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Lux Research: Volkswagen “In A Strong Position To Innovate Their Way Out Of This Mess”

Despite the legal (and public perception) issues, Volkswagen could well be in a “strong position to innovate their way out of this mess,” according to the research firm Lux Research.

This possible outcome, according to the firm, would involve the German company making a strong push towards electric vehicles (EVs) and plug-in hybrids (PHEVs) — potentially regaining market share, and consumer confidence, in that way.

2015 vw e-golf limited edition


 

Here’s the assertion in its fullness: “VW is actually in a strong position to innovate their way out of this mess. They have been spending most on the R&D of any OEM (about $11 billion in 2013), and they are the largest automaker by volume. Arguably, no major OEM is better positioned than they are to decisively accelerate the push towards plug-in hybrids and electric vehicles, putting the shine back on their tarnished image. However, they probably lack the vision, leadership, and ambition to do it, so they will most likely carry on as usual after some apologies.” Hmm, well that puts a (realistic) damper on the hopes. Of course, as we’ve detailed, there are certain reasons why big fossil automakers don’t want to speed up the transition to EVs.

Green Car Congress provides more on other possible outcomes outlined by Lux Research:

  • Regulators will try to improve, but will need better equipment. It’s striking, Lux said, that the US EPA, with its $8-billion budget and workforce of 15,000 staff, couldn’t catch VW, but a small team of researchers from West Virginia University could. Lux suggests that regulators need to revise their testing protocols for real-world performance.
  • Automotive software will come under pressure to open up. OEMs have in the past successfully lobbied regulators to use the Digital Millennium Copyright Act (DMCA) to keep OEM software locked up and proprietary, and off-limits to diagnostic and repair companies the OEM does not like. The EPA has sided with OEMs, fearing that if the software is open-access, then consumers would modify it at the expense of emissions. VW misused the protection of the DCMA to the software cheat, Lux said.
  • Diesel passenger vehicle sales in the US will drop drastically. Due to strict NOx emission standards in the US diesel passenger vehicles have failed to make any significant market penetration, representing less than 1% of passenger vehicles and only 3% of all vehicles on the road. In part, slow adoption was due to the requirement of installing the urea-containing SCR unit to control NOx emissions in diesel engines, which is expensive.
  • AdBlue systems and renewable diesel will infiltrate Europe’s existing diesel passenger vehicle market. The Euro 5 NOx emission standard that is applicable to vehicles prior to 2015 is nearly six times more lenient than that in the US (180 mg/km compared to 31 mg/km). This has resulted in diesel powertrains present in approximately 35% of passenger vehicles and 53% of all vehicles and biodiesel making up 62% of Europe’s biofuels market. With Euro 6 approved and increased attention to NOx emissions (80 mg/km), and implementation of AdBlue systems in diesel passenger vehicles, it’s truly inevitable to achieve “clean diesel”, Lux said. While biodiesel has carbon emission benefits that’s been the primary focus of Europe’s biofuel mandates, it can have higher NOx emissions—up to 10% depending on blend percentage. With the push for nonfood biofuels and new focus on NOx emissions, Europe offers potential for renewable diesel growth. Renewable diesel has been shown through third-party testing to emit up to 9% less NONOxx compared to conventional diesel, and the region will see nearly 300 million gallons per year (MGY) of capacity come online by 2018, nearly doubling what it is today, according to Lux’s Alternative Fuels Tracker.

Some interesting points. Though, I find myself skeptical on the last count. My guess would be some muddling along on the part of most established automakers, with those pushing for other modalities (EVs, PHEVs, etc) gaining greater market share. Outside companies, like Tesla and Apple, also stand to benefit notably.

 
Written By

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.

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