Driven off-course
How Volkswagen got on the road to scandal
“FASTER, HIGHER, FARTHER: THE VOLKSWAGEN SCANDAL,” by Jack Ewing. Illustrated. 337 pages, W.W. Norton & Company. $28.
On Sept. 18, 2015, the Environmental Protection Agency accused Volkswagen of equipping its diesel engines with software that circumvented emissions testing, thereby allowing some of its cars to emit a particularly noxious substance, nitrogen oxide, in amounts that were as high as 40 times the legal limits.
Since that time, Volkswagen has pleaded guilty to civil and criminal charges and paid over $20 billion in fines, and six executives have been charged with running a decade-long scheme to equip Volkswagen diesel engines with that software — nicknamed “defeat devices” — which makes an engine appear to meet emissions standards only when it’s being tested in a lab.
This will go down in history books as a great corporate
scandal, but the story told by New York Times reporter Jack Ewing in his new book, “Faster, Higher, Farther: The Volkswagen Scandal,” is also much more than that. It’s a rich history of a company whose cars, for better and worse, have touched millions of lives, a character study of a brilliant but deeply flawed leader and a case study in how a corporate culture can turn toxic — or as Ewing writes, Volkswagen “vividly shows how a dysfunctional corporate culture can threaten the existence of even the mightiest corporations.”
Volkswagen’s rise to a global powerhouse was itself, in a way, a sleight of hand. Ferdinand Porsche, who designed what became the company’s first and signature car, the Beetle, was a favorite of Hitler’s. The Beetle was originally called the “Strength Through Joy Car” and was part of Hitler’s plan to provide an affordable car to every German.
Very few were produced during the war, as the Volkswagen factory in Fallersleben-- instead was used mostly for military production and staffed by forced labor, including Jews and prisoners of war. Porsche “was so focused on technical and production goals that he willfully ignored the human cost,” Ewing writes.
Despite the horrible history, the Porsche family somehow managed to keep hold of the license for Volkswagen design. Even more, thanks to a brilliant advertising campaign, Volkswagen Beetles and vans, decked out with psychedelic colors, became a ubiquitous symbol not of war, but rather of peace, love and understanding.
“The transformation of the Volkswagen from Nazi propaganda project to counterculture phenomenon was one of the most spectacular examples of rebranding in the history of marketing,” Ewing writes.
Ewing also tells the tangled, intertwined history of Porsche and Volkswagen, and the families who ruled the companies, but it is Porsche’s grandson, Ferdinand Piëch, who is the central character in this book. Piëch, who whether through luck or consummate corporate skill was ousted from his role at Volkswagen just before the world learned about the emissions scandal, was a visionary engineer.
“Like Steve Jobs at Apple, Piëch was among a handful of executives who put an unmistakable personal stamp on the companies they ran,” Ewing writes.
But he was also a demande ing boss whose style created a saying at Volkswagen — “Impossible doesn’t exist.”
His rise to power was greased by corporate machinations that would make Machiavelli proud. His fearsome style of management “emboldened subordinates to behave the same way toward their under lings,” Ewing notes. "That is how corporate cultures — the unwritten rules that govern behavior inside a large organization — come into being.”
Ewing makes a compelling case that it was Piëch who “created a company culture that allowed the diesel fraud to fester,” a culture in which there were few clear guide lines about ethical limit and “underlings always suffered the consequences.”
During his tenure, there was both an infamous sex scandal and a dramatic case of corporate
“Volkswagen was single-handedly responsible for a sixfold increase in diesel passenger car sales in the United States. (But) that strategy elevated the emissions cheating from a mere violation of regulations to a gigantic consumer fraud.”
JACK EWING
espionage, both of which led to criminal investigations and neither of which caused any soul searching within the company or any renewed focus on ethics.
Not only did Piëch want market leadership, but he “wanted total dominance,” Ewing writes, “and he was prepared to deploy new tactics to achieve it, whatever the consequences.”
A key part of Volkswagen’s grand plan to conquer the world was diesel. In some ways, diesel engines are environmentally friendly — they are more fuel-efficient than gasoline and produce less carbon dioxide — but they have severe drawbacks. They produce “far more poisonous nitrogen oxides than gasoline cars did, as well as very fine, carcinogenic soot particles.”
This was a problem in the United States, particularly because of strict emissions laws mandated by the Clean Air Act of 1970 and its subsequent iterations. And it was an engineering problem at Volkswagen, because efforts to reduce the emissions led inevitably to trade-offs with fuel economy, as well as with the performance and style of the car.
Since Volkswagen didn’t want to make those tradeoffs — doing so might affect its goal to become the world’s largest automaker — the company’s engineers arrived at a technical impasse. The answer? To cheat, of course, by using a defeat device.
“There was a tolerance for breaking the rules and a lack of checks and balances. … Employees who had reservations about the illegal software — and there were some — had no place to turn,” Ewing writes. And “higher-ups overruled engineers who objected to the illegal software.”
What adds a special layer to the Volkswagen scandal, though, is that the company didn’t stop at cheating. In effect, Volkswagen doubled down on its bad behavior by putting out an immense advertising campaign to convince American buyers that they were doing the environmentally virtuous thing by buying a diesel car. It worked, in one way.
“Volkswagen was single-handedly responsible for a sixfold increase in diesel passenger car sales in the United States,” Ewing writes. But as he also notes, “That strategy elevated the emissions cheating from a mere violation of regulations to a gigantic consumer fraud.”
The engineers didn’t think they could get caught, because they didn’t know that it was possible to measure emissions from a car that was actually being driven on a road. In car world, emissions technology is so uncool that it had become the specialty of the not-so-prestigious West Virginia University, which was one of the few places willing to take it on.
But under the leadership of Dan Carder (who eventually was named one of Time magazine’s 100 Most Influential People of 2016 for his work), West Virginia University had made huge advances. And when a European regulator came knocking in search of an answer as to how diesels in the United States were complying with clean air rules, Carder’s team found that, in fact, Volkswagens were not.
“We never set out to get crosswise with anyone,” Carder said later. “We were just kind of doing our jobs.”
As the truth very slowly began to come to light, Volkswagen, instead of taking the opportunity to be transparent, once again doubled, or maybe quadrupled, down. Ewing recounts a pleading email in May 2015 in which a Volkswagen engineer who is being asked by regulators for data writes to his managers, “Come up with the story please!”
According to the eventual criminal plea, Volkswagen executives “concocted an elaborate cover-up when regulators became suspicious, and …destroyed evidence once they realized they would be exposed,” Ewing writes. “Volkswagen was portrayed as a place where the people in charge were all too willing to resort to illegal behavior to fulfill the company’s ambitions.”
Ewing also details how, for a long time, Volkswagen tried to pass it all off as the fault of a small group of low-level employees, a scenario he calls “improbable.” While the man who had replaced Piëch as chief executive, Martin Winterkorn, was forced to step down as the scandal grew, Volkswagen’s supervisory board did not discipline any members of the management board. In fact, they not only kept their jobs and most of their bonuses, but there haven’t been any legal consequences for them, either — at least, not yet.
If there’s a weakness to Ewing’s book, it’s that the saga is still taking place, and all the evidence hasn’t yet come to light, so the book is lacking in some of the you-were-there drama of who did what when. It’s more a story of how Piëch, and to some degree Winterkorn, established a culture where something like this could and did happen. But then again, maybe that’s the truer telling of the story.