Volkswagen AG might have stayed clear of the diesel cheating that led to the worst crisis in its history had the company not pulled out of a promising deal with Daimler AG more than a decade ago.
Led by former Chief Executive Officer Bernd Pischetsrieder, Volkswagen examined strategic options for tie-ups and cooperation projects in 2005, a time when the company was undergoing painful restructuring.
The deliberations included senior-level talks on a possible deal with its German rival that would have given it access to Daimler’s diesel technology and could have even included cross-shareholdings of about 10 percent, according to people who were involved in the discussions.
But Volkswagen abruptly called off talks that year, instead forging ahead with its own diesel systems which proved incapable of meeting strict U.S. emissions standards. Faced with an aggressive management push to finally achieve a turnaround in the U.S., the maker of Golf and Jetta cars resorted to secretly rigging its engines until regulators blew open the scheme in late 2015, hammering the once-proud German manufacturer with about 20.5 billion euros ($21.8 billion) in clean-up costs and leaving its reputation in tatters.
Talks to advance the top-secret project, dubbed “Table Mountain,” were canceled by Volkswagen before a key meeting near Braunschweig in summer 2005, said the people, who asked not to be identified as the plan was strictly confidential. That’s several months before the first indications that Volkswagen engineers were working on the defeat device that eventually rigged 11 million vehicles worldwide to cheat on emissions tests.
The scheme unraveled in the summer of 2015 when U.S. authorities pressed Volkswagen to explain why on-the-road emissions of smog-inducing nitrogen oxides were as much as 40 times over the legal limit in cars that met standards in test labs. In addition to fines and costs for fixing or buying back the tainted vehicles, at least six company officials face charges, including former board member of the namesake brand Heinz-Jakob Neusser. Volkswagen also pleaded guilty to conspiracy to defraud the U.S. government and obstruction of justice.
“Volkswagen deeply regrets the behavior that gave rise to the diesel crisis,” Chief Executive Officer Matthias Mueller said after reaching the deal with the U.S. Department of Justice. “Since all of this came to light, we have worked tirelessly to make things right.”
Read more of the original article at Bloomberg.
