Wednesday, June 08, 2016

[Car, Rant] Sin Diesel

I've been casually following the Volkswagen Diesel gate developments and I'm fascinated by how it could happen from an organizational standpoint. The naive narrative is that these greedy corporate interests happily polluted the world for profit. That's good enough if your goal is to work up the warm glow of indignation in your chest, but it's not reality. I strongly suspect that in reality, no person in the decision chain that led to this thought they were doing anything wrong.

My experience in a management in a big multi-national corporation is that nobody has any malice or duplicity in intent, it's just that systems and incentives are mis-designed to allow or encourage it. When I first read about Dieselgate, I wrote, but did not publish, this as an expected analysis: A much more likely possibility is that everyone thought that within their purview they were doing what they should. Worker A is preparing a checklist for a car that's going into testing. Worker B gives worker a list of setting or equipment that he knows will pass inspection because he got the list from Worker C who didn't realize what he was submitting was not how shipping cars would be set because Worker D sent him an ambiguous email that read "These settings will pass the test but the final settings are not known" and Worker C assumed passing the test was the goal while Worker D meant for him to wait for the final specs before initiating the test. The Worker D got transferred and Worker E who took his place didn't realize anything was amiss and just thought the test was passed and years later heads are rolling and VW is fighting for its life.

That was way off. As it turns out, algorithms were created with the specific intent to pass emissions tests knowing full well they would never be used in the real world. A whole lot of people had to know of this and approve. What possible excuse could there be other than an outright company-wide endorsement of fraud? Again, given my first hand knowledge of corporate functioning, I would observe that if your conclusion leads to a bunch of avuncular old men sitting around a table exploring ways to lie, cheat, and steal to bolster next quarter's profit, then you have been watching too much bad TV.

It looks to me like the cheating the test was really just a baby step over the line from accepted practice. Here's a long, but telling description of the testing environment from Kapersky:
The biggest issue of emissions tests is that they are always performed with some standard model, like the so-called NEDC (New European Driving Cycle). This model consists of a few pretty short acceleration-braking cycles and one long cycle with higher speed, which represent city and highway traffic respectively. In real life nobody drives like this, and definitely nobody drives exactly like this.

But for emissions measurement they use this very model, thus engineers at car companies can do tricks to improve measurement results. Why do they do it? Plain and simple: it's way cheaper than to do real improvements. If an enterprise could do something in a cheaper way, it definitely would prefer this way to any other as the bottom line is important to company performance.

"Trickery on that tests is very common," says Lange. "What tricks people are doing to drive down the emissions? For example they blow up the tires by 3 bars more than you could actually use them on the road. The bottom of the tire looks like this, so that means that you only have that very small portion of the tire that still touches the ground, your resistance gets reduced."

"They put diesel into the oil, because diesel is lighter than the oil, so friction gets reduced. They take off the mirror on a passenger side, because that is not legally required to exist. So resistance gets away with it. They tape close all the openings of the vehicle. Obviously, when the wind goes over it, it goes much smoother once you have everything taped. All of these things are either Ok, or they kind of borderline grey area. And they do this. This is how actually emissions are tested."

The results of this trickery are very simple: measured values have pretty much nothing to do with what is going on in the real world. The whole auto industry knows this very well. Perhaps every car manufacturer uses software tweaks, just like Volkswagen did. As a matter of fact, 15 years ago BMW was actually caught on using a similar trick with software of its motorcycle.
So this stuff is known to occur even by the testers. With this as the accepted state of emissions testing it's not surprising (note: did not say "it's OK") that somebody pushed the envelope to the breaking point.

There is a also the effect of historical reputation. VW cars have dismally lagged the market in quality both in cars and service for many years. There is little goodwill to draw on. On the other hand, imagine if this happened to Toyota, makers of our beloved Camry and Priii. Toyota has been devoted to giving us cars that last a lifetime and beyond for a reasonable price as long as I have been alive. If I heard of this scandal at Toyota I would immediately assume it was an honest mistake and feel confident that they would do everything in their power to sort things out. In contrast, I would assume VW would deflect, defend, dodge, duck, dive, dip, and dodge (as they in fact did).

Heads have rolled at VW and more may yet. They are not exactly playing the PR game very well. Their stock price has crashed and sales in the U.S. have tanked (although not so much elsewhere). Enormous fines will be levied and it's entirely possible VW will be struggling to survive when all is said and done.

But should we not also hold the government agencies, who created such environments to get away unscathed. How did these tests get to the point where they were so divorced from the real world that there was an acceptable level of cheating. What was the reasoning behind not simply buying production models and testing them as is? That would seem a lot more logical. The system allowed automakers to game it, and even tacitly encouraged them. The cynic in me asks, Who profits? Well, the auto companies do obviously, from being able to save money by gaming the system. But to allow such a system to be set up in the first place, I can't escape the notion that lobbyists greased the correct palms to shepherd this convoluted and corruptible system into place.

Now look at me, doing exactly what I chastised others for doing: Assuming there was a cadre of greedy cartoon villains at the heart of the matter. The fact is there is nothing surprising in any of this. It is the nature of institutions, either multi-national corporations or government agencies, that they veer off into dubious activity now and then. They get caught, punished, and either correct themselves or disappear.

So thinking it through, it's hard to wax indignant about this. In fact, if I was in the market, I would be shopping for a VW. I have to figure there are some serious discounts available while they try to dig themselves out. Maybe they'll pull it of. The difference between VW and the government agencies is that VW will adapt or die, the government agencies have no reason to change.