Volkswagen, BMW fined $1 billion for colluding to make dirtier cars

Volkswagen, Audi, Porsche, BMW, and Mercedes-Benz parent company Daimler spent years illegally colluding to slow the deployment of cleaner emissions technology, says the European Union, which is dishing out fines as a result.

The EU’s executive branch hit the Volkswagen Group (which owns Audi and Porsche) and BMW with a collective €875 million ($1 billion) fine on Thursday for their role in the scheme. Volkswagen Group must pay €502 million ($595 million), while BMW will pay €373 million ($442 million). Daimler, however, evaded a €727 million fine of its own because the automaker revealed the collusion to the regulators.

The scheme described by EU authorities is separate from the Volkswagen Group’s massive Dieselgate scandal, in which the company installed software on its diesel vehicles that helped fool environmental regulators into believing they were compliant, when in reality, they were polluting far more than the legal limit. Dieselgate ultimately led to nearly $40 billion in fines, buybacks, and legal fees for the Volkswagen Group. Daimler also installed software on some of its diesel vehicles to cheat emissions tests and has paid billions of dollars in fines. BMW was careful to point out Thursday that, unlike the other companies it was caught colluding with, it had not cheated emissions testing.

The existence of this so-called emissions cartel was first revealed in an explosive July 2017 report from Der Spiegel, which said that collusion around diesel emissions dated back to the 1990s. The companies met in secret working groups to discuss “the technology, costs, suppliers, and even the exhaust gas purification of its diesel vehicles,” the outlet reported at the time. At the same time, EU authorities announced a probe into the allegations and started raiding the automakers’ corporate offices in search of evidence. Daimler claimed whistleblower status in October of that year.

The EU formally accused the companies of collusion in 2019. The conduct considered for the fines announced Thursday took place between 2009-2014.

The “exhaust gas purification” of diesel vehicles mentioned in the original Der Spiegel report is at the center of the fines that the EU levied Thursday. Specifically, authorities say the Volkswagen Group, BMW, and Daimler agreed on details like the sizes of the tanks used to house AdBlue, a common solution that mixes with a diesel car’s exhaust to neutralize harmful pollutants. By doing this, authorities argue that the automakers had the technology to make cleaner cars but effectively agreed not to compete on this issue.

“The five car manufacturers Daimler, BMW, Volkswagen, Audi and Porsche possessed the technology to reduce harmful emissions beyond what was legally required under EU emission standards,” the EU’s executive branch wrote in a statement. “But they avoided to compete on using this technology’s full potential to clean better than what is required by law. So today’s decision is about how legitimate technical cooperation went wrong. And we do not tolerate it when companies collude.”

The Volkswagen Group, which has a documented history of lying about its compliance emissions regulations at this point, said in a statement that the “contents of the talks were never implemented and customers were therefore never harmed” and said that bigger AdBlue tanks were eventually used.

As for some of the other allegations that originally surfaced in the Der Spiegel report about the collusion extending to suppliers and other technology, the EU authorities had already “narrowed the original scope of its investigation to ensure its charges stuck,” according to Reuters. The settlement agreement announced Thursday won’t make an enormous dent on either the Volkswagen Group’s or BMW’s bottom line. The Volkswagen Group made nearly €12 billion, or around $14 billion, in before-tax profit in 2020, while BMW logged €5 billion, or just over $6 billion.