Case paper Assignment | Professional Writing Services

Volkswagen

  1. Was there anything about the culture at VW that could have contributed to the implementation of a defeat device?
  2. Was there an effective CSR program in place to catch this violation?
  3. How did VW approach market competition considering the methods of other diesel manufacturers?
  4. How did VW’s business model match its sustainability strategy?
  5. What role did environmental and social responsibility play in VW’s decision-making?
  6. How does the government play a role in business and the environment?
  7. Should governments regulate companies in order to protect the environment? Even if it may stifle economic growth?
  8. What have companies besides VW done in order to incorporate environment and social outcomes in their business strategies?
  9. If health concerns and deaths could be linked to NOx emissions, should criminal charges be brought against the company? How far up in the organizational hierarchy should prosecution go?
  10. Were VW’s sustainability initiatives an example of green-washing?

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Volkswagen’s Clean Diesel Dilemma

case W04C84 revised November 1, 2016

Published by WDI Publishing, a division of the William Davidson Institute (WDI) at the University of Michigan.

©2016 Christopher Monti, Vitor Lira, Jefferson Sanchez, and Namit Jhanwar. This case was written under the supervision of Andrew Hoffman (Holcim Professor of Sustainable Enterprise at the Ross School of Business) at the University of Michigan by graduate students Christopher Monti, Vitor Lira, Jefferson Sanchez, and Namit Jhanwar. Secondary research was performed to accurately portray information about the featured organization and to extrapolate the decision point presented in the case; however, company representatives were not involved in the creation of this case.

“Regardless of whether there is an upturn or a downturn going on, our goal is to ensure the Volkswagen Group reaches the top of the automotive industry by 2018 — in both economic and ecological terms.” 1

— Martin Winterkorn CEO, Volkswagen Group

Martin Winterkorn, CEO of Volkswagen Group, had just received stunning news. The U.S. Environmental Protection Agency (EPA) and the California Air Resource Board (ARB) had notified Volkswagen that they would begin investigating claims that some of the company’s diesel engine vehicles were violating emissions standards. His sources informed him that this revelation was based on a study conducted by an independent research firm in West Virginia.

Sitting in his office in Wolfsburg, Lower Saxony, Winterkorn began to reflect on the ramifications this could have on his company. Since becoming CEO in 2007, Winterkorn had tried to make Volkswagen a global leader in car production as well as sustainability and clean transportation. The company had invested billions of dollars in research and development to create best-in-class diesel engines for the highly competitive North American automobile market.

If these claims were true, what would Volkswagen’s next steps be? How could such violations be taking place in an organization of Volkswagen’s prestige and reliability? How would this affect its brand and sustainability strategy? What will this mean for company leadership and governance? How can the damage be repaired with employees, the government, and its customers? And, as the company tries to look beyond this scandal, it must wonder whether it would have any cascading effects throughout the German economy and the auto sector? And more directly, what does this mean for the future market for diesel-powered vehicles?

The Volkswagen Group

Along with the Autobahn, the Volkswagen, or the people’s car, was to be one of the linchpins for Adolf Hitler’s “motorization” of Germany.2 In 1934, Hitler commissioned automotive designer Ferdinand Porsche to create a car that could be affordable on a worker’s wage as well as seat a family of five. The result was the

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creation of the Type 1, a vehicle with a sleek design, rear engine,3 and the aerodynamic beetle-shape still known today.4

In 1938, Volkswagenwerk built a factory in Wolfsburg, Lower Saxony, with the capacity to produce 500,000 cars a year.5 However, with the outbreak of World War II, the factory was reconfigured to produce multi-purpose military vehicles. Following the war, in 1945, the factory was transferred to the British Military Government and placed under the control of Major Ivan Hirst to oversee its dismantling. However, Major Hirst, seeing the potential of the Type 1, convinced the British military to place an order for 20,000 vehicles.6 In that moment, the Volkswagen plant and Type 1 became essential to Germany’s economic revival and post-war reconstruction.

In 1949 the British Military Government handed the company over to the State of Lower Saxony in the form of a trust.7 Under the guidance of its first director, Heinrich Nordhoff, Volkswagen saw massive improvements to its production capability and quickly gained 50% of the German automobile export business.8 Through sales to much of Europe and South America, Volkswagen became the top exporter and earner of foreign currency for the German economy during the 1950s.9 However, success in the U.S. would prove elusive, as most Americans preferred bigger, roomier cars and harbored resentment toward German- made products.

That all began to change in the 1960s, thanks to evolving consumer preferences and an advertising campaign that used simple design and clever, tongue-in-cheek copy to make an emotional connection with the consumer.10 The ads sparked the incredible popularity Volkswagen enjoyed throughout the ‘60s and early ‘70s. In 1968, Volkswagen would go on to control 5% of the American new car market.11 By 1972, the Volkswagen Beetle broke the world car production record with over 15 million units.12

Throughout the ‘80s, Volkswagen saw a decline in U.S. sales in the face of increased competition from well-manufactured and more fuel-efficient Japanese cars.13 Unable to keep up, the company became overstaffed and inefficient, with a diminished reputation for quality, by the early 1990s.14

Turnaround

“Over the short-term, we urgently need more efficiency and higher profit.”15

— Martin Winterkorn CEO, Volkswagen Group

In 1993, Ferdinand Piëch, grandson of Ferdinand Porsche, took over as chief executive with the singular goal of making Volkswagen the largest carmaker by volume by 2018.16 By then the company had lost $1.1 billion.17 Piëch began overhauling the company’s strategy and culture, fired many executives, and established himself as a leader who managed through fear and brutality.18 The tactics worked, and by the time the New Beetle arrived on the market in 1999, VW had become the world’s third-largest carmaker with $3.6 billion in profits before taxes.19

In 2002, Piëch stepped aside as CEO and became chairman of the Board of Management, while maintaining tight control over the company’s operations. The desire to grow VW into the No. 1 carmaker led to Piëch’s firing of two consecutive CEOs within five years, due to failures to gain market share. In 2007, Piëch promoted his protégé Martin Winterkorn to the chief executive position. Winterkorn was known for setting aggressive standards and firing executives for failure to meet sales targets.

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Winterkorn demanded perfection. He would visit factories and personally inspect the vehicles, sometimes getting on his hands and knees. If he discovered a flaw, Winterkorn would publicly chastise the employees responsible on the spot. As one executive described, “There was always a distance, a fear and respect.… If he would come and visit or you had to go to him, your pulse would go up.… If you presented bad news, those were the moments that it could become quite unpleasant and loud and quite demeaning.”20

Corporate Governance

Winterkorn’s management style went largely unchecked primarily due to VW’s unusual corporate structure.21 Company operations were led by a nine-member Board of Management, which included senior leaders from various VW groups and regions. Winterkorn served as CEO of Volkswagen AG and chairman of the Board of Management.22 Oversight of the management team was provided by a 20-member supervisory board.23 The supervisory board retained the power to hire and fire the CEO and was the approval authority for corporate decisions.24

VW’s supervisory board structure was unique due to its history of involvement with the local government after World War II. Nine of the 20 seats were given to labor representatives and two were allocated to Lower Saxony politicians, whose primary concern was securing continued employment for local workers.25 Another five seats were controlled by members of the Porsche and Piëch families.26 As long as VW kept growing, with wages rising, the board was happy to allow Winterkorn a relatively free hand27 in the operations of VW. Over time, VW would develop a corporate culture that centralized decision-making with Winterkorn and highly discouraged the open discussion of problems.28

Sustainability at Volkswagen

“The Volkswagen Group is well on the way to establishing itself long term as the world’s most sustainable automaker.”29

— Martin Winterkorn CEO, Volkswagen Group

In 2006, VW began laying the foundation for what would become its modern corporate social responsibility (CSR) structure (see Exhibit 1).30 It established a CSR and sustainability coordination office, which was primarily responsible for strategic direction and optimization of CSR and sustainability management across the Volkswagen Group.31 In 2010, it created a parallel office, the CSR and Sustainability Steering Group, a representative body made up of managers from across the Volkswagen business.32

The steering group was tasked with convening four times a year in order to determine strategic sustainability goals and sign off on sustainability reports.33 The steering group was also responsible for briefing the Board of Management twice a year on topics relating to sustainability and CSR.34 The Board of Management, the nine-member governing body of Volkswagen, included Winterkorn as its chairman and retained ultimate authority for all environmental matters affecting the company.35

In 2010, VW began publishing new sustainability reports, which outlined VW’s CSR successes within supply chain management, logistics, production, human capital, corporate governance, and development of new technology. The following year, the company began its “Think Blue. Factory” environmental campaign,36 which sought to reduce the company’s waste, energy, and water impact by 25% in 2018.37 Around the same time, VW was awarded LEED Silver for its main office in Herndon, Virginia, and spent over $1 billion to install an energy-efficient production line in its Chattanooga, Tennessee, manufacturing plant.38

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Exhibit 1 Volkswagen’s Corporate Social Responsibility Structure

O T H E R G R O U P S T E E R I N G

G R O U P S

VO L K S WA G E N G R O U P B OA R D (S U S TA I N A B I L I T Y B OA R D)

G R O U P C S R & S U S TA I N A B I L I T Y S T E E R I N G G R O U P C S R & S U S TA I N A B I L I T Y O F F I C E

R E G I O N S

B R A N D S

S u s t a i n a b i l i t y B o a r d & St e e r i n g G r o u p M A N AG E M E N T

Source: Volkswagen AG. “Sustainability Report 2014.” Accessed 9 Dec. 2015. <http://sustainabilityreport2014.volkswagenag.com/sites/default/files/pdf/en/Volkswagen_ SustainabilityReport_2014.pdf>.

By 2013, Volkswagen was ranked first in its sector on the Dow Jones Sustainability Index with a score of 89 out of 100.39 Highlighting this achievement, Winterkorn stated in the 2014 Sustainability Report, “our business is no longer just about the technical aspects like horsepower and torque. We have learned that sustainability, environmental protection, and social responsibility can be powerful value drivers.”40

Competition and Sustainability within the Global Automotive Industry

The global car and automotive manufacturing business was a mature, $2.5-trillion industry.41 It was a highly competitive market, with high barriers to entry.42 The largest four automakers — Toyota, VW, General Motors, and Ford — made up one-third of market share.43 Additionally, the industry was extremely capital intensive, with over 70% of expenses allocated to the procurement of raw materials and commodities, such as steel.44 Typical profit margins were around 5%.45

Volkswagen operated 119 production facilities in 20 European countries and 11 others in America, Asia, and Africa.46 It sold passenger cars under the Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Skoda, and Volkswagen marques; motorcycles under the Ducati brand; and commercial vehicles under the MAN, Scania, and Volkswagen marques.47 In the U.S. market VW sold hatchbacks, sedans, SUVs, and crossovers.

As the No. 2 global automobile company by volume, behind Toyota, Volkswagen sold vehicles in 153 countries48 and controlled 11.1% of the global automotive market share.49 However, VW commanded only 1.9% of the market in the U.S., making it number 12 behind BMW and Mercedes-Benz.50

Toyota

The Toyota Motor Corporation was founded in 1937 by Kiichiro Toyoda in Japan. Toyota produced vehicles under five brands — Toyota, Hino, Lexus, Ranz, and Scion. It also held stakes in Daihatsu, Isuzu, and Tesla and had joint ventures in China, India, and the Czech Republic.51

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Since its foundation, Toyota had strived for sustainable development through the production of quality motor vehicles that contributed to a better society.52 As the market leader worldwide since 2012, with global and U.S. market shares of 11.6%53 and 14.5%54 respectively, Toyota continued to strive for ambitious environmental targets such as eliminating gasoline cars by 2050.55 Toyota planned to radically reduce emissions by focusing on developing hybrids in every auto category in addition to fuel cell vehicles. As part of its environmental vision, Toyota pledged to “reduce carbon dioxide emissions from production lines during manufacturing in 2030 to one-third of 2001 levels.”56

General Motors

Founded in 1908,57 General Motors (GM) was an American multinational corporation with headquarters in Detroit, Michigan. GM produced vehicles for 120 countries58 and was the third largest global automobile company with an 8.2% market share.59 Domestically, GM was the No. 1 producer, commanding 17.7% of the U.S. market.60 GM, its subsidiaries, and joint venture entities sold vehicles under the Chevrolet, Cadillac, Baojun, Buick, GMC, Holden, Jiefang, Opel, Vauxhall, and Wuling brands.

GM had made many efforts toward responsible manufacturing practices. None of the company’s U.S. plants were powered by coal.61 GM used 105 megawatts of renewables to power its manufacturing operations with plans to increase that amount by about 20% by 2020.62 It had also increased the number of landfill- free operations to 122 sites worldwide with manufacturing sites recycling or reusing 84% of the waste they generated.63 In terms of lowering CO2 emissions, GM planned to have 500,000 vehicles on the road in the U.S. with some form of electrification by 2017.64

Ford

Founded by Henry Ford in 1903,65 the Ford Motor Company was an American multinational automaker with headquarters in Dearborn, Michigan. The company sold automobiles in North America, South America, Europe, Asia, and Africa.66 Its core brands included Ford and Lincoln.67 Ford was the fourth largest automobile manufacturer worldwide and tied for second in the U.S. with market shares of 7.6%68 and 14.5% respectively.69 Among its most acclaimed products was the F-150 pickup truck, which had been the best-selling vehicle of any kind in America for 33 years.70 The F-150 was redesigned and rebuilt with recyclable seat fabrics and a mix of high-strength steel and aluminum alloy that cut the vehicle’s weight by nearly 700 pounds, while improving its speed and braking ability as well as increasing towing capacity to 1,100 pounds.71

As a result, Ford managed to create what it called “the most sustainable truck ever to roll off a Ford assembly line,”72 decreasing greenhouse gas emissions, reducing life-cycle waste and improving fuel efficiency all in one stroke. Additionally, from 2010-2014, Ford reduced CO2 emissions from vehicle manufacturing by 22%73 and had set a 30% reduction goal by 2025.74 Recognizing that the automotive landscape was changing and moving away from diesel- and gasoline-powered engines, Ford had been developing and deploying a portfolio of alternatively powered passenger cars to include hybrid electric, battery electric, plug-in hybrids, biofuel, and hydrogen fuel cell vehicles.75

BMW

Bayerische Motoren Werke or Bavarian Motor Works (BMW) was a German luxury automobile and motorcycle manufacturing company founded in 1916 with headquarters in Munich, Bavaria. With BMW, MINI, and Rolls-Royce,76 the company possessed three of the strongest premium brands in the car industry. In 2014, BMW’s global market share was 4.2%.77 Though not one of the world’s top five auto manufacturers in volume, BMW was certainly a rival in technological development.

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BMW had committed to reducing its European fleet emissions by 2020 to half the levels recorded in 1995.78 Additionally, BMW had begun producing more hybrid and electric cars with its i3 and i8 models. These efforts earned BMW the rank of industry group leader for the Dow Jones Sustainability Index 2014-2015.79

In the diesel engine market, BMW and Daimler competed with VW through the utilization of BlueTec diesel engines. However, in terms of volume sales, VW was the clear leader in this market segment. BMW’s 2013 European diesel auto sales were an estimated 696,00080,81 compared to VW’s 2 million.82,83 In the U.S., VW sold 80,441 diesel passenger cars in 2014 compared to BMW’s 13,296.84

Amid this competitive landscape, Winterkorn set ambitious sales targets for VW. “We want to be the volume number one but also we want to have 8% in operating profit,” Winterkorn once famously said.85 To become the No. 1 automaker by volume sales, VW would have to unseat Toyota (see Exhibit 2). The key to achieving this goal was to capture more market share in the U.S., which was dominated by GM, Toyota, and Ford. In order to grow in the U.S., VW would have to produce cars that could appeal to American preferences as well as meet some of the most stringent emissions standards in the world.

Exhibit 2 Global Market Shares of the Largest Automobile OEMs as of August 30, 2014

Market share

11.6%

11.1%

8.2%

7.6%

5.9%

5.9%

5.3%

5.1%

4.2%

4%

Toyota Motor Corp

Volkswagen AG

General Motors Co

Ford Motor Co

Honda Motor Co Ltd

Fiat SpA

Nissan Motor Co Ltd

Daimler AG

BMW (Bayerische Motoren Werke AG)

SAIC Motor Corp Ltd

0% 2% 4% 6% 8% 10% 12% 14%

Source: Statistica. “Global Market Share of World`s Largest Automobile OEMs as of August 30, 2014.” Accessed 31 Jan. 2016. <http://www.statista.com.proxy.lib.umich.edu/ statistics/316786/global-market-share-of-the-leading-automakers/>.

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U.S. Emissions Regulatory Environment

During the 20th century a number of environmental events within the U.S. led to a public awakening to the hazards of environmental pollution. One event, known as the Donora Death Fog, is credited with being the catalyst for the American clean-air movement. For four days at the end of October 1948, smog from a U.S. Steel plant in Pennsylvania was caught in a temperature inversion, trapping sulfuric acid, nitrogen oxide, and fluoride over the town of Donora. The smog caused the deaths of 20 people and left another 600 with serious illnesses.86 Over the next two decades, environmentalists would push the government to take a more active role in protecting the environment, ultimately leading to the passage of the Clean Air Act (CAA) in 1963 and the creation of the EPA in 1970.87

The Clean Air Act and the Environmental Protection Agency

The CAA set the legislative framework for national air quality standards and pollution control efforts, specifically defining the regulations pertaining to air emissions from motor vehicles (see Appendix A).88 The EPA functioned as the centralized enforcement and certification authority, ensuring compliance with the CAA or legislation passed through congressional action. The EPA implemented environmental legislation by writing regulations89 and ensuring compliance by taking civil or criminal actions against violators. 90

The EPA subjected cars to three layers of testing: automaker self-certification, random testing on the production line, and testing of in-use vehicles.91 The first stage, self-certification, required car companies to carry out their own emissions testing and submit their results to the EPA. The EPA then randomly tested around 15% of cars on the company’s production line, under standard laboratory conditions, to confirm the reported results and issue certifications for sale within the U.S.

For the third test, the EPA could choose to subject a small percentage of after-market vehicles to in-use testing.92 This process involved the EPA contacting random car owners and asking them to volunteer their vehicles for testing on actual road conditions. This process was limited to around 3-4% of new car models.93

The California Air Resources Board (ARB)

Historically, California had set the pace for emissions regulations nationwide and globally. Collectively, 34 million residents owned about 25 million cars and drove more than most other Americans.94 Motor vehicles were California’s number one cause of air pollution.95 In 1967, Governor-elect Ronald Reagan established the California Air Resources Board (ARB) in an effort to “promote and protect public health, welfare and ecological resources through the effective and efficient reduction of air pollutants.”96

The ARB was the nation’s most progressive air quality regulation agency. Under the Federal Air Quality Act of 1967, California was allowed to “set and enforce its own emissions standards…based on [its] unique need for more stringent controls.”97 Automakers were required to meet the ARB’s emissions standards in order to receive certification for sales in California.98

U.S. Emission Standards for Light Duty (Passenger) Vehicles

Since the mid-1990s, the EPA had set tiered standards for tailpipe emissions of nitrogen oxides (NOx). Beginning in 1994, Tier 1 NOx emission for diesel cars was restricted to 1.25 grams per mile. Beginning in 2004, the EPA began enforcing stricter Tier 2 regulations, which limited emissions of NOx to 0.07 grams per mile (see Exhibit 3).99 Based on how a vehicle performed, it was assigned a Bin ranking of 1-8, with 8 being the dirtiest.100

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Exhibit 3 EPA Tier 2 Emissions Standards

Bin# Intermediate life (5 years / 50,000 mi) Full useful life

NMOG* CO NOx PM HCHO NMOG* CO NOx† PM HCHO

Temporary Bins

11 MDPV 0.280 7.3 0.9 0.12 0.032

10 0.125 (0.160) 3.4 (4.4) 0.4 – 0.015 (0.018) 0.156 (0.230) 4.2 (6.4) 0.6 0.08 0.018 (0.027)

9 0.075 (0.140) 3.4 0.2 – 0.015 0.090 (0.180) 4.2 0.3 0.06 0.018

Permanent Bins

8 0.100 (0.125) 3.4 0.14 – 0.015 0.125 (0.156) 4.2 0.20 0.02 0.018

7 0.075 3.4 0.11 – 0.015 0.090 4.2 0.15 0.02 0.018

6 0.075 3.4 0.08 – 0.015 0.090 4.2 0.10 0.01 0.018

5 0.075 3.4 0.05 – 0.015 0.090 4.2 0.07 0.01 0.018

4 – – – – – 0.070 2.1 0.04 0.01 0.011

3 – – – – – 0.055 2.1 0.03 0.01 0.011

2 – – – – – 0.010 2.1 0.02 0.01 0.004

1 – – – – – 0.000 0.0 0.00 0.00 0.000

* for diesel fueled vehicle, NMOG (non-methane organic gases) means NMHC (non-methane hydrocarbons) † average manufacturer fleet NOx standard is 0.07 g/mi for Tier 2 vehicles

a – Bin deleted at end of 2006 model year (2008 for HLDTs) b – The higher temporary NMOG, CO and HCHO values apply only to HLDTs and MDPVs and expire after 2008 c – An additional temporary bin restricted to MDPVs, expires after model year 2008 d – Optional temporary NMOG standard of 0.195 g/mi (50,000) and 0.280 g/mi (full useful life) applies for qualifying LDT4s and MDPVs only e – Optional temporary NMOG standard of 0.100 g/mi (50,000) and 0.130 g/mi (full useful life) applies for qualifying LDT2s only f – 50,000 mile standard optional for diesels certified to bins 9 or 10

It may be noted that bin 5 has a NO limit of 0.07 g/mi, which is equal to the fleet average NO standard. Therefore, NOx emissions from vehicles certified to bins higher than bin 5 must be offset by selling a sufficient number of vehicles certified to bins lower than bin 5.

c

a,b,d,f

a,b,e,f

b

x x

Source: DieselNet. “Cars and Light-Duty Trucks — Tier 2.” Accessed 30 Jan 2016. <https://www.dieselnet.com/standards/us/ld_t2.php>.

In 2009, President Barack Obama announced a national policy to further reduce emissions through even more stringent Tier 3 regulations, set to take effect starting in model year 2017.101 These regulations aimed to reduce NOx emissions by a further 80% (see Appendix B). Furthermore, President Obama planned to allow for an additional 13 states to set and enforce their own, stricter emissions standards.102

European Union Emissions Regulatory Environment

Member states of the European Union (EU) sent representatives to the European Commission (EC) to act as the executive body responsible for proposing legislation.103 The EC delegated the design and implementation of environmental policy to the Directorate General for the Environment (DGE).104 In the case of exhaust emissions, rules known as the Euro 1-6 standards were defined by a series of EU directives issued by the EC and had become increasingly more stringent over the years.105 While the EC set the overall standards, each of the member states were individually responsible for enforcing these standards.106

Historically, the EU had focused primarily on the reduction of CO2 emissions from diesel vehicles while allowing higher NOx emissions (see Appendix C).

107 However, in 2007 stricter regulations on NOx emissions from diesel engines were formally adopted as the Euro 5 and 6 standards.108 Many European automakers had successfully lobbied the EU to delay the implementation of these standards due to concerns with potential earnings shortfalls from compliance expenses.109

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Unlike the environmental regulatory climate in the U.S., there was no central independent vehicle testing program for emissions. Manufacturers were allowed to perform their own testing and pay an accredited technical service company to witness the testing.110 These results were then sent to a type-approval authority, which usually did not have the resources to confirm the data.111 Additionally, manufacturers did not need to seek certification in the specific member state where they wished to sell their vehicles.112 Rather, they were free to choose a member state that had more relaxed certification requirements.113 Once a vehicle was certified in one member state, that vehicle was approved for all EU member states.114 This created a perverse incentive for national type-approval authorities to relax their requirements in order to attract more customers.115

Diesel Engines

Following the signing of the Kyoto Treaty in 1997 and the EC 1998 Acea Agreement, European automakers agreed to lower carbon dioxide emissions by 25% within 10 years.116 While American and Japanese automakers would focus on hybrid and electric cars, German automakers decided that diesel engines would provide an expedient and cheap solution to reduce carbon emissions.117 Diesel engines could produce 15% less CO2 when compared to gasoline engines, but they emitted at least four times more nitrogen dioxide (NO2) and 22 times more particulates.118 However, European regulators primarily channeled their efforts on the reduction of CO2, while ignoring NO2 emissions through various tax incentives and fee reductions. These measures stimulated European demand for diesel engines over the past two decades.

Diesel engines offered a number of advantages over gasoline engines. For one, the energy content of diesel fuel was 11% greater on a per gallon basis than that of gasoline.119 Therefore, diesel engines operated at higher compression ratios than spark-ignited gasoline engines. This allowed for higher temperatures inside the piston leading to a more efficient combustion cycle and higher torque. As a result, diesel engines provided a 15-40% fuel economy advantage over gasoline vehicles,120 with ranges of up to 800 miles between fill-ups.121 Fuel-efficient diesel engines had become very popular with European drivers due to the high costs of fuel.

The Diesel Market

Diesel engine cars in Europe had grown from a niche market to the majority of new passenger cars sales in many countries by 2013 (see Exhibit 4).122 This was due largely to a number of legislative moves designed to incentivize the purchase of diesel engines. This popularity had been slow to spread to the U.S. In 2013, diesel engines made up only 3% of the overall passenger car market.123 Many Americans still remembered the early diesel engines of the 1970s and ‘80s, which were plagued by poor performance, fuel quality problems, and severe reliability problems. Additionally, lower gasoline prices, compared to diesel fuel, had steered demand toward non-diesel automobiles. Furthermore, tighter emissions fuel efficiency regulations had forced German automakers to develop new technologies to bring diesel engines up to standard.

Diesel Emissions, Public Health, and the Environment

While tighter standards had reduced the amount of particulates, sulfur oxides, and nitrogen oxides present in diesel exhaust, these emissions still presented a hazard to the public and the environment. The scientific evidence regarding the effects of diesel emissions was clear: Diesel exposure posed a significant and avoidable risk to the environment and personal health.124 The International Agency for Research on Cancer classified diesel engine exhaust as carcinogenic to humans, noting that it was correlated to an increased risk for lung cancer.125 High levels of NOx in the atmosphere could also aggravate respiratory illnesses, such as bronchitis, emphysema, and asthma, and were associated with premature deaths from cardio-pulmonary disorders.126

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Exhibit 4 Diesel Car Penetration in Major World Markets

Source: Cames, Michel, and Eckard Helmers. “Critical Evaluation of the European Diesel Car Boom – Global Comparison, Environmental Effects and Various National Strategies.” Environmental Science Europe. 22 June 2013. Accessed 9 Dec. 2015. <http://www.enveurope.com/content/25/1/15>.

A study led by MIT and Harvard University quantified the human health impacts and associated costs of the excess NOx emissions from light-duty diesel vehicles.

127 The study concluded that VW’s excess NOx emissions could lead to 140 early deaths.128 Furthermore, the health implications of excess diesel emissions were likely far deadlier and costlier in Europe, where more diesel cars were sold.

When it came to determining the environmental impacts of NOx, several studies had examined the ozone, particulate matter, and acid rain formation from on-road emissions.129 Once NOx is released into the air it reacts to form NO2, acid-aerosols, and nitrate particles, creating the reddish-brown haze that blankets cities and is associated with various respiratory problems.130 NOx can also seep into the soil through acid rain, which can severely affect local ecosystems, killing plants and animals. 131

Developing a Clean Diesel Engine for the United States

“The U.S. market has the highest priority for Volkswagen.”132

— Martin Winterkorn CEO, Volkswagen Group

By the mid-2000s, VW had been making diesel engines for decades.133 However, to gain in the highly competitive American car market, VW needed to develop an engine that could accelerate quickly and meet the strictest emissions standards in the world without compromising fuel efficiency.134

Engineers at Daimler had developed a technology called BlueTec, which the company agreed to license to VW.135 BlueTec systems required a separate tank filled with urea, a chemical that neutralizes NOx from exhaust.136 This system could be a costly addition for both the manufacturer and the consumer. Additionally, it required extra space to install, making it difficult to adapt to smaller VW cars.137

Volkswagen believed it could develop an alternative engine, which trapped NOx inside a catalytic converter and burned it off with an extra burst of fuel when full.138 While this process was cheaper, it came with a number of problems. For one, the procedure tended to reduce the engine’s power and clog the pipes

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with soot.139 Additionally, the constant injection of fuel required to burn off the excess NOx lowered fuel economy.140

In 2007, VW would end its BlueTec cooperation with Daimler in an effort to market its own diesel engines under the TDI brand.141 While VW would successfully launch its EA 189 diesel engine in Europe, by November 2007 the company would be forced to delay a similar U.S. launch for failure to meet emissions standards.142 This was problematic, as Winterkorn’s promise to triple sales in the U.S. within a decade hinged on the success of its diesel-powered cars.143 There appeared to be a breakthrough by August 2008 when the company launched the Jetta TDI in the U.S. Within a little over a year, VW would go on to install the EA 189 throughout its diesel passenger car fleet and earn “Green Car of the Year” for the Jetta TDI and Audi A3.144

The ICCT and the Diesel Emissions Study

Beginning in the early 2000s, John German, a senior fellow and co-lead at the International Council on Clean Transportation (ICCT),145 suspected that diesel engine manufacturers were submitting questionable data to environmental and transportation agencies in the EU.146 With 30 years of experience in analysis of technology and environmental policies at Chrysler, Honda, and the EPA, German had built a career advising regulators around the world on how best to introduce more stringent policies on emissions.

German was concerned by the amount of data from his research that demonstrated high levels of NOx emissions in Europe. He decided to analyze how the very same vehicles sold in the U.S. performed under the tighter EPA standards.147 Expecting to find lower levels of NOx emissions, German intended to take those results back to Europe to prove that diesel vehicles could be cleaner in the EU. In 2012, German and his ICCT cohort contracted with the Center for Alternative Fuels, Engines & Emissions (CAFEE) at West Virginia University to conduct a study on fuel performance and greenhouse gas emissions.148

Three US-EPA Tier2-Bin5 certified light-duty diesel vehicles — a 2012 VW Jetta, a 2013 VW Passat, and a BMW X5 — were chosen for the study.149 Upon successfully passing laboratory inspection and scans for malfunctions of any sort, all three models were equipped with battery-powered portable emissions measurement systems (PEMS) to track road emissions of NOx, carbon monoxide (CO), carbon dioxide (CO2), and tetrahydrocannabinol (THC).150 The results from the real-world testing seemed unusual.

Under actual driving conditions, emissions from the Jetta and Passat were as much as 35 times the allowable emissions standards. The VW vehicles demonstrated emission values roughly equivalent to those from 18-wheel trucks (see Exhibit 5).151 Comparatively, the study revealed that the BMW X5 had a vastly cleaner design, only marginally exceeding standards during uphill driving.

Concerned they had made a mistake, German and his team decided to re-calibrate their PEMS and run new tests. After results of the second tests matched their original findings, it became clear there was indeed something wrong with the emissions from the VW vehicles. German filed his final results in a report to the EPA and continued his diesel emissions research at ICCT.152

The Scandal Escalates

As John German continued his diesel emissions research at ICCT and after several attempts of contact with no reply, he received word from the EPA that it was four hours away153 from releasing a letter stating that VW’s practices violated the Clean Air Act.154 From the publication of the ICCT study in May 2014 to the release of the letter in September of the following year, the EPA communicated its concerns to VW.155 The

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auto giant reassured that the highlighted anomalies were associated to technical issues and unexpected in- use conditions, and ordered a callback in December to evaluate the EPA claims. As recalled and refurbished vehicles hit the roads, the California Air Resources Board (ARB) and EPA repeated lab and road tests to evaluate their performance. The changes were proven to be minimal.156

Exhibit 5 Emissions Data from ICCT, CAFEE, and ARB Study

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Jetta Passat X5 Heavy truck

Medium truck

N O

x (g

/m ile

) Urban-LA Urban-SD Urban-SF Highway CARB EF tables

Tier 2 bin 5 standard

Source: John German. “Volkswagen’s Defeat Device Scandal. University of Michigan Conference.” 30 Oct. 2015.

Emissions from the vehicles targeted by the EPA still went undetected in the lab while real-world testing showed the VW recalled vehicles exceeded Tier 2-Bin 5 standards.157 As a result, the EPA warned VW that the certification process for the entire 2016 fleet of diesels would have to be halted due to the recurring anomalies. It would not take long before heavy criticism poured onto Volkswagen’s leadership.158 Within days of the unveiling of the EPA’s letter, media outlets from all over the world159 would reach out to VW offices, John German160 and his team at ICCT,161 the West Virginia Center for Alternative Fuels, Engines, and Emissions (CAFEE) lab, and the EPA, seeking clarification of Volkswagen’s infractions.162 Diesel auto owners would begin to inquire who was to blame for the deception and contact attorneys about filing lawsuits.163

To try to stem the reputation damage, Martin Winterkorn issued a statement on September 22, 2015 that struck a conciliatory tone “We are endlessly sorry we betrayed the trust of customers. We are going to clarify the background unsparingly, and, at this very moment, everything is being put on the table as quickly, thoroughly, and transparently as possible. The irregularities with these engines contradict everything for which Volkswagen stands.” 164

The Defeat Device and Repercussions

The ICCT, CAFEE, and CARB studies indicated that the discrepancies between the laboratory and real- world performance of Volkswagen diesels were the result of a planned feature described as a defeat device.165 The device was installed in all EA 189, 2.0L 4-cylinder TDI diesel engines (Appendix D).166 These devices activated when they sensed the vehicle was being tested under lab conditions and turned on features that reduced NOx emissions.

167 However, under real-world driving conditions, the device deactivated, improving fuel mileage while conversely increasing emissions to levels that exceeded U.S. regulatory standards (Appendix E).168

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Internal investigations by VW found records dating back to 2007 on the manufacturer of the software, the German multinational Bosch. Bosch had explicitly communicated to VW that the software was not fit for use in regular operations.169 Additionally, according to reports from the Frankfurter Allgemeine Sonntagszeitung, in 2011 concerns were raised within the company that defeat devices were being used to cheat on emissions standards.170 Furthermore, the scandal could have implications for the Volkswagen Group’s high-end brands. Given the findings in seven diesel models (Appendix F),171 the EPA launched investigations throughout Audi and Porsche fleets (Appendix G) in order to assess the extent of the cheating scheme.172

The Scandal Reaches to Volkswagen’s Core

In the EPA’s judgment, VW was aware or should have been aware that the implementation of defeat devices “rendered inoperative elements of the vehicle design related to compliance with the Clean Air Act emission standards,”23 making their use illegal and punishable by law. Violations of section 203(a)(1) of the CAA, 42 U.S.C. S7522 (a)(1), and section 203(a)(3)(B) of the CAA, 42 U.S.C. S7522 (a)(3)(B) of the Clean Air Act, could result in severe health impacts, such as asthma, emphysema, and loss of life, and fines ranging from $18 billion24 to $80 billion.

With so much controversy surrounding Volkswagen, many fingers began to point to CEO Winterkorn; so much so that on September 23, 2015, Winterkorn resigned, saying in a statement that he’s unaware of any personal wrongdoing but accepts responsibility for the crisis. Winterkorn says his resignation clears the way for a “fresh start” at Volkswagen.173

What should Volkswagen do at this juncture? First, does the ultimate responsibility lie with the CEO, even if personally unaware of the infractions? Does Winterkorn’s stepping down address the problem? Second, how does the company ascertain whether there are systemic problems that lead to this ethical breakdown? Is the CEO just a scapegoat for addressing the problems? Do the issues run much deeper in the culture? What will happen with Volkswagen and its corporate culture as a result of this scandal? Third, how does the company regain the trust of the US government as well as governments around the world? Fourth, how does the company regain the trust of its customers, both those that have already bought a VW and those that may be thinking about buying one in the future? How can the brand be cleaned up to help the company resume its spot as one of the premier car companies in the world, and one of the premier green car companies in the world? Fifth and finally, how can the company stem any collateral damage to its other brands? How was it the case that the whole fleet of VW diesels infringed EPA’s standards while BMW and Mercedes used clean technology?

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Appendices

Appendix A Clean Air Act Sections Regarding Defeat Devices

Volkswagen Violations

Laws and Regulations related to Volkswagen Violations

U.S. Authorities and Regulations    Defeat Devices

Section 203 (a)(3)(b) of the Clean Air Act (CAA), 42 U.S.C. Sec. 7522(a)(3)(b), prohibits the manufacture, selling, or installation of any device that intentionally circumvents EPA emission standards by bypassing, defeating, or rendering inoperative a required element of the vehicle’s emissions control system.

Section 203 (a)(1) of the same Act also prohibits the sale of motor vehicles or engines that are not covered by valid certificates of conformity.

40 CFR Part 86, Subpart A contains the regulatory language pertaining to defeat devices.

Section 86.1803-01 defines Auxiliary Emission Control Devices (AECDs) and defeat devices Section 86.1809-12 sets forth the prohibition of defeat devices

Source: EPA. “Laws and Regulations Related to Volkswagen Violations.” 13 Nov. 2015. Accessed 31 Jan. 2016. <http://www2.epa.gov/vw/laws-and-regulations-related- volkswagen-violations>.

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Appendix B EPA’s Promotion of Tier 3 Standards

Source: EPA. “Reducing Air Pollution from Passenger Cars & Trucks.” Accessed: 31 Jan. 2016. <http://www3.epa.gov/otaq/images/tier3.pdf>.

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Appendix C EU Emissions Standards for Passenger Cars

Stage Date CO HC HC+NOx NOx PM PN

g/km #/km

Compression Ignition (Diesel)

Euro 1† 1992.07 2.72 (3.16)

– 0.97 (1.13)

– 0.14 (0.18)

Euro 2, IDI 1996.01 1.0 – 0.7 – 0.08 –

Euro 2, DI 1996.01 1.0 – 0.9 – 0.10 –

Euro 3 2000.01 0.64 – 0.56 0.50 0.05 –

Euro 4 2005.01 0.50 – 0.30 0.25 0.025 –

Euro 5a 2009.09 0.50 – 0.23 0.18 0.005 –

Euro 5b 2011.09 0.50 – 0.23 0.18 0.005 6.0×10

Euro 6 2014.09 0.50 – 0.17 0.08 0.005 6.0×10

Positive Ignition (Gasoline)

Euro 1† 1992.07 2.72 (3.16)

– 0.97 (1.13)

– – –

Euro 2 1996.01 2.2 – 0.5 – – –

Euro 3 2000.01 2.30 0.20 – 0.15 – –

Euro 4 2005.01 1.0 0.10 – 0.08 – –

Euro 5 2009.09 1.0 0.10 – 0.06 0.005 –

Euro 6 2014.09 1.0 0.10 – 0.06 0.005 6.0×10

* At the Euro 1..4 stages, passenger vehicles > 2,500 kg were type approved as Category N vehicles † Values in brackets are conformity of production (COP) limits a. until 1999.09.30 (after that date DI engines must meet the IDI limits) b. 2011.01 for all models c. 2013.01 for all models d. and NMHC = 0.068 g/km e. applicable only to vehicles using DI engines f. 0.0045 g/km using the PMP measurement procedure g. 6.0×10 1/km within first three years from Euro 6 effective dates

a

b f

c f 11

f 11

b d e,f

d e,f 11 e,g

1

12

Source: DieselNet. “Emission Standards: Cars and Light Trucks.” Jan. 2015. Accessed 31 Jan. 2016. <https://www.dieselnet.com/standards/eu/ld.php>.

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Appendix D The Inner Workings of VW Emissions Control

Source: Russell, Karl, Guilbert Gates, Josh Keller, and Derek Watkins. “How Volkswagen Got Away With Diesel Deception.” The New York Times. 5 Jan. 2016. Accessed 9 Feb. 2016. <http://www.nytimes.com/interactive/2015/business/international/vw-diesel-emissions-scandal-explained.html?_r=1>.

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Appendix E Implications of VW Defeat Devices

VW has admitted using so�ware to cheat emissions tests worldwide Volkswagen emissions scandal

What does the so�ware do? Detects when a car is undergoing o icial US emissions testing

$18 billion Possible fines faced by Volkswagen in the United States

Turns full emissions controls for nitrogen oxides (NOx) on only during the test

What happens at other times? Emissions controls are turned o , vehicle emits NOx at up to 40 times standard

Volkswagen admitted that 11 million cars worldwide are fitted with the pollution-hiding so�ware

US EPA says 482,000 cars in the United States are a ected

ICCT* study in Europe

2014 tests for on-road NOx production

*International Council for Clean Transportation

A study of 15 diesel models from various manufacturers found on average real-world NOx emissions were about 7 times higher than new European standards

Real-world emissions calculated at 560 mg/kg

NOx limit in Europe for new cars 80 mg/km

Possible worldwide problem

Diesel engine exhaust system

Exhaust gas recirculation system Lowers temperatures to stop formation of NOx. The more it is used the more it a ects performance

Converts hydrocarbons and carbon monoxide into water vapor and carbon dioxide

Oxidation catalytic converter

Reduces soot particles

Particulate filter

Reduces NOx to nitrogen and water

NOx storage catalytic converter

What does NOx do? Linked to increased asthma attacks, other respiratory illnesses and cardiovascular-related e ects

Source: “Polluted Scandal: The S&P Threatens to Downgrade Volkswagen.” News of Bahrain. 25 Sep. 2015. Accessed 9 Feb. 2016. <http://www.newsofbahrain.com/epaper/25-09-2015/single/page-09.pdf>.

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Appendix F Volkswagen Models Affected Up to September 15, 2015

Jetta 2009 to 2015

Beetle and Beetle Convertible 2012 to 2015

Passat 2012 to 2015

A3 2010 to 2015

Jetta SportWagen 2009 to 2014

Golf 2010 to 2015

Golf SportWagen 2015

VOLKSWAGEN VOLKSWAGEN

VOLKSWAGEN

AUDI VOLKSWAGEN VOLKSWAGEN

VOLKSWAGEN

Source: Russell, Karl, Guilbert Gates, Josh Keller, and Derek Watkins. “How Volkswagen Got Away With Diesel Deception.” The New York Times. 5 Jan. 2016. Accessed 9 Feb. 2016. <http://www.nytimes.com/interactive/2015/business/international/vw-diesel-emissions-scandal-explained.html?_r=1>.

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Appendix G Vehicles Under Investigation as of September 22, 2015

Touareg 2009 to 2016

A6 Quattro 2014 to 2016

A7 Quattro 2014 to 2016

A8 and A8L 2014 to 2016

Q5 2014 to 2016

Q7 2009 to 2016

Cayenne 2013 to 2016

VOLKSWAGEN AUDI AUDI

AUDI AUDI AUDI

PORSCHE

Source: Russell, Karl, Guilbert Gates, Josh Keller, and Derek Watkins. “How Volkswagen Got Away With Diesel Deception.” The New York Times. 5 Jan. 2016. Accessed 9 Feb. 2016. <http://www.nytimes.com/interactive/2015/business/international/vw-diesel-emissions-scandal-explained.html?_r=1>.

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Endnotes 1 Volkswagen Aktiengesellschaft. “Experience D[r]iveristy: Annual Report 2012.” 14 Mar. 2013. Accessed 29 Jan. 2016.

<http://www.volkswagenag.com/content/vwcorp/content/en/misc/pdf-dummies.bin.html/downloadfilelist/downloadfile/ downloadfile_23/file/Y_2012_e.pdf>.

2 Manfred Grieger and Markus Lupa. “From the Beetle to a Global Player.” Volkswagen Aktiengesellschaft Wolfsburg. 2014. Accessed 3 Feb. 2016. <http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2015/06/Historical_Notes_9.bin. html/binarystorageitem/file/HN9_en_web.pdf>.

3 Bernstein, Marty. “The VW Story.” Bloomberg Business. 9 May 2006. Accessed 9 Dec. 2015. <http://www.bloomberg.com/bw/ stories/2006-05-09/the-vw-storybusinessweek-business-news-stock-market-and-financial-advice>.

4 Bowler, Tim. “Volkswagen: From the Third Reich to Emissions Scandal.” BBC News. 2 Oct. 2015. Accessed 9 Dec. 2015. <http:// www.bbc.com/news/business-34358783>.

5 Grieger and Lupa. 6 Bowler. 7 Grieger and Lupa. 8 Grieger and Lupa. 9 Grieger and Lupa. 10 Ogden, Mike. “Volkswagen Ad Campaign Was Far from a Lemon.” Silicon Valley Business Journal. 21 Nov. 1999. Accessed 9 Dec.

2015. <http://www.bizjournals.com/sanjose/stories/1999/11/22/smallb7.html?page=all>. 11 Bernstein. 12 Bernstein. 13 Bernstein. 14 The Economist. “VW Conquers the World.” 7 July 2012. Accessed 9 Dec. 2015. <http://www.economist.com/node/21558269>. 15 Cremer, Andreas, and Jan Schwartz. “VW Faces Battle with Workers Over Cost Cutting Plans.” Reuters. 23 July 2014. Accessed 29

Jan. 2016. <http://www.reuters.com/article/us-volkswagen-results-idUSKBN0FS10L20140723>. 16 The Economist. 17 Guyon, Janet. “Getting the Bugs Out at VW in Six Years, Ferdinand Piech Has Turned VW into One of the World’s Strongest Car

Companies. Can He Sustain It?” Fortune Magazine. 29 Mar. 1999. Accessed 9 Dec. 2015. <http://archive.fortune.com/magazines/ fortune/fortune_archive/1999/03/29/257410/index.htm>.

18 The Economist. 19 Guyon. 20 Cremer, Andreas, and Tom Bergin. “Fear and Respect: VW’s Culture Under Winterkorn.” Reuters. 10 Oct. 2015. Accessed 9 Dec.

2015. <http://www.reuters.com/article/volkswagen-emissions-culture-idUSL5N1230FE20151010#ZlW8e5vyWmaqx6jt.97>. 21 Cremer and Bergin. 22 Volkswagen AG. “Annual Report 2013.” Accessed 29 Jan. 2016. <http://www.volkswagenag.com/content/vwcorp/info_center/en/

publications/2014/03/Y_2013_e.bin.html/binarystorageitem/file/GB+2013_e.pdf>. 23 Cremer and Bergin. 24 Cremer and Bergin. 25 Cremer and Bergin. 26 Volkswagen AG. “Annual Report 2013.” 27 Cremer and Bergin. 28 Ewing, Jack. “Volkswagen Inquiry’s Focus to Include Managers Who Turned a Blind Eye.” The New York Times. 25 Oct. 2015.

Accessed 9 Dec. 2015. <http://www.nytimes.com/2015/10/26/business/international/volkswagen-investigation-focus-to- include-managers-who-turned-a-blind-eye.html?_r=0>.

29 Volkswagen AG. “Volkswagen is World’s Most Sustainable Automotive Group.” 11 Sep. 2015. Accessed 29 Jan. 2016. <http:// media.vw.com/release/1058/>.

30 Volkswagen AG. “Sustainability Report 2009/10.” Accessed 9 Dec. 2015. <http://www.volkswagenag.com/content/vwcorp/info_ center/en/publications/2009/09/sustainability_report0.bin.html/binarystorageitem/file/VW_Sustainability_Report_2009.pdf>.

31 Volkswagen AG. “Sustainability Report 2009/10.” 32 Volkswagen AG. “Sustainability Report 2009/10.”

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33 Volkswagen AG “Sustainability Report 2014.” Accessed 9 Dec. 2015. <http://sustainabilityreport2014.volkswagenag.com/sites/ default/files/pdf/en/Volkswagen_SustainabilityReport_2014.pdf>.

34 Volkswagen AG. “Sustainability Report 2014.” 35 Volkswagen AG. “Sustainability Report 2014.” 36 Loveday, Eric. “VW Launches ‘Think Blue’ Initiative in U.S.” AutoBlog. 23 May 2011. Accessed 30 Jan. 2016. <http://www.

autoblog.com/2011/05/23/vw-launches-think-blue-initiative-in-u-s/>. 37 Volkswagen AG. “Think Blue. Factory.” July 2012. Accessed 30 Jan 2016. <http://www.volkswagengroup.it/Apps/WebObjects/

VGI.woa/wa/viewFile?id=115&lang=ita>. 38 Nastu, Paul. “VW Goes for Energy Efficiency at New Chattanooga Plant.” Environmental Leader. 16 Feb. 2010 Accessed 19 Jan.

2016. <http://www.environmentalleader.com/2010/02/16/vw-goes-for-energy-efficiency-at-new-chattanooga-plant/>. 39 Volkswagen AG. “Sustainability Report 2013.” Accessed 19 Jan. 2016. <http://www.volkswagenag.com/content/vwcorp/

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40 Volkswagen AG. “Sustainability Report 2014.” 41 IBISWorld. “Global Car and Automobile Manufacturing.” 2015. Accessed 30 Jan 2015. <http://clients1.ibisworld.com.libproxy.

bus.umich.edu/reports/gl/industry/keystatistics.aspx?entid=1000#ID>. 42 IBISWorld. 43 IBISWorld. 44 IBISWorld. 45 IBISWorld. 46 Volkswagen AG. “Production Plants.” 31 Dec. 2014. Accessed 9 Dec. 2015. <http://www.volkswagenag.com/content/vwcorp/

content/en/the_group/production_plants.html>. 47 Volkswagen AG. “Brands and Products.” 31 Dec. 2014. Accessed 9 Dec. 2015. <http://www.volkswagenag.com/content/vwcorp/

content/en/brands_and_products.html>. 48 Volkswagen AG. “The Group.” 31 Dec. 2014. Accessed 30 Jan 2016. <http://www.volkswagenag.com/content/vwcorp/content/

en/the_group.html>. 49 Statistica. “Global Market Share of the World’s Largest Automobile OEMs as of August 30, 2014.” Accessed 30 Jan. 2016. <http://

www.statista.com.proxy.lib.umich.edu/statistics/316786/global-market-share-of-the-leading-automakers/>. 50 Statistica. “Selected Automakers’ U.S. Market Share in December 2015, by Manufacturer.” Accessed 8 Jan. 2016. <http://www.

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Notes

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