Economy

German Automakers: Dump Diesel Strategy Once And For All

German car makers must change their entire model, and even accept lower short-term profits.

Exhausted?
Exhausted?
Thomas Fromm

-Analysis-

MUNICH — Here's what happens during a typical week these days in the German auto industry: The Munich public prosecutor imposes an 800-million-euro fine against Audi; investigators probe the Opel sites in Rüsselsheim and Kaiserslautern on suspicion of fraud on exhaust measures and nearly 100 000 vehicles are recalled, the Volkswagen group says it wants to sell cars on the internet and prevent driving bans in cities and retrofits by offering the scrapping of old diesel vehicles against exchange premiums of up to 10,000 euros. The diesel drama as the ultimate sales promotion — Chapeau!

Otherwise, everything is business as usual. Former Audi CEO Rupert Stadler is still suspected of fraud linked to bogus emissions policy, alongside corporate patriarch Ferdinand Piëch and former VW boss Martin Winterkorn. One now lives as VW king and retired billionaire in Salzburg, the other in the comfort of his villa in a fine Munich district and is now focused on real estate instead of diesel engines. It is said that Winterkorn has begun to slow down on traveling since the U.S. Justice Department issued a warrant for his arrest.

The German auto industry in autumn 2018 looks rather sad. The heroes have fallen. Once proud industrial icons like VW, Daimler or Audi have long been targets of investigators and lawyers. Driving a diesel car is becoming more and more difficult in cities; customers are frustrated, and the tragic thing about it all is that the industry is about to undergo the biggest upheaval in its history. Car manufacturers need to focus on the future. But they have little time because they are trapped in their own past.

The big corporations are trapped, with the trap triggered on Sept. 18, 2015 — the day that Volkswagen's emissions manipulation was revealed. Such a manipulation from such a reputable company was thought impossible. And yet the "dieselgate" has led to the collapse of an entire industry"s strategy. Now the companies have to think of something new. And fast.

They had counted on their diesel strategy to last forever. Instead of using future technologies such as electric and hybrid powertrains, they used diesel engines on a large scale. Precious years went by, and alternatives were left out. This strategy has come to a halt and today companies are hanging somewhere between faltering diesel dreams and the EU's ever stricter limits on carbon dioxide emissions (CO₂), bans on driving and a range of models largely from the past.

That was an illusion.

There was once a major political goal: By 2020, a million electric cars were supposed to speed along German roads. It seems hardly possible now: In the first half of 2018, only 17,000 electric cars were allowed. VW CEO Herbert Diess warns that tens of thousands of jobs in the car industry are at stake, because of the EU's strict CO₂ limits. Worker Interests versus Environmental Protection — an old debate.

It sounds like a potential threat for a whole country. But what Diess did not say is that the industry has spent too long believing they could continue to set the rules of the game in the future. That was an illusion. Strict limits for internal combustion engines are part of the solution, not the problem.

The big automakers are now changing their fleets. VW plans big for the coming years, and BMW had already begun building electric cars years ago. The question is not only whether there are enough charging stations for these vehicles and where the electricity comes from, but whether the companies really want to sell these cars, instead of diesel and gasoline models.

Charging stations for electric cars in Brohtal, Germany — Photo: Thomas Frey/DPA via ZUMA

After all, the transition years to electro-mobility will be meager for most. The electrification of the fleets costs billions, profits and margins of the success-spoiled diesel sellers will first sink. So are the corporations ready for lower profits?

Sergio Marchionne, the late Fiat boss, said a few years ago about his electric Fiat 500: "I hope you don't buy it." Every electric car sold is a loss to the company. If the manufacturers want to get out of the diesel trap, they have to sell electric cars, as many as possible. In the future, a car salesman has to ask himself how much CO₂ he has sold during the week — and how many emission-free vehicles. The sales culture of an entire industry has to evolve.

To comply with the CO₂ limits for their car fleets, the diesel vehicles had been firmly scheduled to achieve the climate goals. Diesel cars have a lower consumption and emit less CO₂. The fact that they blow out a lot of poisonous nitrogen oxides only played a subordinate role for the industry. The balance sheets of the corporations became more and more dependent on diesel sales each year. Diesel became the business model.

A car had to rattle and roar, and smoke.

Car dealerships in the world celebrated "clean diesel." In purely linguistic terms, this was a perfidious marketing campaign: "Clean Diesel" sounded like something ecologically valuable and viable. In American commercials, VW presented a lady holding her white scarf in front of the exhaust of her diesel car to show her friends how clean her car is. If the engineers had invested their energy, time, and research billions in other projects in good time, the entire industry would probably have been spared. But there was no room for alternatives in the old world.

The year before the diesel scandal, VW Patriarch Ferdinand Piëch said he had "no place in his garage for electric cars." A car had to rattle and roar, and smoke. Otherwise it was not a car. There was a lot of arrogance in the game from the old guard who did not want to accept new rules of the game. There was probably also the worry of not being able to compete in the new world. They were hoping to somehow survive in the future with the technologies of the past. Now that diesel is breaking down as an alternative and people are switching to gasoline, panic is spreading throughout the industry.

The self-pity of some car manufacturers is out of place from companies that have been making billions in profits: The diesel era has filled the vaults, and now that money is now urgently needed to get the cars of the future on the road.

One possible model may come from Porsche. In the future, Porsche intends to focus increasingly on hybrid technology and electromobility, investing billions of euros in the coming years. That's the only way out: Put everything into the technologies of the future, and don't pour any more time or money into a technology that has no future.

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Green

Ecological Angst In India, A Mining Dumpsite As Neighbor

Local villagers in western India have been forced to live with a mining waste site on the edge of town. What happens when you wake up one day and the giant mound of industrial waste has imploded?

The mining dumpsite is situated just outside of the Badi village in the coastal state of Gujarat

Sukanya Shantha

BADI — Last week, when the men and women from the Bharwad community in this small village in western India stepped out for their daily work to herd livestock, they were greeted with a strange sight.

The 20-meter-high small hill that had formed at the open-cast mining dumpsite had suddenly sunk. Unsure of the reason behind the sudden caving-in, they immediately informed other villagers. In no time, word had traveled far, even drawing the attention of environment specialists and activists from outside town.

This mining dumpsite situated less than 500 meters outside of the Badi village in the coastal state of Gujarat has been a matter of serious concern ever since the Gujarat Power Corporation Limited began lignite mining work here in early 2017. The power plant is run by the Power Gujarat State Electricity Corporation Limited, which was previously known as the Bhavnagar Energy Company Ltd.

Vasudev Gohil, a 43-year-old resident of Badi village says that though the dumping site is technically situated outside the village, locals must pass the area on a daily basis.


"We are constantly on tenterhooks and looking for danger signs," he says. Indeed, their state of alert is how the sudden change in the shape of the dumpsite was noticed in the first place.

Can you trust environmental officials?

For someone visiting the place for the first time, the changes may not stand out. "But we have lived all our lives here, we know every little detail of this village. And when a 150-meter-long stretch cave-in by over 25-30 feet, the change can't be overlooked," Gohil adds.

This is not the first time that the dumpsite has worried local residents. Last November, a large part of the flattened part of the dumpsite had developed deep cracks and several flat areas had suddenly got elevated. While the officials had attributed this significant elevation to the high pressure of water in the upper strata of soil in the region, environment experts had pointed to seismic activities. The change is evident even today, nearly a year since it happened.

It could have sunk because of the rain.

After the recent incident, when the villagers raised an alarm and sent a written complaint to the regional Gujarat Pollution Control Board, an official visit to the site was arranged, along with the district administration and the mining department.

The regional pollution board officer Bhavnagar, A.G. Oza, insists the changes "aren't worrisome" and attributes it to the weather.

"The area received heavy rain this time. It is possible that the soil could have sunk in because of the rain," he tells The Wire. The Board, he says, along with the mining department, is now trying to assess if the caving-in had any impact on the ground surface.

"We visited the site as soon as a complaint was made. Samples have already been sent to the laboratory and we will have a clear idea only once the reports are made available," Oza adds.

Women from the Surkha village have to travel several kilometers to find potable water

Sukanya Shantha/The Wire

A questionable claim

That the dumpsite had sunk in was noticeable for at least three days between October 1 and 3, but Rohit Prajapati of an environmental watchdog group Paryavaran Suraksha Samiti, noted that it was not the first time.

"This is the third time in four years that something so strange is happening. It is a disaster in the making and the authorities ought to examine the root cause of the problem," Prajapati says, adding that the department has repeatedly failed to properly address the issue.

He also contests the GPCB's claim that excess rain could lead to something so drastic. "Then why was similar impact not seen on other dumping sites in the region? One cannot arrive at conclusions for geological changes without a deeper study of them," he says. "It can have deadly implications."

Living in pollution

The villagers have also accused the GPCB of overlooking their complaint of water pollution which has rendered a large part of the land, most importantly, the gauchar or grazing land, useless.

"In the absence of a wall or a barrier, the pollutant has freely mixed with the water bodies here and has slowly started polluting both our soil and water," complains 23- year-old Nikul Kantharia.

He says ever since the mining project took off in the region, he, like most other villagers has been forced to take his livestock farther away to graze. "Nothing grows on the grazing land anymore and the grass closer to the dumpsite makes our cattle ill," Kantharia claims.

The mining work should have been stopped long ago

Prajapati and Bharat Jambucha, a well-known environmental activist and proponent of organic farming from the region, both point to blatant violations of environmental laws in the execution of mining work, with at least 12 violations cited by local officials. "But nothing happened after that. Mining work has continued without any hassles," Jambucha says. Among some glaring violations include the absence of a boundary wall around the dumping site and proper disposal of mining effluents.

The mining work has also continued without a most basic requirement – effluent treatment plant and sewage treatment plant at the mining site, Prajapati points out. "The mining work should have been stopped long ago. And the company should have been levied a heavy fine. But no such thing happened," he adds.

In some villages, the groundwater level has depleted over the past few years and villagers attribute it to the mining project. Women from Surkha village travel several kilometers outside for potable water. "This is new. Until five years ago, we had some water in the village and did not have to lug water every day," says Shilaben Kantharia.

The mine has affected the landscape around the villages

Sukanya Shantha/The Wire

Resisting lignite mining

The lignite mining project has a long history of resistance. Agricultural land, along with grazing land were acquired from the cluster of 12 adjoining villages in the coastal Ghogha taluka between 1994 and 1997. The locals estimate that villagers here lost anything between 40-100% of their land to the project. "We were paid a standard Rs 40,000 per bigha," Narendra, a local photographer, says.

The money, Narendra says, felt decent in 1994 but for those who had been dependent on this land, the years to come proved very challenging. "Several villagers have now taken a small patch of land in the neighboring villages on lease and are cultivating cotton and groundnut there," Narendra says.

They were dependent on others' land for work.

Bharat Jambucha says things get further complicated for the communities which were historically landless. "Most families belonging to the Dalit or other marginalized populations in the region never owned any land. They were dependent on others' land for work. Once villagers lost their land to the project, the landless were pushed out of the village," he adds. His organization, Prakrutik Kheti Juth, has been at the forefront, fighting for the rights of the villages affected in the lignite mining project.

In 2017, when the mining project finally took off, villagers from across 12 villages protested. The demonstration was disrupted after police used force and beat many protesters. More than 350 of them were booked for rioting.

The villagers, however, did not give up. Protests and hunger strikes have continued from time to time. A few villagers even sent a letter to the President of India threatening that they would commit suicide if the government did not return their land.

"We let them have our land for over 20 years," says Gohil.

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