nissan did better in Leaf sales – at 1,425 cars sold it was a record for the month of February, more than double the amount from a year earlier. That makes for 12 straight months of year-over-year sales increases. Its top two markets last month were San Francisco and Atlanta; the rest of the top five was Los Angeles, Seattle, and Portland. The Chevrolet Volt’s sales have been seeing a decline – at 1,210 it was higher than January’s 918, but down a third from February 2013’s total of 1,626. Tesla continues to not report monthly sales, but the estimate was 1,000 to 1,200 units of the Model S sold.
  • Honda appears ready to pull its Insight hybrid off the market – one of the very first hybrids to come to market when it was introduced in 1999, before the Toyota Prius. The original two-seater hybrid got even better mileage than the Prius or the Honda Civic hybrid. It was redesigned in 2009 with a backseat, but it failed to grow in sales numbers even though it sold for less than $20,000.
  • President Obama is bringing to medium- and heavy-duty trucks and buses what was previously brought to passenger cars – a second level of fuel efficiency standards. The first round covered model years 2014 through 2018; the new standards will be in place in about tow years and will extend the rules into the next decade.
  • Even though ECOtality is out of business, its Blink electric vehicle charging stations are still around. IKEA added four stations at one of its Chicago-area stores as part of its partnership with Car Charging Group, Inc. IKEA started installing stations in 2011 in Arizona, California, Oregon, and Washington and wants to place them at 55 US locations.
  • Daimler will be launching a new battery electric vehicle in partnership with China’s BYD. It will go through the Denza brand and be shown as a concept hatchback car at the next Beijing Motor Show. It will be called the “NEV” – or New Energy Vehicle, which means it’s being built for China. One of the popular car trends in that market will be met – rear seating will have the feel of a lounge area, perfect for riding in when you have a chauffeur in the front seat doing all the driving.