Letter from Elon Musk: Volkswagen’s Cheating Scandal Punishment Should Be to Make Zero-Emission Cars

Elon Musk Weighs in On Volkswagen Cheating Scandal
Elon Musk, CEO of Tesla Motors, is weighing in on the Volkswagen emissions-cheating scandal. Rashid Umar Abbasi/Reuters

Elon Musk, the CEO of electric car company Tesla Motors, signed a letter sent to California emissions regulators on Thursday, urging them to abandon the plan to force Volkswagen to fix their emissions-cheating cars and instead require that the company put the resources it would take to accomplish that into transitioning to a zero-emissions car company.

“A giant sum of money [will] be wasted in attempting to fix cars that cannot all be fixed, and where the fix may be worse than the problem if the cars are crushed well before the end of their useful lives,” the letter reads. “Instead, direct VW to accelerate greatly its rollout of zero-emission vehicles, which by their very nature, have zero emissions and thus present zero opportunities for cheating, and also do not require any enforcement dollars to verify.”

Former eBay President Jeff Skoll, Sierra Club Executive Director Mike Brune, clean energy firm Energy Innovation CEO Hal Harvey, and 41 other clean energy executives and environmental activists also signed the letter to the California Air Resources Board (CARB).

CARB announced last month it would require Volkswagen to recall the cars with emissions test cheating software installed. In the EU, Volkswagen intends to begin fixing affected cars in 2016.

But, the letter argues, it would make much more environmental and economic sense if California required VW to use the money it would otherwise spend fixing the cars to instead accelerate “the rollout of zero emissions vehicles” which would “result in a 10 for one or greater reduction in pollutant emissions as compared to the pollution associated with the diesel fleet.” The letter also suggests California require VW to invest the same dollar amount it would normally be fined by the state into research and development, and new manufacturing plants to build its new fleet of zero-emissions cars.

The time for trying to fix diesel is past, the letter argues. “In the simplest terms, we have reached the point of de miminis returns in extracting performance from a gallon of diesel while reducing pollutants, at least at reasonable cost. Unsurprisingly, and despite having the greatest research and development program in diesel engines, VW had to cheat to meet current European and U.S. standard,” it reads. “Meeting future tighter diesel standards will prove even more fruitless.”

CARB declined to directly address the Musk letter. “Our focus has and will continue to be cleaning the air and advancing the cleanest vehicle and fuel technologies,” CARB spokesman Dave Clegern said in an email regarding the letter.

Read the full letter to regulators below:

An Open Letter to California Air Resources Board Chairman Mary Nichols

The VW emissions scandal is mainly the result of physics meeting fiction. In the simplest terms, we have reached the point of de miminis returns in extracting performance from a gallon of diesel while reducing pollutants, at least at reasonable cost. Unsurprisingly, and despite having the greatest research and development program in diesel engines, VW had to cheat to meet current European and U.S. standards. Meeting future tighter diesel standards will prove even more fruitless.

For a significant fraction of the non-compliant diesel cars already in the hands of drivers, there is no real solution. Drivers won’t come in for a fix that compromises performance. Further, solutions which result in net greater CO2 emissions, a regulated pollutant, are inappropriate for CARB to endorse. Retrofitting urea tank systems to small cars is costly and impractical. Some cars may be fixed, but many won’t and will be crushed before they are fixed.

A giant sum of money thus will be wasted in attempting to fix cars that cannot all be fixed, and where the fix may be worse than the problem if the cars are crushed well before the end of their useful lives. We, the undersigned, instead encourage the CARB to show leadership in directing VW to “cure the air, not the cars” and reap multiples of what damage has been caused while strongly advancing California’s interests in transitioning to zero-emission vehicles.

The solution we propose for VW and the CARB is to, in a legally enforceable form:

1. Release VW from its obligation to fix diesel cars already on the road in California, which represent an insignificant portion of total vehicles emissions in the state, and which cars do not, individually, present any emissions-related risk to their owners or occupants

2. Instead, direct VW to accelerate greatly its rollout of zero-emission vehicles, which by their very nature, have zero emissions and thus present zero opportunities for cheating, and also do not require any enforcement dollars to verify

3. Require that this acceleration of the rollout of zero emissions vehicles by VW result in a 10 for 1 or greater reduction in pollutant emissions as compared to the pollution associated with the diesel fleet cheating, and achieve this over the next 5 years

4. Require that VW invest in new manufacturing plants and/or research and development, in the amounts that they otherwise would have been fined, and do so in California to the extent that California would have been allocated its share of the fines

5. Allow VW some flexibility in the execution and timing of this plan by allowing it to be implemented via zero-emission vehicle credits.

In contrast to the punishments and recalls being considered, this proposal would be a real win for California emissions, a big win for California jobs, and a historic action to help derail climate change.

The bottleneck to the greater availability of zero emissions vehicles is the availability of batteries. There is an urgent need to build more battery factories to increase battery supply, and this proposal would ensure that large battery plant and related investments, with their ensuing local jobs, would be made in the U.S. by VW.

A satisfactory way to fix all the diesel cars does not likely exist, so this solution sidesteps the great injury and uncertainty that imposing an ineffective fix would place on individual diesel car owners. A drawn out and partial failure of the process will only exacerbate the public’s lack of trust in the industry and its regulators. By explicit design, this proposal would achieve, in contrast, a minimum of a 10X reduction in pollutant emissions as compared to a complete fix.

There is a precedent for this type of resolution. In the industry-wide 1990 diesel truck cheating scandal, the EPA chose not to require an interim recall but instead moved up the deadline for tougher standards to make up the difference. This proposal does the same for VW and ties the solution to a transition to zero emissions vehicles.

We strongly urge CARB to consider this proposal in resolving the VW cheating scandal.

Ion Yadigaroglu, Partner, Capricorn Investment Group

Elon Musk, CEO, Tesla and SpaceX

Jeff Skoll, CEO, Jeff Skoll Group

Dipender Saluja, Partner, Capricorn Investment Group

Carl Pope, Inside Straight Strategies

Chamath Palihapitiya, CEO, Social Capital

Ira Ehrenpreis, Partner, DBL Partners

Hal Harvey, CEO, Energy Innovation

Antonio Gracias, CEO, Valor Equity Partners

Lyndon Rive, CEO, SolarCity

Michael Brune, Executive Director, Sierra Club

Cole Frates, Renewable Resources Group

Ari Swiller, Renewable Resources Group

Lawrence Bender, Producer, An Inconvenient Truth

Reuben Munger, Partner, Vision Ridge

Jigar Shah, President, Generate Capital Angel

Jason Calacanis, Launch Fund Partner

Gregory Manuel, MNL Partners

Adam Wolfensohn, Partner, Encourage Capital

Jason Scott, Partner, Encourage Capital

Martin Roscheisen, CEO, Diamond Foundry

Steve Westly, Former California State Controller

Jules Kortenhorst, CEO, Rocky Mountain Institute

Steven Dietz, Partner, Upfront Ventures

Kevin Parker, CEO, Sustainable Insight Capital

Anja Manuel, Partner, RiceHadleyGates

Larry Lunt, CEO, Armonia

Mindy Lubber, President, Ceres

Tom Darden, Partner, Cherokee Fund

Panos Ninios, Partner, True Green Capital

Jesse Fink, Chairman, MissionPoint

Matt Breidert, Senior Portfolio Manager, Ecofin

Suhail Rizvi, CEO, Rizvi Traverse

Jeffrey Tannenbaum, Chairman, sPower

Rob Davenport, Managing Partner, Brightpath Capital

Stuart Davidson, Chairman, Sonen

Laurence Levi, Partner, VO2 Partners

Rob Day, Partner, Black Coral Capital

Dan Fuller, CIO, Fuller Smith

Nicholas Eisenberger, Partner, Pure Energy

Marc Stuart, CEO, Allotrope Partners

Justin Kamine, Kamine Development

Peter R. Stein, Managing Director, Lyme Timber

Bruce Kahn, PM, Sustainable Insight

Raúl Pomares, Capital Managing Director, Sonen

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