As soon as Barack Obama won the presidency in 2008, it was predicted by the automative industry that the corporate average fuel-economy standard would rise. After assuming office, Barak Obama directed the U.S. EPA, the National Highway Traffic Safety Administration, and the California Air Resources Board to come up with a joint program for 2012-2017 emission rules.

The new rules raised the fuel-economy standard for passenger cars rather than for light trucks. Although it was concerning issue for all the automakers, General Motors and Toyota were on a safer side as they managed to retain their profit shares from light trucks. Volkswagen was most concerned in the raise as they only sold passenger cars in US market. Since early 2009, General Motors and Toyota had invested huge money on research for hybrid and electric cars. By 2012 GM and Toyota had few electric cars and almost had 4 hybrid cars. On the other hand, Volkswagen never made any investment on research of electric and hybrid cars. When the new rules came into effect, with no major research into hybrids or electric cars, the company had to go with what it had: diesels.

Other manufacturers like BMW, Jeep, Mercedes, and Ram vehicles were able to meet emission limits with the help of a technology called Selective Catalytic Reduction (SCR). It injects liquid urea into diesel exhaust in an additional catalytic converter at specific points, converting NOx into nitrogen and carbon dioxide. Volkswagen could have used the same technology but was expensive as it requires a urea tank, associated plumbing, an additional converter, and other components. Volkswagen hadn’t engineered SCR for any of its volume compact cars, most acutely the high-volume Jetta sedan, as well as the Golf hatchback, and the Beetle.

Volkswagen cars were know as fun to drive cars for years. Their engines produced high torque compared to gasoline engines of similar power, and combined with German-engineered suspension tuning and handling, they gave cars like the diesel Jetta the mantle of affordable sport sedans with high fuel economy.

Volkswagen’s marketing strategy for high volume sales were powerful cars, maximum fuel economy at affordable prices. The company made sure they delivered more in order maintain it. But passing the new and more stringent emission tests likely called for reducing the cars’ strong acceleration and their fuel economy

The company had to decide on either complying with the regulations by fitting SCR to its volume cars, which would raise their price, reduce their performance, and lower their fuel economy or building in software that let the cars pass U.S. emissions tests and then emit more NOx than the permitted limits in real-world use. The ethical decision would have been the first choice but, Volkswagen decided to unethically proceed by altering the engine   performance while testing. The company paid a hefty price in lawsuits, band name and consumer trust