Pollution cheating scandal sends VW stock down almost 20%

VW shares lost over 20 percent on the DAX index in Frankfurt on Monday, the biggest fall in one day for seven years. Between 2009 and 2015, their cars were programmed with software that only turned on the full pollution controls when the vehicles were being tested to determine their emissions.

“This results in cars that meet emissions standards in the laboratory or testing station, but during normal operation, emit nitrogen oxides, or NOx, at up to 40 times the standard”, the EPA said in a statement. Order books for at least five models, including the VW Golf and Passat, are to be closed, as they feature complex algorithms that enable them to considerably reduce emissions during laboratory and station tests. The loss followed news on Friday morning that the automaker had installed “defeat devices” on many of its most recent diesel auto models.

“Now all of this, of course, hitting just days before the CEO’s contract was to be renewed through 2018”, Shery Ahn of Bloomberg said.

$37,500 Fine per vehicle that the German automaker could face in the U.S.

Chief executive Marin Winterkorn said he was “deeply sorry” after findings by America’s Environmental Protection Agency (EPA) that it had cheated clean-air rules.

In Germany, the fallout ranges from calls for the German government to investigate the matter to new tensions in Volkswagen’s leadership ranks, which had been emerging from a power struggle between Winterkorn and former chairman Ferdinand Piech, who resigned almost five months ago.

The automaker could also face accusations of false marketing and consumer lawsuits over its promotion of the vehicles under the “Clean Diesel” moniker, in addition to the likely cost of a large recall. VW has ordered its own external investigation into the issue.

While other carmakers have paid smaller fines for USA environmental breaches – past year Hyundai and Kia jointly paid $300 million in civil penalties for over-stating gas mileage, the scale of the Volkswagen scandal has led to analyst warnings that its penalties could go further.

We have reached out to Volkswagen and the DOJ for comment.

“This is a notice of non-compliance that needs to be addressed”, VW said.

“Regulators will look at this more closely now”, Bailey said.

Volkswagen Group said it will be cooperating fully with the EPA and the California Air Resource Board in their investigations.