It’s not the crime—it’s the cover up. That infamous lesson of Watergate was lost on the executives at VW who tried to cover up their company’s emissions scandal. Had they fessed up early, they might have gotten away with a regulatory slap on the wrist. Instead, we got Dieselgate, an ever-widening scandal that has cut the company’s market value in half and may end up forcing Europeans to buy electric cars.
Far less well known is another lesson that Woodward and Bernstein took from Watergate: write the book with the movie deal in view. Faster, Higher, Farther: The Volkswagen Scandal proves that its author, Jack Ewing, a Frankfurt-based correspondent for the New York Times, paid attention to that particular moral. As a conscientious beat reporter assembling the facts, he acquits himself well. But this is not the “shocking exposé” promised by the dust jacket. Ewing short-circuits every shocking fact he enumerates. At the climactic moment in which the villain reveals his crimes, Ewing dutifully appends a reporter’s caveat: “If true . . .” With more time to pound the pavement or let the story percolate, he might have had a dramatic tour de force on his hands. Instead, the book has all the hallmarks of an author under a tight marketing deadline. Concepts are introduced and then re-introduced without variation. Assertions go unsourced and sources are misquoted. The narrative flits about in search of a genre. It feints at a techno-thriller. The front matter consists of a corporate chronology (item one: the Nazis founded VW in 1937) and a “Porsche and Piëch” family tree. These betray a fondness for the multi-generational family epic. But the market demands the Great Corporate Scandal.
Scandal always captivates, and the VW news captivated Americans for months—even those Americans who usually skip past the automobile section. Reporters like Ewing published updates nearly every day. John Oliver even jumped aboard with a comedy bit mocking the German language and ended with the line, “Hitler trusted us, why won’t you?” With the market prepared, Faster, Higher, Farther has been published simultaneously in English and German, and the author has been appearing on the morning shows to talk corporate scandal. Leonardo DiCaprio bought the movie rights.
VW’s troubles began when engineers were ordered to build “clean diesel engines” that would meet air quality standards while also delivering smooth performance, high mileage, and minimal pollution. Diesel owners in the 1970s put up with black smoke coming from the tailpipe in exchange for high mileage. Today’s buyers of the company’s VW, Audi, and Porsche models get high mileage and high performance in a smoke-free package. They also expect their cars to comply with air-quality regulations. Engineers could give them any two out of the three, but not all of them. So they cheated.
They got away with it for years because regulators only check vehicle emissions under laboratory conditions. They strap a car to a table with the wheels set in rollers and stick a probe up its tailpipe. It is an open book test: the EPA tells the automakers that it will run each car through 1,874 seconds of repeated accelerations, simulating 11.04 miles of driving at an average speed of 21.19 miles per hour.1
Knowing the questions ahead of time, it was a relatively simple matter to program the Engine Control Unit (ECU) to give the right answers. In fact, all VW had to do was adapt some code developed in 1999 to quiet Audi engines on startup. The new code would let mileage and acceleration suffer in order to meet emissions standards on the bench. The clever part, truly worthy of a techno-thriller, was how they programmed self-awareness into their cars. These were not magical Herbie the Love Bugs. Rather, the EPA described “a sophisticated software algorithm that detected when a vehicle was undergoing emissions testing.” (That quote is not found in Faster, Higher. Farther, but in the six-page letter the EPA sent to VW, which outlines the essential details of the case against the company.)
In the dawning age of artificially intelligent autonomous vehicles, cars with sophisticated algorithms would make for a timely movie plot. Ewing opens with heroic engineers from an independent emissions testing lab at West Virginia University “barreling down California freeways.” The work of this “handful of researchers armed with just $70,000,” Ewing reported for the Times, resulted in VW’s $15 billion settlement. They were doing what no one else had done: testing for smog-producing nitrogen oxide (NOx) exhaust in the real world. It wasn’t easy to pack an emissions lab into the back of the VWs they had rented in California. Their cars “sprouted a tangle of pipes and hoses held together with hardware store clamps and brackets.” It is a biblical saga: “David against Volkswagen’s Goliath.” Leading this band of crazy grad students is Dan Carder, who emerges as a hero of the story.
Cut to VW’s sleek corporate headquarters, home of the black-hat engineers. An abusive boss dresses down another young engineer. Had his modest upbringing in India led him down a different path, he might have ended up in Morgantown rather than Wolfsburg, Germany. That night, after even the janitor has left for the evening, sweat beads from the poor boy’s brow. He is working up the algorithm, his face lit only by the monitor’s glow. The mouse pointer hovers: “Compile? Yes/No.” He clicks “Yes” and buries his head in his hands.
DiCaprio’s screenwriters will need to add that scene. In the book, the VW engineers who actually came up with the cheat codes are absent. Ewing tells us that it was, “someone—it’s not clear who,” came up with the idea of adapting the original Audi code to emissions cheating. He even hints that the idea was intended as joke. We never find out who actually clicked “compile.” In fact, Ewing explains that Bosch, the German component maker had final control of the coding. Bosch is the number-one parts supplier to the global automobile industry, with $45 billion in sales, according to a study by Automotive News. That cheat codes passed through Bosch is one of the most startling revelations of the book. Bosch paid a fine of $327.5 million to settle allegations of complicity in the cheating. Ewing briefly mentions that Bosch officials raised the issue of US compliance with their VW counterparts and asked to be indemnified against the liabilities. There must be more to that story, but Ewing says only that, “As far as is known, Volkswagen refused.” Then he moves on.
Which is understandable. There’s still more reporting to be done, and Ewing, to his credit, is too honest to turn this story into the techno-thriller that it’s not—at least not yet. The reader may have forgotten the West Virginia grad students from the first chapter (titled “Road Trip”), but we return to them thirteen chapters later, in (inevitably) “On the Road.” This time Ewing reports the story more fully, draining away the drama in the process. He reveals that the funding was not so much a “modest $70,000 grant” (Ewing’s words in Chapter 1) in support of academic research that discovered the cheat almost by accident. It was a commercial contract with the International Council on Clean Transportation, a “nonprofit” with a “political agenda.” The question asked by the ICCT was how automakers could possibly be meeting a US standard they had told European regulators they could not meet. The ICCT takes in $10 million a year from such foundations as ClimateWorks, the European Climate Foundation, and the Climate and Clean Air Coalition. It operates under the auspices of the United Nations. The ICCT’s founding members include retired environmental officials who “shared a certain frustration with what they regarded as the auto industry’s influence over regulation.”
Techno-thriller fully abandoned, Ewing returns to the magisterial Buddenbrooks-type epic that he first hinted at with the chronology and family tree. There we find Ferdinand Porsche, whose name will catch the eye of any sports-car enthusiast; for everyone else, there’s Hitler. Hitler sires VW by Porsche and Porsche’s blood courses through the veins of another Ferdinand: Piëch, the powerful head of VW throughout most of the crisis and Ewing’s super villain.
We first meet Piëch touring the Volkswagen factory with grandfather Porsche during the war. Piëch “was probably too young to perceive that many Volkswagen workers were underfed prisoners and de facto slaves.” But Ewing condemns him anyway, for “saying that Ferdinand Porsche was fearfully naïve about politics.” Piëch was taught to shift gears in a Beetle at the age of five. This might digress into funny stories of child’s recklessness or delight, stories that would reveal essential truths about his character. Instead, we are given a primer on double-clutching an asynchronous manual transmission. As a dour patriarch himself Piëch fathered nine children, including three with the family governess, a mistress twenty years his junior, and two from an affair with his cousin’s wife. The balance were born to a woman “Piëch declined in his autobiography to identify.” Surely that tells us something about the man. At the very least, Ewing has missed the opportunity for a good farce. But since Piëch’s autobiography is essentially Ewing’s only source, he cannot tell us much. His Piëch is Piëch’s Piëch—only with the emphasis shifted.
The Piëch family inherited control of Porsche and in turn enough stock to control VW. In 1993, Piëch became CEO of a global automaker soon to be bigger than GM. “Being a manufacturer of affordable cars for the masses was never going to be enough for someone of Ferdinand Piëch’s ambition,” Ewing concludes. So, in 1998, he bought Rolls Royce, Lamborghini, and Bugatti. He also embarked VW on the Phaeton model, a luxury sedan available with up to twelve cylinders. Piëch was highly successful as CEO. He had taken charge of a money loser, doubled sales within three years, and plowed profits into research and development. “But, as so often with Piëch, there was a dark side to the story,” writes Ewing. “He also acquired a reputation for pushing his engineers to the limit.” That assessment is carefully crafted. Support for it comes from outside observers, a “veteran auto journalist,” and Bob Lutz, former CEO of Chrysler. We never hear from an inside executive or engineer who points the finger at Piëch.
More to the point, Ewing’s attempts to trace the purchase of luxury brands and other VW moves back to Piëch’s apparently diabolical personality begs the question: does every other auto guy also possess a dark side? Sergio Marchionne’s Fiat bought Maserati and Ferrari; Ford bought Jaguar and Land Rover, selling them to Tata of India eight years later. China’s Geely now owns Volvo. GM went on a shopping spree, buying such hot properties as Hummer and Saab. The strategy has worked better out for some (Tata) than others (Ford). But either every CEO shares Piëch’s vaguely Nazi heritage, or the pressures of catering to a global market are actually sufficient explanation.
Ewing pins the mess on Piëch’s obsession with becoming the world’s biggest automaker, which he would do by selling diesels to Americans. But every automaker has been chasing manufacturing scale. That’s why Toyota, Hyundai, and Renault-Nissan-Mitsubishi each strives to make ten million cars, just as VW did. (GM was doing the same thing until it went bankrupt. It is now in retreat.) In this context, trying to knock Toyota off the winner’s podium seems less like the work of a school yard bully than a way to motivate the troops. “Let’s be number one!” is a pretty good corporate mantra—certainly better than “Over the tops boys, we must have scale!”
Ewing’s insistence on making Piëch his villain has also been overtaken by events. A fuel mileage scandal in September, 2016 bankrupted Mitsubishi, which was then taken over by Nissan (which also owns Renault with the French government). Ironically, French authorities raided Renault’s offices in January, seizing electronic boxes implicated in diesel cheating. In May, German prosecutors searched the offices of Daimler (Mercedes-Benz) looking for its diesel cheats, and the company warned investors that its stock might suffer as a result. The US Justice Department sued Fiat-Chrysler in May, alleging precisely the same violations—and the same dissembling—that blew up VW. It now faces a penalty of $4.6 billion and looks as if its diesels won’t be certified for sale in the US. (It should be noted that BMW diesels have so far gotten a clean bill of health. And a class-action lawsuit against GM diesels may go nowhere.)
Ewing considers VW especially damnable for promoting its cars as having environmentally friendly “clean diesels.” The fairness of that criticism depends on the meaning of the word “clean.” VW produced a bit of advertising gold with a spot called “Three Old Wives Talk Dirty.” “Listen to me, Terri, diesel in Latin means dirty,” the septuagenarian in the back seat says with confidence. But this is 2015, the proud owner replies, and proceeds to hold her white scarf over the tailpipe. “See how clean it is,” she says of the still bleached white accessory.2 In another ad, a band of unruly brothers dirties up a convenience store when Mom stops for gas. Meanwhile, Other Mom eases by with her perfectly serene boys because her Passat diesel gets 800 miles on a tank. Diesels really are greener. They produce less CO2 per mile than their gasoline counterparts. Best to avoid the white scarf test, though.
Whether Piëch is villainous or not is immaterial to me, but I won’t stand by and let Ewing throw a great car under the bus. Not since The Nader Report: Small on Safety, the sequel to the blockbuster Unsafe at Any Speed, have I read such a sustained indictment of the VW Beetle. For Ewing, the Beetle began as a mere propaganda exercise: “Hitler’s ambition for Volkswagen was grandiose, bordering on delusional.” We can all agree that Hitler was delusional, but so was the American Nazi, Henry Ford, and things worked out well for him. Because the Model T and the automobile generally created America’s staggering wealth and power, every country in Europe promoted a “people’s car” in the mid-century. More than 21 million were built, the last ones coming off an assembly line in 2003.
But Porsche was not a great engineer. His race cars exploded and his war machines got stuck in the mud. He was even unable to design what Hitler wanted. So, he cheated. He stole the design from Hans Ledwinka’s Tatra T97. “Ledwinka protested,” writes Ewing, “but a lawsuit against Porsche was settled by force when German troops invaded Czechoslovakia in 1939.” This may be the book’s best line. But as Ewing’s and many other sources make clear, it’s not quite accurate. Volkswagen eventually paid Ledwinka’s heirs DM 3 million in 1961 to settle the suit. With more research time Ewing would have found a more delicious tale. Porsche also stole the idea from Josef Ganz, who advertised the “cheapest and fastest German Volkswagen” in 1933. The Standard Superior’s rear-engine layout and even its bodywork are strikingly similar to the later Beetle. Better still, Ganz was a Jew who wisely fled to Switzerland in 1933.
“Beetles were notoriously frosty in winter” because of the air-cooled engine. I’ve owned a couple; we have cold winters in Massachusetts. The engine’s also noisy. Only because Porsche cars were winning on the race track could VW “still maintain that its technology was superior to the water-cooled motors used by almost every other manufacturer.” Any Beetle buyer who raced to the dealership on Monday because Porsche won on Sunday must have appeared in a New Yorker cartoon. Water-cooled engines are not better than air-cooled—they’re simply different. That is why snowblowers, chain saws, and even some motorcycles still use them. A home mechanic can drop a Beetle engine out easily for repairs – even by the side of the road. It uses pints of oil instead of quarts and has no water pump or radiator to fail. It’s cheaper too. To suggest that Porsche stole these designs, or that Hitler wanted them killed so his “Strength Through Joy” Bug could succeed is to misunderstand the history of the era. To imply that the Beetle was a bad car and wonder at its adoption by the American counterculture is to misunderstand its design ethos and role in the world. I searched Faster, Higher, Farther in vain for reference to Walter Nelson’s classic 1965 history of VW, Small Wonder. The Beetle was a great car. When the VW Golf, diesel or otherwise, debuted in 1974, it was a worthy successor.
By the end of the book, Ewing’s comprehensive and wide-ranging reportage had me convinced—not of his conclusion, but of its opposite: there is no scandal at the heart of the VW Scandal. More precisely, the scandal is more diffuse, technical, and tedious than the headlines and movie scripts demand. In daily reporting, the story—corporate malfeasance, death by car exhaust, consumer fraud—made sense. But as he fills it in between the covers of a book, despite himself, Ewing betrays it. He cannot prosecute the case against Piëch. The Porsche and Piëch families had control of the company, “albeit only with the consent of the state of Lower Saxony.” Twice in twelve pages he explains that by law the labor unions hold half the seats on the company board. He stretches to imply that Piëch controlled them as well. Without Piëch’s finger on the trigger, Ewing is left to rely on b-school platitudes: corporations live and die by their culture, and corporate culture flows directly from the CEO. Around every corner that should reveal a smoking gun we instead get “must have known,” “could not have ignored,” and “it is hard to believe.” At a critical point Ewing concludes that, “It is hard to say whether company executives were ignorant of American laws or so arrogant they did not feel bound by them.”
As for European regulators, enforcement of air quality in the EU is “inconsistent or nonexistent.” Ewing claims that, “The car industry convinced legislators in many countries to set a lower fuel tax on diesel, so it was typically about twenty euros cheaper per liter than gasoline.” It is true that European governments have long supported diesels, but it does not necessarily follow that the car industry convinced them to do so. Given what I know about Detroit’s influence on all manner of US automotive regulation, I’m ready to presume the European automakers do the same.. Diesels account for 50 percent of car sales over there, compared to a small percentage over here. We buy gasoline cars. But European automakers sell both. I would love to chase down a source for either the details or implications of Ewing’s contentions, but the notes provided no quarry.
The most interesting outcome of Dieselgate is only now becoming apparent. Tightening air-quality and greenhouse gas emissions standards may force electrification. As Tesla has shown, you just can’t make money selling them. Dealers, who make money servicing rather than selling cars, don’t like them. Also, companies such as VW, Honda, and Bavarian Motor Works have oil in their blood. As for consumers, having driven both a gasoline Golf and an electric Golf—as well as a Tesla, Mitsubishi, and my own home-baked electric 1971 VW Bug—I can report that electric cars are quieter, cleaner, far more sensible, and just plain dull. Add to that the time it takes to “refuel” and the lack of infrastructure and soon even people who don’t care about driving dynamics are dissuaded.
Unless they start electrocuting people, don’t expect any great electric car movies. But at least we’ll have Dieselgate!—a ripped from the headlines blockbuster. With a bald cap and a pair of platform shoes, Leo could be Ferdinand Piëch’s spitting image.
Dan Albert covered the Volkswagen scandal for n+1 in September 2015.
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