Over the weekend, the United States Environmental Protection Agency (EPA) and California Air Resources Board (CARB) revealed that Volkswagen's US arm had installed special software on some of its diesel vehicles to cheat its way past the country's emissions test.
Speaking to Autoblog, former automotive journalist Sam Abuelsamid said that in California, emissions testers don't directly measure tailpipe emissions, rather they check a vehicle for signs of visual tampering and then plug a device into the car's OBD-II port to read the car's internal codes.
Cynthia Giles, an EPA enforcement officer, told reporters that companies can face civil penalties of up to US$37,500 ($52,000) for each vehicle that's in breach of federal clean air regulations. Volkswagen is also liable for the cost of bringing all affected vehicles into compliance.
Given that there are around 482,000 Volkswagen and Audi models fitted with the 2.0-litre turbo-diesel motor in question, the Volkswagen Group could be fined up US$18 billion ($25 billion) if all these vehicles were found to be not up to the legally mandated standard.
In a statement issued overnight, Martin Winterkorn, Volkswagen's CEO, said: "The Board of Management at Volkswagen AG takes these findings very seriously. I personally am deeply sorry that we have broken the trust of our customers and the public. We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly, and completely establish all of the facts of this case. Volkswagen has ordered an external investigation of this matter."
At the time of writing, the company's share price has dropped by around 19 percent from 162.20 euros ($255) before the scandal broke to 131.90 euros ($207), and wiping off around 14.4 billion euros ($22.6 billion) from the company's market value.