Another Diesel Cheating Scandal — This Time It’s Hyundai & Kia

Hyundai and Kia are at the center of the newest diesel cheating scandal. A spokesperson for Hyundai Motor Group in Seoul that also represents Kia confirmed raids coordinated by the European Union agency Eurojust at 8 corporate properties. 140 investigators descended to gather evidence to support the investigation.

The background to the action, according to Handelsblatt, is the suspicion of fraud and air pollution or aiding and abetting managers at Hyundai and Kia and the supplier BorgWarner.

This is not the first time that Hyundai and Kia diesel models sold in Europe were investigated for emissions subterfuge. Investigations in the mid-2010s, however, produced no significant findings.

German authorities this week have raided Hyundai and Kia over allegations that they put over 210,000 diesel vehicles with suspected illegal defeat devices onto the road. Defeat devices are mechanisms or software that can change vehicle emissions levels, assumed to be implemented to mask the true pollution levels of vehicles. The engine software that Hyundai and Kia used has been reportedly tracked back to parts companies Bosch and Delphi.

The alleged defeat devices, the prosecutors said, have led to exhaust gas cleaning mechanisms being massively reduced or switched off in numerous everyday situations. Based on the information released by prosecutors, the cars were sold up until 2020.

Investors shuddered as they saw their stock value plunge into a downward spiral as punitive damages associated with the 2 companies seem likely with the investigation’s rising intensity.

Why Have Diesel Cheating Scandals Become a Norm?

Conservation and sustainable environmental practices are, to some degree, a reaction to globalization and pollution. The transportation sector emits the substantial degree of carbon emissions in western countries, which has spurred environmental protection agencies to control emissions. Emitted nitrogen oxide endangers human lives and triggers disease such as asthma, respiratory, cardiovascular, bronchitis, and premature death.

Harmful and mortal effects of nitrogen oxide, a pollutant found in an internal combustion engine (ICE) car’s exhaust, has led to increasingly rigorous restrictions on standard of emission for light-duty ICE vehicles such as small pickup trucks, automobiles, and sport utility vehicles.

Yet automakers manufacturing fuel-efficient diesel cars complained bitterly that the updated emission standards posed immense hardship to them as they competed in an intensely competitive marketplace.

Volkswagen engineers initially were unable to meet US emission standards in the given time and within their allocated budget. Yet they eventually did manage to find a solution — but the corporate decision was made to continue rigging rather than to implement the resolution. The number of participating managers, technicians, and engineers complicit in the emission test scandal to operate the defeat device was dramatic.

Volkswagen was the first to be identified as an automaker that rigged emission tests to make their diesel vehicles seem emitting less pollution than what they really did emit. By September, 2015, the EPA reported that an ample number of Volkswagen vehicles contained a defeat device, or software, that was embedded in its diesel engine. The purpose was to change vehicle performance to improve the required emissions result with a program that made slight changes to the engine setting to diminish nitrogen oxide level readings.

Looking back, the Volkswagen pretense that its vehicles followed emission standards was both audacious and astounding. The actual result of Volkswagen emission testing on roads was 35 times more than the cheated results in the lab.

While diesel cheating administrative and criminal proceedings were all quite slow outside the US, the quickly lodged US class actions impressed European consumers. Ultimately, the emissions scandal sparked the necessary political tailwind in Europe to overcome the resistance against instruments of collective redress and, thus, favored the adoption of representative actions in the interest of consumers.

The Volkswagen chairperson publicly admitted that the unethical scandal was not an isolated incident but, rather, a whole chain of mistakes taking place without any disruption. The scandal has cost the automaker more than $38 billion in fines and legal costs and has incentivized the company to invest heavily in electric vehicles to help rehabilitate its image in the public eye.

Volkswagen created Electrify America with $2 billion in funding as part of its emissions scam settlement with the US and California. It was just this year that this now-leading network of fast chargers announced a new investment of $450 million into its charging network by Siemens, a global technology and electrification company, as well as with the Volkswagen Group. These investments will support the rapid deployment of up to 10,000 ultra-fast chargers at 1,800 charging stations, more than the number of high-power chargers available in the US today.

The Broader Swatch of Diesel Cheating Scandal Practices

Engine control units (ECUs) were used by Volkswagen diesel engineers so that a low emissions mode would produce lower emissions than it did when driving during regular conditions and back to a higher emissions mode again for testing. Bosch produced these ECUs for Volkswagen in addition to the software used to program them. Bosch claims it had warned Volkswagen that the software could be considered illegal; nonetheless, Bosch received a $100 million fine in 2019 for its role in the emissions scandal.

Fast forward to 2022 and the name Bosch is back in the diesel cheating scandal news. Along with Delphi Automotive, Bosch is named for its contributions to the diesel emission defeat devices in Hyundai and Kia vehicles.

Moreover, Germany has pressed on numerous automakers to which evidence points of other attempts at diesel cheating. Add Porsche, Audi, Mercedes-Benz, Honda, Mazda, and Mitsubishi to the list of possible diesel cheating scandal suspects.

In March, shares of Toyota’s truck-making subsidiary, Hino, suffered their biggest one-day fall in more than two decades, plunging 16.8% in the first trading session after the company admitted it had falsified emissions data. Hino admitted that it had falsified diesel engine performance and fuel economy data for some of its vehicles manufactured in Japan.

Final Thoughts about the Diesel Cheating Scandal

Because Hyundai and Kia don’t sell diesel-powered vehicles in the US, the news of participating in diesel cheating came as a bit of a surprise.

In an ironic twist, South Korea Volkswagen has struggled with weak sales due to the impact of the emissions cheating scandal that began in September, 2015, when the US discovered the German carmaker cheated on its local diesel emissions tests. As reported by Business Standard, in July, 2016, the group voluntarily stopped selling its vehicles in South Korea, as the Seoul government announced it would ban the sale of all Audi and Volkswagen cars and impose heavy fines for emissions cheating.

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