The German car industry has been a mess for the last couple of years with ongoing investigations into diesel emissions, an alleged price-fixing cartel, and the brutal reorganization of Volkswagen. It looks like the industry is swinging back to save the beleaguer diesel industry. There was an ‘emergency summit’ organized in Berlin between the VDA carmakers association (Volkswagen, Daimler, and BMW) and government leaders that agreed on a software fix for cheating diesels and avoided an outright ban.
The automotive group promises to upgrade their vehicles emissions control software to meet pollution limits if the government does not ban diesel-powered cars outright. Why is this so important to German automakers? Well, given that they’ve been focused on trying to fix cheating diesels (which has cost billions), they’re worried that their North American and Asian competitors are eating their lunch because they can focus on electric vehicles and traditional gasoline engines. They see this allowance on diesel cars as a way to stop the bleeding while they get their shit together.
Automakers dodged the bullet on Wednesday when the final deal was reached. This is despite the fact that there is a national election coming up and politicians are facing public pressure to not go soft on automakers. On the other hand, diesel lobby groups pushed hard to sell the fact that diesels (presumably with real emissions controls) are, in fact, good for the environment and that, oh, it will also keep thousands of people employed. It’s important to note that 1 in 5 jobs in Germany are tied to the auto industry. Wow, nicely played.
There are over 15 million diesel vehicles in Germany. Automakers cut a deal to update the software of 5 million diesel cars according to Reuters. This will make exhaust filtering systems more effective and reduce emissions of nitrogen oxide – which is the real culprit in urban smog – by 25 to 30%. The update might cost $6 billion USD, not exactly chump change. However, scientists and environmental groups have pointed out that the proposed reduction in nitrogen oxide emissions might not be enough to rein in dirty diesels and clean up polluted city centers across the country, pollution that can cause health problems and deaths that also cost billions over the years these cars could still be on the road.
The European Union has set out some very tough emission regulations that must be met and will get even tougher in 2020. The German auto industry is going to go through some radical changes in the short term to meet these requirements one way or another, and it looks like, this time, it’s at the expense of public health. Whether or not the diesel fix will work or how long these vehicles, in fact, remain on the road will determine how high the cost will go.