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US Taxpayers Duped Into Shelling Out $51 Million In Green Subsidies For ‘Clean’ VW Cars

Jerry Hirsch, Los Angeles Times

The federal government paid out as much as $51 million in green car subsidies for Volkswagen diesel vehicles based on falsified pollution test results, according to a Times analysis of the federal incentives.

On Friday, federal and state regulators said the German automaker used software in 482,000 of its diesel vehicles since the 2009 model year to cheat on U.S. emissions tests. Environmental Protection Agency officials said Monday that the U.S. Department of Justice is also investigating.

The Times analysis matched Internal Revenue Service data with Volkswagen sales figures to determine the value of subsidies VW diesel buyers were eligible to collect in 2009, the first and only year the vehicles qualified. The $1,300 tax credit would have been available to buyers of about 39,500 Jetta and Jetta Sportwagen models that sold that year, according to Motor Intelligence, an industry research firm.

“It is really unfortunate,” said Luke Tonachel, director of clean vehicles and fuels project at the Natural Resources Defense Council. “The government has been effective to help advance clean technologies, but it is a waste of taxpayer dollars when they aren’t actually helping to clean the environment.”

He said regulators should factor in the $51 million in subsidies when determining penalties for Volkswagen’s Clean Air Act violations.

Such green car incentives have also gone to buyers of hybrid, electric and hydrogen fuel cell cars. But the EPA does not track aggregate figures for incentives paid out to buyers of specific models or brands.

The Volkswagen diesels qualified for the federal incentives in the same year the automaker first installed the software trick it used to cheat on emissions tests. The so-called defeat device employed an algorithm that automatically detects when the vehicle is undergoing pollution tests and changes the way the engine performs.

The algorithm senses whether the car is in a testing environment by analyzing a variety of data — steering position, speed, duration of engine operation and barometric pressure.

Away from the laboratory, during everyday driving, the cars emit up to 40 times the legally allowed amount of nitrogen oxide, environmental officials said.

The Environmental Protection Agency and the California Air Resources Board discovered the software. The EPA said Monday it will coordinate with federal prosecutors on further enforcement and penalties.

The Justice Department has lately taken on a leading role in major investigations of automakers, usually leveraging the threat of criminal charges to exact huge fines.

Last week, General Motors agreed to pay a $900-million fine to settle an investigation into why it did not promptly recall cars with a defective ignition switch that has led to crashes causing 124 deaths. Last year Toyota signed a $1.2-billion settlement and admitted to deceiving regulators about deadly safety defects that allegedly caused unintended sudden-acceleration incidents.

No individuals were charged in the GM and Toyota probes.

The German automaker admitted installing the software after it was confronted by regulators. In a statement Sunday, VW Chief Executive Martin Winterkorn said, “I personally am deeply sorry that we have broken the trust of our customers and the public.”

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