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Running head: VWS ETHICAL CHALLENGES

Resolving VWs Ethical Challenges with Software Cheating


Jennifer A. Dunham
California State University Monterey Bay

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Resolving VWs Ethical Challenges with Software Cheating


I am currently a student at California State University Monterey Bay working towards my
degree in Computer Science and Information Technology with a concentration in software
engineering through the CSIT online degree completion program. I am currently enrolled in
CST 373-40, Ethics and Current Issues in Communication and Technology. My professional
background is in Quality Assurance and Regulatory Affairs for pharmaceuticals and medical
devices, an industry which I have been immersed in for sixteen years. My industry is heavily
regulated by local, state, federal, and international regulations, and my job is directly related to
ensuring compliance with such regulations and contributing to a culture that is driven by
compliance, quality, and environmental responsibility rather than by profit. I am currently working
for a company that manufactures implantable, programmable electronic devices. Although I do not
have any experience working with the automotive industry, the recent scandal involving
Volkswagen (VW), one of the worlds largest automakers, and a purposeful software algorithm
intended to circumvent emission legislation in the U.S. piqued my interest as both someone who has
devoted nearly half of my life to compliance with legislation and as an aspiring software engineer.
The Environmental Protection Agency (EPA), an American government organization that
exists to protect human health and the environment, revealed that VW had sold cars in the U.S. that
included defeat devices in the form of software algorithms intended to evade clean air standards
after they were notified by an independent third-party researching firm. The allegations against VW
indicated that nearly 500,000 diesel passenger cars sold in the United States since 2008 were in
violation of U.S. clean air laws (United States Environmental Protection Agency, 2015). Some of
the personal and societal values at stake are the importance of establishing fair and reasonable limits
so as to not unjustly hinder business, the responsibility of corporations and consumers to observe

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concern and respect for the health of the environment and fellow citizens, the expectations of
consumers regarding adherence to legislation, and the expectations regarding honesty in marketing
and sale of goods for public consumption. I will explore this scandal in detail, from the history
preceding the issue, the media representation of the story, the individuals and groups concerned
with this issue, the ethical perspectives regarding the situation, future challenges arising from this
issue, and my personal views and reflections.
History
Both the U.S. and Germany, as a member state of the EU, have a long history of legislation
pertaining to the known problem of air pollution. The U.S. first incorporated formal legislation to
address this problem in 1955 (American Meteorological Society, n.d.). In 1970, Congress passed
the Clean Air Act, which required industry to develop technology to conform to stringent air quality
requirements and permitted states to waive federal preemption provisions, allowing California to be
a pioneer in this field. Californias Low-Emission Vehicle (LEV) Program served as a model for
EPAs [Clean Fuel Vehicle] CFV Program (Biodiesel.org, n.d.). Californias particularly stringent
emissions standards have been adopted by 13 states (States, 2009).
The EU began implementing legislation regarding vehicle emissions in 1970 with Council
Directive 70/220/EEC on the approximation of the laws of the Member States relating to measures
to be taken against air pollution by gases from positive-ignition engines of motor vehicles.
Additional standards have been implemented as a supplement to the 1970 legislation, with major
amendments occurring as the international regime on climate change emerged and matured in
the 1990s and early 2000s. [T]he EU has been a major actor and leader in international climate
policy (Oberthur & Pallemaerts, 2010). Although both regions include strict pollution standards,
there are key differences in what they measure. David Herron explains:

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US standards are strict on Nitrogen Oxides (NOx) and Particulate Matter (PM),
while the EU is strict on Carbon Dioxide (CO2) and Carbon Monoxide (CO). In
other words, European regulators are focused on fuel efficiency to limit the
dependency on crude oil from Russia and the Middle East, and on greenhouse gas
emissions to combat climate change. On the other hand, American regulators are
focused on smog and health impacts of air pollution (2015).

Figure 1. Differences in US and EU emissions standards (Herron, 2015).


The discrepancy in the emissions of the VWs with the modified software algorithm is with the
NOx emissions. While NOx is a known precursor to greenhouse gases and to smog, it is a priority
in the EU to maintain the ability to maximize fuel efficiency and thus minimize dependence on
foreign oil, and limiting NOx emissions beyond their established acceptable emissions rates
decreases diesel fuel efficiency (Majewski & Jaaskelainen, 2015). In 2009, 95% of passenger cars
and light trucks in America were gas-powered, while in Europe, approximately 50% of the cars
were running on diesel fuel (Scientific American, 2009). Additionally, the U.S. taxes diesel fuel
much higher than gasoline, contributing to the continued dominance of gas-fueled vehicles in the
nation, while Europe subsidizes diesel. It is the difference in the incentive and the current market
which has led to the disparity in the established emissions standards. However, at up to 40 times
the legal NOx limit in the U.S., the affected VW cars are not in compliance with European

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emissions limits, either. While 500,000 affected vehicles are in the United States, 11 million
carrying the software are in Europe, but a European regulation loophole lets carmakers change the
performance settings of their engines before a pollution test (Hakim and Barthelemy, 2015). Smog
and obvious air pollution have long been a concern of citizens in both the EU and the U.S., as smog
is a lung irritant and causes health problems such as asthma (Climate Change, n.d.). Awareness and
concern for climate change has become a concern for citizens in both regions, with over 80% of the
population in both regions aware of climate change as of a 2008 survey (Pugliese & Ray, 2009).
The EU and the U.S. are not the only countries with such laws in place. Other countries such as
New Zealand and China have their own set of air pollution laws and standards, while many
countries do not regulate their emissions at all. While the restrictions differ in the U.S. and the EU,
U.S. law requires that all vehicles sold in the United States must comply with the emissions
regulations set forth by the EPA.
There have been many automotive scandals throughout history. Ford recalled 1.5 million
Pintos in 1978 due to the gas tanks being prone to catching on fire, Chrysler was indicted in 1987
for allowing their executives to drive cars with the odometers disconnected and then selling the cars
as new, and many companies have been found in violation of false gas mileage claims (Hakim &
Tabuchi, 2015). VW is not the first automotive company to use software algorithms to optimize
performance during testing. Long-haul truck engine manufacturers were fined nearly $1 billion in
1998 for a similar offense, optimizing the performance of diesel engines during laboratory testing
with a software algorithm (Hakim & Tabachu, 2015). GM, Ford, and Honda have all used defeat
devices in the past and have been found in violation of the U.S.s emission rules (Beene, 2015).
When General Motors admitted to including emissions defeat devices on 470,000 Cadillac luxury
sedans in 1995, they paid $45 million in fines (Plungis, 2015). In contrast, with VW admitting to

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using admissions defeat devices in 482,000 vehicles in the U.S., they may be fined as much as $18
billion and may have to recall and fix the cars in the U.S. (Plugis, 2015).
Media Views
In the American media, the story regarding the VW defeat device software algorithm has
been highly covered by major news agencies. The situation has been dubbed Dieselgate or the
diesel dupe. The word scandal is used frequently, and other German diesel car manufacturers
have been named in speculation to also being potential offenders, with headlines such as More
German automakers may be afoul of US emission standards (King, 2015). However, a BMW X5
was included in the ICCTs initial testing, and its low emissions are what convinced the team that
their equipment was not broken (Kretchmer, 2015). It is difficult to find an article that lists facts
and numbers, with the situation tending to be oversimplified to terms such as produc[ing] up to 40
times more pollution that allowed (Kollewe, 2015), emphasis mine. Someone would have to dig
much deeper than the big news sources headlines to find a detailed account of the different
emissions limits and to learn more about NOx specifically, a history of the automotive industrys
past infractions, and the political and social circumstances that have led to the development of
unique emissions limits in different regions. In the U.S., where low emissions vehicles such as
hybrids, natural gas vehicles, and electric vehicles are gaining ground on the market as the concern
for the environment and climate change increases, the news that a company who markets its
vehicles as clean diesel was actually emitting pollution in excess of established limits was a major
national headline. Many environmentally conscious consumers said they were enticed into buying
diesels by the companys advertising, which touted the environmental benefits of new diesel
technology. Those alleged benefits convinced many to buy cars they otherwise would not have
considered (Bigelow, 2015). With environmental responsibility on the top of many consumers

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agendas, this news was particularly hard-hitting and was easily sensationalized by the media.
Additionally, with the percentage of diesel cars in the U.S. being so low, and diesel engines
being so strongly associated with foreign car manufacturers, it was easy for the media to villainize
foreign, especially German, car manufacturers. The medias depiction of foreign automotive
manufacturers as potential culprits may help the American car manufacturers to increase sales and
faith in their brands, which is perhaps why so few American media reports specify the history of
automotive scandals, including those from domestic manufacturers. In the past, similar scandals
have not been presented in the same light. One very similar incident occurred in 1995 with
American automobile manufacturer Chrysler incorporating a chip that shut off emissions control
systems while the air-conditioner was being used, to improve the cars performance (Hakim &
Tabuchi, 2015). With this scenario so similar to the current VW software algorithm issue, it might
be surprising that there is scarcely a whimper of the correlation in the tens of thousands of articles
concerning the VW diesel scandal. In fact, Ford, VW, and Chrysler were all involved in emissionsrelated scandals in the early 1970s, with VW and Chrysler both installing devices that shut down the
vehicles pollution control systems. With such a long history of violations, domestic companies
included, there appears to be clear bias in the American medias reporting of the current VW
scandal to underreport the facts, sensationalize the story, and villainize VW while implicating that
other foreign automotive manufacturers, but not domestic manufacturers, may have similar
problems.
Other Views
Aside from the automotive manufacturers, media, and the EPA, one group who is concerned
with this issue is the consumers. VW is a global company, but the primary focus with regards to
this emissions issue are the consumers in the United States, where the defeat devices were

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discovered, and in Germany, as VW is a German brand. A survey through Kelley Blue Book of
1,002 respondents indicated that 64 percent of consumers are aware of the diesel emissions issue,
and of those 64%, 53% showed distrust in Volkswagen and 42% suspect that other automobile
manufacturers are also in violation of EPA emission limits (Kelley Blue Book, 2015). A survey of
2,387 vehicle owners in all 50 states showed that 25% of the respondents thought that the
environmental impact from the VW diesel emissions scandal was equal to or more severe than the
BP oil spill environmental disaster (Autolist, 2016). The Autolist survey showed that American
trust in VW quality, German engineering quality, and in the auto industry itself decreased as a result
of the VW diesel scandal. An Autotrader poll of 914 respondents revealed that 30 percent of
respondents say they would be less likely to consider a diesel vehicle (Kelley Blue Book, 2015).
Meanwhile, a survey of Germans of 1,000 respondents shows that 65% of Germans still
consider Volkswagen's vehicles outstanding and think the current media frenzy is taking things
too far. Many also apparently view the scandal as a passing squall, with 63 percent of respondents
saying they believe the issue will soon disappear (Krok, 2015). A drastically higher number of
respondents in Germany, 91%, think that other companies are also cheating on their dieselemissions tests. A small sampling of Germans were asked to express their views on the scandal.
Overwhelmingly, they expressed that they think the issue is not serious, not specific to VW, and
that it will have no impact on their decision to continue using diesel vehicles. In fact, most even
expressed a distrust of hybrid/electric technology such as the unreliability of the battery. The
coverage in Germany was reported to be neutral, minimal, and full of more speculation than facts
(Vijayenthiran, 2015).
Although none of the surveys performed took into account ethnicity, income, age, education,
etc., it can be assumed that the perception of the seriousness of the violation by VW will be

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strongest among those who have been raised to consider environmental health a strong priority and
who respect the emissions laws as valid for solving a problem rather than a bureaucratic measure.
Interestingly, globally, neither Americans nor Germans rank especially high in living
environmentally sustainable lives. 68% of Germans drink bottled water daily, and Americans
consume more packaged and processed food than people in most other countries (Stone, 2014).
However, because the VW clean diesel vehicles were being driven in Germany by a typical
German consumer base, as diesel cars already dominate half the market, while in the U.S. a large
portion of the consumer base for VW clean diesel are environmentally conscious and bought the
vehicles because of VWs convincing marketing tactics about the environmental friendliness of
clean diesel, the outrage from these particular consumers is bound to be significant. Income,
education, and ethnicity may not play a significant role in determining the response to this issue,
although the very disadvantaged are not likely to feel strongly about the situation, as spending is
less likely to be geared towards environmentally conscious decisions and more towards
affordability.
There are people in both the U.S. and in Germany who feel that the attention given to this
scandal is politically driven. Some have questioned the legitimacy of the emissions limits
themselves and accused the U.S. of establishing these limits to intentionally hinder the diesel
industry in America. America exports most of the diesel fuel it produces, and American car
manufacturers tend to focus on gasoline engines and are working towards innovations in the
hybrid/electrical realm, so the U.S. does not have a motive to encourage diesel vehicles and in fact
may have a motive to do the exact opposite (Domm, 2013). One commenter speculated, Since
Americans cannot make a good diesel, they insist to have such a low NOx level that it blocks almost
anybody (Quora, 2015).

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People disagree on both the criticality and the legitimacy of villainizing VW over this
scandal for a number of reasons, though there is no controversy over whether VW is actually at
faultthey have accepted blame. Some may be loyal to their country, which if American, may lead
them to be suspicious of the German car manufacturers, and if German, may lead them to be
suspicious of the validity of the U.S. emissions standards and the U.S. media bias which is drawing
much attention to the matter and disregarding the U.S. automotive industrys own past of scandals.
People may also disagree based on their own value system. If someone values a stable economy
and a secure workforce more than they do the health of the environment, they are more likely to
support VW and believe this is a setback that will and must be overcome, as a large part of
Germanys workforce and economy depend on it. However, if someone more highly values
environmental concerns, they are more likely to lose confidence in VW and demand that reparations
are made. These groups communicate on the Internet on sites such as Quora.com, where respectful
opinions are given. The comments section of opinion pieces, such as the autoblog.com opinion
piece regarding how Volkswagen should proceed, are often full of comments and opinions from
varying viewpoints (Lang, 2015). These comments sections can be an effective manner for people
to communicate their dissenting viewpoints, since they are typically in direct response to a relative
article. However, more specific automotive forums can present a more central location, such as
tdiclub.com, which is dedicated to discussions on the VW TDI (Turbo Direct Injection Diesel)
engine.
Ethical Perspectives
Multiple ethical frameworks can be applied to the VW diesel scandal situation. In the
Egoism or Self Interest Perspective, presented by Milton Friedman in 1962, it is proposed that
corporations and individuals are obligated to conduct themselves based on their own interests,

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provided it does so without deception or fraud. In this framework, it is not the responsibility of a
company to benefit society as a direct, purposeful goal, when, if playing by the rules for their own
benefit, will tend to benefit society as a side-effect to their success. Clearly, in this ethical
framework, VW failed horribly, tending to its own profit with the assistance of outright fraud to
bypass legislation. They did not stay within the rules of the game, and thus in their quest for profit,
did not promote the benefit of society. This ethical perspective does not cause me to reconsider my
attitudes and assumptions regarding the VW scandal. It is clear to me that the purposeful use of
software to bypass legislation is wrong, though I do not tend to agree with the Egoism or Self
Interest Perspective framework, as I do not believe that a companys profits are the only things it
needs to tend to.
In the Social Group Relativism ethical framework, the expectations of others in our social
group influences our ethical decisions. This framework does not provide a guideline for what is the
right decision, but only what social factors affect a persons decision. For instance, this could
apply to the VW managers who were aware of the software algorithm cheat. Regardless of whether
they considered the algorithm to be the ethical choice, their expectations to uphold confidentiality
and to support management decisions as a member of VW management seem to have driven them
to remain private about the cheat algorithm rather than inform anyone outside of their circle.
Similarly, those who express outrage at the scandal may be pressured by their peers who highly
value corporate honesty and/or environmental health to agree that the situation is intolerable, while
their own perceptions may not yield such a strong result. I suspect that I may be subject to the
Social Group Relativism framework of ethics at times. Most of my peers are very cognizant of the
environmental impact of our lifestyle choices, and whether it was due to this influence, the impact
of the media, or my own existing values, I immediately decided that VW had done a terrible

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offense, and I would not support that company in the future. Once I learned more about the history
of fraud in the automotive industry globally, my harsh judgement directed solely at VW softened,
while I still do not agree that what they did is right.
The Utilitarianism ethical framework describes that decisions should be made based on an
outcome that will provide the greatest good for the greatest number. On first glance, it appears that
VW has failed miserably at making a sound ethical judgment in allowing its cheat software to hit
the market, because this will allow harm to come to the Earths environment and to its inhabitants in
the form of air polluting and by contributing to global warming. However, if the decision makers
truly felt that the impact of additional NOx emissions was inconsequential and that the limits were
arbitrarily set so as to appease other interests, such as political interests, then their decision may be
justified under the Utilitarianism framework. The VW executives may have decided that their
companys success and its benefit to the countrys economy and to the stability of its workforce was
of greater good than complying with arbitrary limits for NOx. If this is the case, then their decision
would be within ethical compliance of the Utilitarianism framework, though if they disregarded the
contributions to the harm in the environment and the potential disruption to jobs due to the
aftermath of their deception, then they were clearly in the wrong, ethically speaking. I still believe
that the decision to incorporate the cheat software was the wrong one, though considering the
dilemma with respect to various ethical frameworks helps to ensure one is looking at the issue from
multiple viewpoints and with as little bias as possible.
Future Challenges
Future challenges that arise from this issue are the management of the excessive pollutants,
the correction of the problem in existing vehicles, the development/incorporation of better
technology to ensure the vehicles are actually within acceptable limits for the marketed regions,

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paying fines and making corrections mandated by law as a result of the infractions, restoring pubic
faith in VW and in the automotive industry, particularly the German/diesel segments, and preparing
for harsh penalties for similar infractions in the future. In the next 5 years, organized efforts to
correct the emissions system in existing vehicles should be addressed. While the installation of a
new system using urea to minimize the NOx emissions may not be economically feasible, a
software algorithm that decreases the existing vehicles performance to bring the emissions limits
within specification should be applied to every vehicle for which this is an option, and the cheat
algorithm should be removed. Once the new performance algorithm is written, it should not be
cost-prohibitive to implement widely. However, the California Air Resources Board (CARM),
admitted that it just might not be possible to fix all of the cheating Volkswagen diesels on the
road due to performance requirements in their onboard diagnostic requirements (Ramsey, 2016).
There may be other automotive companies who are currently incorporating defeat devices that we
are not aware of. While the industry has been rampant with repeated scandals and infractions, the
attention given to this matter and the seriousness of the financial impact is bringing more attention
to it compared to previous scandals. It is likely that other companies who are out of compliance
will be taking immediate action to bring their vehicles into compliance before they are the next
company identified to the public as intentionally circumventing air pollution legislation. All
vehicles for sale should be within compliance for emissions legislation within the next 5 years.
10 years from now, as people move on to new cars, there should be a plan to remove their
affected vehicles from circulation if they have not yet been repaired or bought back. It is likely that
10 years in the future, new purchases will be from the clean energy vehicle segment, such as electric
and natural gas vehicles. As technology around alternative power sources improves, fossil fuelpowered vehicles are likely to decrease steadily in use.

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50 years from now, I expect that the automotive industry will be completely transformed.
With the current introduction of automotive cars, it is possible that in 50 years, people will not even
own their own cars, but rather subscribe to a system of self-driving vehicles that arrive when
needed. With no need to own a personal car, it is likely that vehicles will be standardized due to the
removal of competition and market analysis of key demographics. There will be a high reliance on
software algorithms, and it is important that the industry has the publics trust in order to succeed. I
believe that overall, the problem of automotive companies purposely deceiving the public and
circumventing laws with hardware and software devices will be less of a problem. As long as the
public makes it clear that honesty and integrity is expected from these companies, and as long as
government agencies continue to crack down with significant repercussions for violations,
conformance will be encouraged. If agencies and the public ease up on the penalties and financial
repercussions of non-compliance, however, then I feel that the problem would get worse in a
complacent environment.
The drop in stock price for VW in response to the scandal is one indication that this type of
scandal will not be tolerated by the public in the future. The stock of Volkswagen plunged nearly
30% almost immediately after the news of the Clean Air Act violations, and later dropped even
more, more than 50% below the 52-week high that hit in March [2015] (Monica, 2015).
CNNMoneys Paul R. La Monica predicts that Volkswagen can bounce back from this scandal, just
as GM has after its faulty ignition switch scandal and Toyota did after its faulty gas pedals, and
because of these problems, people actually died. VWs scandal essentially amounts to trying to get
one over on regulators. There are no safety concerns as of yet with its diesel engines (La Monica,
2015). GMs stock is now 20% higher than it was before their recall problems began, and Toyotas
stock recovered from its scandal in less than 2 years (La Monica, 2015). Financial reporter Paul

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Ausic states that VW is going to have to spend a substantial amount to pay fines and make owners
of the companys diesel cars happy (or less unhappy). If the company can do that without going
bankrupt, consumers will come back, but warier about claims of clean diesel engines (2015). Alan
Baum, principal of Baum and Associates, and automotive consulting firm in Michigan, claims that
the future of cars is not in diesel, but in cleaner alternatives such as electric cars. While currently
more expensive than gas or diesel models, as technology improves and costs come down, cleaner
alternatives will be critical when you have to have a car that gets 30 miles per gallon, or, in 10
years, 40 (De Aenlle, 2015).
My Reflection
My personal views on the issue are that it is wrong to implement software that allows a
device to behave in an illegal manner. If the industry finds that the emissions limits are
unreasonable and prohibitive to their financial success, an attempt to revisit the establishment of
such limits should be pursued by industry leaders. I feel that nations should harmonize their limits
and establish a sound scientific basis for established emissions limits. However, if an automaker is
not satisfied with established limits, it should comply with them anyhow. If they cannot meet the
limits legally, they should not market their vehicles in that market. If other technologies can excel
at emissions, performance, and cost, it is natural that they will take market share, and the auto
industry should prepare for changes and to abandon technologies such as diesel if necessary. When
I first learned of the VW scandal, I did not have an understanding of the history and political
implications surrounding the event. While I now understand how the environment in Germany
could have led to those in charge making the decisions they did, I do not feel that this excuses their
poor choices and intentional deceit. The damage done to the environment as a result of this scandal
may not be able to be immediately corrected, but future infractions should not be tolerated, and I

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hope that the attention to this situation by the media and the potentially huge monetary penalties
will help to ensure that automotive industry scandal does not persist.

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