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German car makers in emissions deal

Emissions have reached toxic levels in many parts of Germany

Politicians and car makers in Germany have agreed to completely overhaul engine software on 5.3 million diesel vehicles in a bid to cut pollution, avoid a ban on diesels and repair the industry’s reputation in Europe.

Justice Minister Heiko Mass told the German newspaper Bild that the agreement was only the first step in an ongoing process, and bans on diesel vehicles in the future would not be ruled out.

“The legal requirements for clean air remain in effect,” he told journalists.

Air pollution has significantly decreased over the past decade, but is still breaching current standards.

In February, the EU Commission found limits for the deadly nitrogen dioxide pollution were exceeded 28 areas of Germany, and was responsible for 10,610 premature German deaths in 2013.

Chancellor Angela Merkel’s government has come under increasing pressure for not doing enough to crack down on vehicle pollution, with Merkel’s close relationship to auto executives heavily criticised.  

However, ministers have been cautious about disrupting the auto industry, which provides 800,000 jobs, and is Germany’s biggest exporter.

“We expect a new culture of responsibility from carmakers,” Environment Minister Barbara Hendricks, from the centre-left Social Democrats, said at a news conference.

“There is much to make good – to the environment, to people in cities, car owners and not least to the security of the car industry in Germany and its hundreds of thousands of jobs.”

The German Association of the Automotive Industry (VDA) said the software updates would cut nitrous oxide emissions by 25-30 per cent for the 5.3 million affected cars.

The software update is expected to cost Volkwagen, Daimler and BMW a combined $800 million.

The popularity of diesel vehicles in the EU’s largest market is falling as a result of the ongoing emissions scandal. German diesel car sales fell 12 per cent in July, and diesel now makes up 40.5 per cent of new car sales, down from 46 per cent in 2016.

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EU investigates possible auto cartel

Volkswagen will hold a supervisory board meeting labelled “extraordinary” by Reuters on Wednesday following allegations that major German car makers operated a cartel.

German magazine Der Spiegel first reported on Friday that Volkswagen, Daimler and BMW may have colluded to fix prices on components, including diesel emissions systems.

The European Commission announced on Saturday that antitrust regulators were investigating a possible cartel in the auto industry in Germany following a tip-off from a source.

The Commission will investigate whether Volkswagen, Audi, Porsche, Mercedes and BMW used auto industry committees to discuss pricing of components and technologies, and if these discussions could be defined as anti-competitive behaviour.

A Volkswagen spokesperson confirmed the planned board meeting on Wednesday to Reuters, but declined to provide further information.

The industry has been hit with fines totalling billions of dollars in both Europe and America in the past for parts-related cartels.

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Audi accused of more emissions cheating

The German government has accusing Audi of cheating emissions tests with its top-end models. It’s the first time Audi has been accused of emissions cheating in its home country.

The German transport ministry has asked Audi to recall around 24,000 A7 and A8 models built between 2009 and 2013, around half of which were sold in Germany, Reuters reports.

A ministry spokesman told Reuters that VW CEO Matthias Mueller was summoned to the transport ministry, but didn’t elaborate.

The ministry said that recalled Audi models which were supposedly Euro-5 emission standards but in fact emitted twice the legal limit of nitrogen oxide when the steering wheel is turned more than 15 degrees.

The ministry has also issued a deadline of June 12 for Audi to come up with a plan to refit the affected cars. Audi issued a recall for the affected cars on Thursday, and said software updates will start in July.

An Audi source told Reuters the discrepancy in emissions is due to a faulty interaction between transmission and engine control units, and a proposal for a fix has already been submitted to the KBA.

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Mercedes builds new EV battery factory

Angela Merkel attended the ceremonial laying of the foundation stone at the new factory

Mercedes-Benz parent company Daimler AG has broken ground on its $690 million electric battery plant in Kamenz, Saxony, at a ceremony attended by German chancellor Angela Merkel.

“The automotive industry is facing a fundamental transformation and we see ourselves as the driving force behind this change,” said Daimler AG chairman Dieter Zetsche.

“The battery factory in Kamenz is an important component in the implementation of our electric offensive. By 2022, we will have more than ten purely electric passenger cars in series. We also continue to drive forward the hybridization of our fleet.”

Daimler has invested an overall $1.6 billion in global battery production so far, and have delivered over 80,000 batteries to consumers. The new battery factory, the second built by the company, will begin operation next year.

 “With the second battery plant in Kamenz, we are giving the initial start for the development of the first premium eBattery factory,” said Mercedes board member Markus Schäfer.

Mercedes have also unveiled more plans for their next-generation electric fleet, which has been promised almost $16 billion of funding. Ten EVS will be launched over the next five years.

The company predicts total vehicle sales for Mercedes-Benz will be between 15 per cent and 25 per cent electric by 2025.

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Merkel testifies in VW inquiry

German Chancellor Angela Merkel has appeared before a parliamentary committee of inquiry investigating the ongoing Volkswagen emissions scandal.

The inquiry was established to investigate whether German authorities were aware of VW’s emissions cheating before the United States. Angela Merkel is the last witness to testify. German opposition parties wanted the inquiry to investigate the government’s response to the scandal, which they felt had been too lax.

Merkel told the committee she first learned of the diesel emissions scandal through the media. “I only found out through media reports,” she said.

Merkel said she found out about the accusations against Volkswagen on September 19 2015, and was informed by the transport minister, Alexander Dobrindt, on September 21. Her first contact with former VW CEO Martin Winterkorn regarding the issue came via a telephone call “probably on the 22 September,” according to Reuters.

The long-standing relationship between Merkel and Winterkorn has been a point of interest throughout the emissions scandal.

When asked what she found out from the VW chief, Merkel said, “nothing that I didn’t already know based on the information from the transport minister and the media.” She said it was unfortunate that VW had misled U.S. authorities.

Merkel said she felt Dobrint had kept her well informed on the issue and quickly set up an investigation committee, and she had no impression that German authorities responsible had been negligent or incompetent during the scandal.

The emissions scandal broke on September 18, 2015, after U.S authorities ordered a recall of VW diesel vehicles. Merkel said she did not know why the emissions cheating had not been discovered in Germany. “I don’t have any explanation for that,” she told the committee.

A long-time defender of diesel vehicles, Merkel argued against excessive regulation of the industry, which employs 800,000 people in Germany. “We should have regulation that is ambitious, but not to such an extent that cars can no longer be produced,” she said.

The inquiry has yet to uncover clear evidence of improper misconduct by Angela Merkel or the German government.

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Audi engineer shows proof of cheating

The former Audi chief of engine development, Ulrich Weiß, has produced a document in court which shows CEO Rupert Stadler ordered engineers to cheat regulations tests in July 2015.

Weiß presented the incriminating document at the Arbeitsgericht Heilbronn, a German labour court. Initially, he was suspended from Audi in 2015, but Weiß was fired last week after testifying against Audi on February 15.

This latest revelation centres on the Audi’s Q7 release in Hong Kong. An internal Audi presentation shown in court stated the Q7 far exceeded the 60g of NOx per kilometre threshold, according to German newspaper BILD.

Weiß told the court he was asked by Audi’s head of powertrain development, Dr Thomas Heiduk, to cheat the tests in July 2015 and refused. Following more discussion, Weiß demanded the order in writing.

Heiduk then sent Weiß a signed note in which board members Rupert Stadler (CEO), Ulrich Hackenberg (research and development), Werner Zimmermann (quality assurance), and Michael Neumayer (product management) echoed Heiduk’s order to cheat.

The order was kept in a locked safe, and Weiß’s attorney, Hans-Georg Kauffeld, claims the engineer told his staff to resist the order. It unclear whether any illegal modifications fooled Hong Kong regulators.

Proceedings in the German court will continue until March 10, when a decision is scheduled to be reached.

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Luxembourg launches suit against VW

Luxembourg has begun criminal proceedings over the Volkswagen diesel emissions scandal. “We have decided that, as there is a large probability that a defeat device was used, to launch a lawsuit against unknown persons,” Luxembourg’s infrastructure minister, Francois Bausch, told Reuters.

The engine in question is the EA 189 model manufactured by VW’s Audi division. The engine was tested and certified by Luxembourg authorities and used in most of the cars affected by the long-running scandal by concealing the true level of toxic emissions in tests.

Ongoing global investigations are trying to unravel the extent of the cheating within VW and identify the individuals involved. VW shares were down 2.2 per cent at the news to 141.9 euros.

Legal action has also been launched in Germany, with fish distributor Deutsche See announcing on the weekend it was suing VW for misrepresenting a fleet of vehicles it leased as environmentally friendly.

The German distributors lease 500 vehicles from VW and were unable to reach an out-of-court settlement. German media reported that Deutsche See filed its complaint for “malicious deception” at the regional court in Braunschweig, near Volkswagen’s Wolfsburg headquarters.

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