This is the real cause of the VW cheating scandal

Volkswagen’s emissions scandal affects 11 million cars worldwide, with 500,000 of those in the US.

Now, the investigation into the cause of the scandal is centered around two high-level engineers, the Wall Street Journal’s William Boston reported.

Buts that’s just the end of the story.

Buried in Boston’s article about engineers Ulrich Hackenberg and Wolfgang Hatz are clues to the true source of VW’s crisis.

The scandal’s roots go well beyond alleged malfeasance on the part of a pair of engineers. A series of personal and professional rivalries that go back to the early days of the VW’s diesel strategy are largely to blame.

A decade ago, the VW brand was run by Wolfgang Bernhard, who was recently hired away from rival Daimler-Benz by then-Volkswagen Group CEO Bernd Pischetsrieder.

According to Boston, Bernhard was seen as an outsider and faced stiff opposition from certain VW corporate insiders — such as Audi’s then-CEO, Martin Winterkorn.

The two butted heads during the planning phase of VW now-infamous EA189 2.0 litre TDI engine, which is at the heart of the current crisis.

At the time, with more stringent diesel emissions standards looming, Bernhard licensed clean diesel technology called “BlueTec” for his former employers at Mercedes-Benz. Winterkorn and his team at Audi submitted plans for a new diesel engine developed in-house that would become the EA189.

Sources within the company told Boston that many of VW engineers felt that the company’s native technology was not good enough to return sufficiently low emissions.

In December, 2006, VW Group chairman Ferdinand Piech ousted Pischetsrieder from his spot as CEO. With Pischetsrieder gone, Bernhard was soon shown the door, as well, even though his team already had a functioning prototype engine, Boston reported.

When the dust cleared, Winterkorn was installed as VW Group’s CEO. He immediately appointed the duo of Hackenberg and Hatz in 2007 to oversee the development of the EA189 engine that entered production in 2008.

According to Boston, it is during this period that the cheat software was installed on the EA189 while Bernhard’s rival engine, using the Mercedes-sourced technology, was scrapped.

Hackenberg — currently Audi’s chief engineer — and Hatz , the developer of Porsche Le Mans racing engines, are two the most accomplished men in the automotive industry. Hackenberg is credited with playing a pivotal role in the development of VW Group’s modular manufacturing program, while Hatz helped engineer Porsche’s victorious return to the gruelling 24 Hours of LeMans endurance sports car race.

In the decade since the power struggle that put the emissions cheating engines into production, Volkswagen has grown to the become the biggest car company in the world. With Winterkorn at the helm, the EA189 became one of the company’s mainstay engines, selling around the world in cars across VW’s family of brands.

Ironically, the man who made Winterkorn VW Group’s CEO also tried to oust him earlier this year. Piech — a member of the Porsche family who controls major share in the company — attempted to engineer Winterkorn’s departure from the company. Winterkorn survived the coup, and Piech left the company’s board of supervisors.

Now, Winterkorn is out as well. And his innovative clean diesel engine has been proven to be a fraud. The VW Groups’s supervisory board named Porsche CEO Matthias Müller as Winterkorn’s successor.

In the weeks since Volkswagen admitted to the EPA that he company cheated, the company have lost more than $US30 billion in stock market value

According to Reuters, analysts predict the total cost in fines and lawsuits resulting from the scandal could reach $US40 billion dollars. But the amount of damage done to the company’s brand equity could amount to billions more in losses.

VW Group announced this week that a recall of the 11 million cars affected will commence in January and be completed by the end of 2016.

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