Why Does This Automaker Cheat Emissions Testing Volkswagen Group AG tried to aim high by embarking on a strategy to bypass Toyota as the world's largest automaker. One part of that strategy called for tripling U.S. sales in a decade by promoting "clean" diesel- powered cars promising low emissions and high mileage without sacrificing performance. It turned out that about 580,000 cars in the United States and almost 10.5 million more clean diesel models sold worldwide by VW under its VW, Audi, and Porsche brands weren't really "green" at all. On September 18, 2015, the U.S. Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to the Volkswagen Group after finding that Volkswagen had intentionally programmed turbocharged direct injection diesel engines to activate certain emissions controls only during laboratory emissions testing. The programming caused the vehicle's nitrogen oxide (NOx) output to meet U.S. standards during regulatory testing but emit up to 40 times more NOx when the cars were actually driven on the road. Volkswagen put this software in about 11 million cars worldwide, and in 500,000 in the United States, during model years 2009 through 2015. Volkswagen was able to get away with cheating on emissions tests for years because it was hidden in lines of software code. Only after investigations by environmental groups and independent researchers did Volkswagen's deception come light. Many functions in today's automobiles are controlled by millions of lines of software program code, including monitoring carbon monoxide and nitrogen oxide levels to help a car control the amount of pollutants it emits. Diesel engines don't emit much carbon monoxide, but they generally emit a greater amount of nitrogen oxide (NOx), a component in low-atmosphere ozone and acid rain. The United States has tougher NOX standards than Europe, where diesel cars are more common. Diesel-powered cars use sensors and engine-management software to monitor and limit emission levels. The software can control how much NOx is produced during combustion by regulating the car's mix of diesel fuel and oxygen or by deploying NOx traps to capture the pollutant and catalysts to clean emissions. However, theses pollution-reducing measures also reduce fuel economy. Vw did not identify the software or engine component that was used to falsify emissions test results. Experts believe that by examining data on steering, tire rotation, and accelerator use, a software program would be able to determine whether a car was being actually driven on the road or on an emissions-testing bed and adjust engine performance and emissions to pass the test. In 2007 Volkswagen decides to abandon a pollution-control technology developed by Mercedes-Benz and Bosch and instead used its own internally developed technology. This took place at the same time that VW's hard- driving chief executive Martin Winterkorn started pressuring his managers with much higher growth targets for the U.S. car market. In order to increase market share, VW needed to build the larger cars favored by Americans - and it also had to comply with the Obama administration's toughening standards on mileage. All automakers developed strategies to meet the new mileage rules, and VW's focused on diesel. However, diesel engines, while offering better mileage, also emit more smog-forming pollutants than conventional engines. VW strategy came up against American air pollution standards, which are stricter than those in Europe. Cheating on emissions tests solved multiple problems. Cars equipped with the "cheating" software were able to deliver better mileage and performance while WW avoided having to pay for expensive and cumbersome pollution-control systems. WW started installing the software to cheat emissions tests in 2008 after learning that its new diesel engine, developed at great expense for its growth strategy, could not meet pollution standards in the U.S. and other countries. Rather than halt production and discard years of research and development, Vw decided the best course of action was to game the system. It is unclear who in VW management was responsible for this decision. Lawsuits by New York, Maryland, and Massachusetts have charged that dozens of engineers and managers, including VW's chief executive, were involved. Volkswagen's cheating on auto emissions tests is not an isolated incident. The entire automobile industry has a history of trying to rig emissions and mileage data, which began as soon as governments began regulating automotive emissions in the early 1970s. Ford was fined $7.8 million in 1998 for using defeat devices enabling Econoline vans to reduce emissions to pass testing and then to exceed pollution limits when driving at highway speeds. General Motors paid $11 million in fines in 1995 for the defeat devices that secretly overrode the emissions control system at times on some of its Cadillac cars. Caterpillar, Volvo, Renault, and other manufacturers were fine $83.4 million in 1998 for using defeat devices. Auto manufacturers have also used other ploys to demonstrate better performance and gas mileage, such as taping cars doors and grilles to improve aero- dynamics or making test vehicles lighter by removing the back seats. The emissions scandal has shaken not just Volkswagen but the entire auto industry. Volkswagen became the target of regulatory investigations in multiple countries, and Volkswagen's stock price fell in value by a third in the days immediately following the cheating revelation. Chief executive Winterkorn resigned, and the head of brand development Heinz-Jakob Neusser, Audi research and development head Ulrich Hackenberg, and Porsche research and development head Wolfgang Hatz were suspended. Volkswagen announced plans to spend $7.3 billion, later raised to $18.32 billion, on rectifying the emissions issues and planned to refit the affected vehicles as part of a recall campaign, the scandal raised awareness of the higher levels of pollution being emitted by all vehicles built by a wide range of car makers, including Volvo, Renault, Jeep, Hyundai, and Fiat, which under real- world driving conditions are prone to exceed legal emission limits. The emissions crisis has also sparked discussions about how to deal with other kinds of software-controlled machinery besides automobiles. It is believed that such machines will generally be prone to cheating and that their software source code should be made accessible to the public. Case Questions (answer all three questions below): 1. Does the emission cheating crisis in the case pose an ethical dilemma? Why or why not? If so, who are the stakeholders? 2. Describe the role of management and technology factors in creating WW's software cheating problem. To what extent was management responsible? Explain your answer. 3. Should all software-controlling machines be available for public inspection? Why or why not