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Red Bull says VW deal in F1 now 'up in smoke'

The Volkswagen diesel scandal will likely have long-term repercussions, reverberating across the industry potentially for years to come – the likes of which we're only beginning to discover. And that could include Formula One. Now if you're thinking that VW doesn't compete in F1, you're right. Even between all of its various brands, the group has little history in post-war grand prix racing. But if was getting close. As we reported last week, the German auto giant and the Red Bull Racing team were nearing an agreement that would (or would have) seen the former take over the latter. The deal was said to include VW developing a new power unit (as the combined turbo engine and electric motor are referred to in the sport) and acquiring the multiple championship-winning team, with the energy drink company that now owns it transitioning back to a more traditional sponsorship role. It remained to be seen, though, just which of its many brands VW would choose to promote through the new program. Team principal Christian Horner, however, now says that the deal has "seemed to go up in smoke." That doesn't mean that it's off the table entirely and indefinitely, but it would follow logically that between the scandal it's currently facing, the ensuing change in leadership, and drop in stock value, the board in Wolfsburg has other problems to focus on and devote its resources. While ostensibly a logical move for Volkswagen, that would leave Red Bull in a difficult position. The Renault partnership that once led to utter domination with four back-to-back world championships has since fallen dramatically off pace. Although it impressively held on last season to come second in the championship with three race wins, it hasn't won a race yet this season – and heading into this weekend's Japanese Grand Prix, stood fourth in the standings... its worst position since 2008. "With the way the regulations are, unless you have a Mercedes or Ferrari power unit it is quite simply impossible to compete," said Horner. "And if we are not able to compete, then you have to question what is the validity of remaining in F1." If the Volkswagen deal does indeed fall through, the team will likely need to buy its power units from another supplier – with its chief rivals as the only likely candidates. Related Video:

VW CEO under fire after emissions scandal, stock slide

Pressure piled on the head of Volkswagen on Monday in the wake of an emissions-testing scandal that's seen around 15 billion euros ($16.9 billion) wiped off the company's market value. Following revelations that the German carmaker had rigged US emissions tests for about 500,000 diesel cars, VW CEO Martin Winterkorn apologized Sunday for the fact that his company had "broken the trust of our customers and the public." But saying sorry wasn't enough for investors as they digested the financial and reputational implications of the scandal on the world's biggest carmaker by sales – in mid-afternoon trading in Frankfurt, Volkswagen's share price was down a stunning 17.8 percent at a near three-year low of 132.15 euros. Earlier it had tumbled by more than 20 percent. In the wake of Friday's revelations from the US's Environmental Protection Agency, VW has already halted sales of some vehicles in the US and pledged to cooperate with regulators in an investigation that could, in theory, see the company fined up to $18 billion. Industry analysts said the VW CEO faces difficult questions in the coming days, particularly when the company's board is scheduled to meet Friday. "At the moment, I'd be surprised if Winterkorn can ride this out." - Christian Stadler "At the moment, I'd be surprised if Winterkorn can ride this out, but in Germany there's often a slightly slower process in these matters," said Christian Stadler, a professor of strategic management at Warwick Business School who researches the car industry. Stadler said that if VW were a US company, then the CEO would have gone more or less immediately. In essence, Volkswagen stands accused of skirting the US's clean air rules. The EPA said VW used a device programmed to detect when the cars are undergoing official emissions testing. The software device then turns off the emissions controls during normal driving situations, allowing the cars to emit more than the legal limit of pollutants. Guido Reinking, a German auto expert, said that for a company to engage in such blatant trickery the company's top executives would have to be informed. Winterkorn, an engineer by training, led research and development across the VW group from 2007. He became chairman of the management board the same year. "It's almost impossible to imagine that he didn't know about this special way of programming the engine," Reinking told German television station n-tv.

VW air rule violation allegations 'stunning,' $18B fine unlikely

The big automotive news today was the US federal allegations that VW quietly and illegally installed software on approximately 482,000 diesel vehicles sold in the United States so that they would not return substandard results on government emissions tests. To say the least, this is potentially a very big deal. You can read the details of the government's allegations here. The problem seems to be with the NOx trap. Sam Abuelsamid, a former AutoblogGreen editor who is now a senior research analyst at Navigant Research's Transportation Efficiencies program, told me that there were some hints that VW's diesel emissions strategy had issues a while back. The vehicles affected by today's announcement are all equipped with the 2-liter, 4-cylinder TDI, he said. They all have the lean NOx (nitrogen oxides) trap, whereas all other current modern diesels use urea to treat NOx emissions. "When VW launched those vehicles, I went to the TDI launch program in Santa Monica and asked them if they were going to put the diesel engine into the Tiguan because that would be an ideal application," he said. "They said no, because it would be too heavy. Turns out, the NOx trap was enough to meet the emissions standards in the smaller cars, but not the Tiguan. That seems to be where the problem is, in the NOx trap. All the other big VW and Audi diesels, they use urea, just like BMW and Mercedes do." Abuelsamid added that, in California, to do an emissions test, testers don't stick a probe up the exhaust, as you would suspect. Instead, they just do a visual test to make sure nothing was tampered with and then plug a scanner into the OBD-II port to read the codes. The news today basically says that the cars were programmed to send out false codes, giving readings that testers are looking for instead of what's actually going on. "That's the background, as far as I know at this point," he said. This could be "a black eye on the auto industry." - John O'Dell Speaking at the AltCar Expo in Santa Monica just hours after the news first broke this morning, Edmunds.com's John O'Dell said the Fed's allegations were "stunning." The idea that VW might have gamed the system, he said, "underscores how important EPA clean air numbers are, that a company would allegedly stoop to this to try and meet them. Obviously, people are paying attention to that sort of thing.