Investors have punished Volkswagen too severely over its emissions cheating scandal, the chair of the board that blew the whistle said this morning.
VW’s stock dropped close to 40 percent after the California Air resources Board found that the automaker had installed devices to cheat on emissions tests. The company faces billions in penalties and costs to fix the problem in 11 million cars currently on the road.
Mary Nichols, CARB’s chairman, has no sympathy for VW, but she told the Observer and other U.S. and German reporters in San Francisco today that the market reaction has been overly severe.
“The stock market has a life of its own,” she said. VW, she noted, has the money to make the required fixes.
That’s “an expensive proposition,” she said, but it’s a small percentage of the company’s assets.
“We believe they are capable to make good on what they should have done in the first place.”
Asked who knew what when at Volkswagen and whether it’s believable that it was the work only of mid-level software engineers, Nichols demurred.
“I don’t want to make news on that,” she said.
Nichols told the story of a breakfast she attended about six years ago at which then-California Gov. Arnold Schwarzenegger hosted German Chancellor Angela Merkel.
“The first issue she brought up was, ‘You’re NOX standards are too strict, they are hurting our German diesels.’
“She was there as a spokesman for the German auto industry. It seemed like a telling moment. I was quite taken aback.”
Nichols called the VW scandal “shocking” and said it was “a defining moment” for the EPA, Europe and the California Air Resources Board.
The CARB, with a staff of 1,300, is important because it is the only state agency with authority to create tougher environmental standards than the federal government, Nichols said. The federal government in turn often follows its lead.
But its rules are effective “only if they are enforceable and enforced.” Nichols has every intention of doing so, and anyone who values clean air should be glad she will.