Germany is going through one of its sunniest years on record, but the same cannot be said of the fortunes of Volkswagen AG. Just as the auto major is looking to restructure its management board and make amends to its tarnished image after the Dieselgate scandal, it seems to have discovered new skeletons in its closet.
A German magazine Wirtschaftswoche reported that the VW group might have to recall as many as 124,000 electric and hybrid cars citing the presence of poisonous cadmium in its charger component. The line of cars under the radar would also include notable subsidiaries of the VW group - Audi and Porsche.
Following the report, VW has confirmed that it is in discussion with the German Federal Motor Transport Authority, Kraftfahrtbundesamt (KBA) over the situation and has mentioned that it would recall the cars if need be. “A corresponding recall order by the KBA is currently in clarification,” said a spokesperson from the VW group.
The heavy metal cadmium is carcinogenic, meaning exposure to it could cause cancer. Thus, its usage is widely prohibited in the auto industry making this situation a bit dire. Volkswagen has mentioned that charging devices within the car models under question each contain 0.0008 grams of cadmium. Then again, Volkswagen has pointed out that the chargers are well insulated making sure that the users would not be exposed to cadmium during the car’s lifetime.
As most of the electric and hybrid cars manufactured by the VW group over the last six years come with the chargers under scrutiny, the count has now swelled to include 124,000 cars. Volkswagen has also alleged that it never got wind of the cadmium content in the charger as its supplier never mentioned it on the material data. "Volkswagen has stopped the series production and the delivery of the corresponding vehicles immediately, replaced the affected component by that of another supplier and resumed production," said the spokesperson.
Even in the scenario where the cars are recalled, disposing the chargers safely would be another nightmare. News from the Wirtschaftswoche suggests that the KBA is mulling at the prospects, as there is palpable fear of damage to health and the environment with regard to cadmium waste disposal.
The cadmium occurrence joins a long list of problems that VW remains mired in. Herbert Diess, its new CEO has had to contend with the ghost of dieselgate, while also with the issues surrounding the new exhaust gas test standard called Worldwide Harmonized Light-Duty Vehicles Test Procedure (WLTP).
The WLTP is a standard for determining the level of CO2 emissions and pollutants emanating from the exhausts of light-duty vehicles, a test which is seen as a setback for Volkswagen's production queue. The company has stated that production of 250,000 cars from VW and all its subsidiary brands would be delayed as their engines have not passed the test till date.
The now discharged Audi CEO Rupert Stadler is still under the police probe as he is suspected to have influenced witnesses in the Dieselgate scandal - a emissions horror story that cost VW $15 billion in a buyback program in the U.S., as it took back nearly 475,000 cars that were non-compliant with the standards. Last month, VW was again fined by a German court to the tune of $1.2 billion for its role in the emissions scandal - the highest ever fine imposed on a company in German history.
All this has come to bite it in its bottom line. Analysts have predicted that VW would be spending billions more over this year to clear the WLTP guidelines, as 250,000 cars cannot be manufactured on schedule and this would put a dent on its profits moving into the next quarter. Thus far, a lot of the problems seem to stem from the extensive model inventory that VW has, albeit under different subsidiaries. Now is probably the time for VW to contemplate on its path forward, and look into reducing its diversity to avert complexities that arise due to it.
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