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VW Executive Had a Pivotal Role As Car Maker Struggled with Emissions by DANNY HAKIM and JACK EWINGDEC The New York Times 12/21/15 Page | 1 VW Executive Had a Pivotal Role as Car Maker Struggled With Emissions By DANNY HAKIM and JACK EWINGDEC. 21, 2015 Photo Wolfgang Hatz at the 2013 Geneva Car Show. Mr. Hatz, head of transmission and engine development at the Volkswagen Group, was suspended in September. CreditDenis Balibouse/Reuters LONDON — A few months after taking over engine development at Volkswagen in 2007, Wolfgang Hatz faced a potential challenge that he considered insurmountable. It was the State of California. Regulators there were seeking to limit global warming gases released by automobiles, a step never directly taken before in the United States. “We can do quite a bit and we will do a bit, but ‘impossible’ we cannot do,” Mr. Hatz said during a trip to San Francisco that year, where he http://www.nytimes.com/2015/12/22/business/international/vw‐executive‐had‐a‐pivotal‐role‐as‐car‐ maker‐struggled‐with‐emissions.html?_r=0 The New York Times 12/21/15 Page | 2 took part in a technology demonstration hosted byVolkswagen. “From my point of view, the C.A.R.B. is not realistic,” he said of the California Air Resources Board, in remarks filmed by an auto website during the event. Of the proposed regulation, he said, “I see it as nearly impossible for us.” In September of this year, Volkswagen, then the world’s largest automaker, admitted to installing software designed to cheat on emissions tests, setting off one of the largest corporate scandals in the industry’s history. The role of Mr. Hatz, one of the first employees suspended by the company when the crisis broke, is considered a pivotal one in myriad investigations into Volkswagen’s decision-making by prosecutors in the United States, Germany and elsewhere. Mr. Hatz, 56, was one of a coterie of executives from VW’s Audi brand brought over to run the parent company in 2007 by Martin Winterkorn, who was Audi’s chief until he took over as VW’s chief executive that year. One of Mr. Winterkorn’s first moves was to name Mr. Hatz, the head of engines and transmission development at Audi, to do the same job for the entire company. Mr. Hatz’s elevation came during a bitter internal clash about what kind of emissions technology Volkswagen should use to ensure that the company’s diesels would comply with tougher American emissions standards — a clash that ultimately led the company to cheat on emissions tests. While Mr. Hatz was an advocate for diesels, he has also spoken out in the past about the struggle to meet regulations in the American market, according to a review of his statements and public records. Mr. Hatz declined to comment through a spokesman at Porsche, where he has served on the management board as chief of research and development. http://www.nytimes.com/2015/12/22/business/international/vw‐executive‐had‐a‐pivotal‐role‐as‐car‐ maker‐struggled‐with‐emissions.html?_r=0 The New York Times 12/21/15 Page | 3 A blunt-spoken engineer with a love of motor sports, Mr. Hatz was born in Baden-Baden and has had an itinerant career, working at BMW, Fiat and General Motors, as well as at Porsche in a stint in the early 1990s. Asked inone interview what his favorite car was, he cited a 1990s Porsche 911 Carrera, “because I developed it.” As Volkswagen’s engine chief, he pushed to expand use of diesels. “It is very clear to me that diesel is the only way we will meet future emissions requirements,” he once told a trade publication. But he also struggled with a common challenge for automakers: how to make cars alluring and peppy while meeting ever-tougher regulations. He mused about dropping muscular diesel engines into sporty cars like theAudi R8 coupe — “My dream is an R8 with a diesel engine,” he said at the Los Angeles auto show in 2007. At the same time, he had to bring engines to market that could meet a complex suite of toughening regulations in the United States, particularly in California and other states like New York that opt to follow California’s more stringent air quality rules. http://www.nytimes.com/2015/12/22/business/international/vw‐executive‐had‐a‐pivotal‐role‐as‐car‐ maker‐struggled‐with‐emissions.html?_r=0 The New York Times 12/21/15 Page | 4 Cars leaving the Volkswagen plant in Wolfsburg, Germany, by rail. As Volkswagen’s engine chief, Wolfgang Hatz promoted the use of diesel engines but spoke publicly about the challenges of conforming to regulations in the American market.CreditJohn Macdougall/Agence France-Presse — Getty Images “We will do what is possible, but we should keep the pleasure” and keep cars “fun to drive,” he said in remarks in October 2007 at the California technology demonstration. His remarks were filmed byDrivingtheNation.com, an auto website. “It’s not just about transport; our business, it’s also about pleasure,” he said. While Mr. Hatz was referring to carbon dioxide regulations, and Volkswagen’s cheating scandal is centered on smog-forming pollutants, managing both kinds of emissions presents an interlocking puzzle for automakers. At times, Mr. Hatz could sound defeatist. “Perhaps we have just small Korean and Japanese cars in this country,” he said. “We have to be realistic.” Continue reading the main story GRAPHIC How Volkswagen Got Away With Diesel Deception Volkswagen has admitted that millions of its diesel cars worldwide were equipped with software that was used to cheat on emissions tests. The company is now grappling with the fallout. http://www.nytimes.com/2015/12/22/business/international/vw‐executive‐had‐a‐pivotal‐role‐as‐car‐ maker‐struggled‐with‐emissions.html?_r=0 The New York Times 12/21/15 Page | 5 OPEN GRAPHIC And he was dismissive of the prospects for the big Detroit automakers. “I cannot see a way with their program that they can fulfill these regulations,” he said. “There’s no way.” At the time, California regulators, along with regulators in Washington, already had rules in place for emissions of nitrogen oxides and other smog-forming pollutants that were the toughest in the world, and California was also proposing to regulate greenhouse gas emissions from cars. While diesels have better fuel economy and, by extension, lower emissions of global warming gases, they have higher emissions of nitrogen oxides and other smog-forming pollutants that require special treatment systems. The company was plunged into an internal struggle about how to proceed. Wolfgang Bernhard, a former Daimler executive who ran the Volkswagen brand, had championed a technology-sharing agreement with Mercedes-Benz and BMW to jointly develop a system using urea, which neutralizes nitrogen oxides. Publicly, Mr. Hatz supported the technology, which Mercedes markets as Bluetec. http://www.nytimes.com/2015/12/22/business/international/vw‐executive‐had‐a‐pivotal‐role‐as‐car‐ maker‐struggled‐with‐emissions.html?_r=0 The New York Times 12/21/15 Page | 6 VOLKSWAGEN TIMELINE VW’s engine-rigging scheme is said to have begun in 2005. Sept. 18 The E.P.A. orders VW torecall nearly a half-million cars, saying the automaker illegally installed software in its diesel-power cars to trick emissions tests. Sept. 22 VW says that 11 million of its diesel cars were equipped with cheating software. That was more than 20 times the number previously disclosed. Sept. 25 VW names Matthias Müller, the head of the company’s Porsche unit, as chief executive. He replacesMartin Winterkorn, who resigned. Nov. 2 The E.P.A. discovers cheating software on more cars than previously disclosed and, for the first time, also finds the illegal software in a Porsche model. Nov. 3 VW says it understated emissions of gas-powered cars in Europe, expanding the focus of the crisis beyond its diesel engines. Nov. 25 VW describes simple repairsto bring its diesel cars in line with European standards, though not necessarily the stricter American standards. Dec. 10 The chairman of VW, presented the results so far of an internal inquiry, said that the decision by employees to cheat on emissions tests was made more than a decade ago. “Bluetec technology allows us to demonstrate Audi’s commitment to always being at the very forefront of diesel technology,” he said http://www.nytimes.com/2015/12/22/business/international/vw‐executive‐had‐a‐pivotal‐role‐as‐car‐ maker‐struggled‐with‐emissions.html?_r=0 The New York Times 12/21/15 Page | 7 in remarks at the Detroit auto show at the beginning of 2007. But internal friction within the company was already building. Mr. Bernhard unexpectedly did not attend that auto show, and soon resigned. Behind the scenes, Mr. Hatz was part of a faction at the company that supported using a less expensive system that did not require urea, according to two Volkswagen managers who were in a position to witness the clashes. The managers requested anonymity because they did not want to jeopardize their relationships with Volkswagen. Mr. Hatz’s viewpoint won out and the technology-sharing arrangement was soon scrapped. Though he was the executive ultimately responsible for engine development, it remains unclear if Mr. Hatz or executives above him were aware of or directed the cheating that took place. The central role of Mr. Hatz in the scandal raises questions about what Volkswagen’s former chief executive, Mr. Winterkorn, and its current chief, Matthias Müller, themselves knew or should have known. But both are detail-oriented engineers who worked closely with Mr. Hatz for years, first at Audi and then at its parent company, Volkswagen.
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