The Environmental Protection Agency on Friday accused Volkswagen of installing software on 482,000 diesel cars in the U.S. to evade federal emission regulations, potentially exposing people to harmful pollutants.
The German automaker adopted what the EPA called a "defeat device" to trick U.S. regulators into believing that its cars met Clean Air Act standards, the federal agency said in a statement.
The agency said the diesel cars that violated federal standard were the 2009-14 Volkswagen Jetta, Beetle and Golf, the 2014-15 Volkswagen Passat, and the 2009-15 Audi A3.
Those cars emitted nitrogen oxides, which can exasperate respiratory conditions such as asthma, at up to 40 times the standard level, the EPA said.
Volkswagen admitted to investigators that it had installed the defeat device, the EPA said.
The automaker said in a statement that it's cooperating with investigators but won't comment further.
Volkswagen, whose brands include the luxury Audi lineup, may face fines or other penalties, the EPA said. The maximum Clean Air Act violation is $37,500 per vehicle, meaning Volkswagen's fine could technically be as high as $18 billion.
What's more, the scandal could expose Volkswagen to lawsuits and penalties for marketing its cars under the "Clean Diesel" moniker. An hour after the EPA announcement, the automaker's website still contained the "Clean Diesel" branding.
About 20% of Volkswagen's vehicle sales are diesel engines, AutoPacific analyst Dave Sullivan said.
"It totally goes against all of the marketing they have had of a clean diesel," Sullivan said in an interview. "That’s one of the biggest selling points for Volkswagen."
The cars are still safe to drive, the EPA said, and owners do not need to take immediate action. But agency officials said they will require Volkswagen to fix the cars for free, indicating that a recall is likely.
"We intend to hold Volkswagen responsible," Cynthia Giles, assistant administrator for EPA's Office of Enforcement and Compliance Assurance, told reporters in a conference call.
The state of California also launched an investigation into the matter.
"VW was concealing the facts from the EPA, the state of California and from consumers. We expected better from VW," Giles said. "We thought it was important to inform the public right away of these violations."
EPA regulators said that Volkswagen adopted a "sophisticated" algorithm that turned on vehicles' full emissions controls when it detected they were being tested for emissions performance.
EPA and California regulators discovered the device after researchers at West Virginia University and the International Council on Clean Transportation "raised questions about emissions levels" in Volkswagen cars, the federal agency said.
Giles declined to say whether the EPA has made a criminal referral because of its findings. She said the investigation is ongoing and declined to say whether top executives knew about the device when it was installed.
"I’m surprised that it took this long for somebody to find this out, but it was actually a very clever piece of software written to keep it hidden," AutoPacific's Dave Sullivan said.
