Volkswagen identifies 1,950 faulty cars in China, could have EU loans recalled

On Monday, Volkswagen announced that it would recall 1,950 imported diesel vehicles in China—specifically 1,946 Tiguans and four Passat B6s.

In response, China’s air quality control authority (the General Administration of Quality Supervision, Inspection and Quarantine or AQSIQ) said it was “highly concerned” about the diesel cars’ defeat device mechanism. The organization would "launch an investigation into VW vehicles,” according to Reuters.

The knee-jerk reaction is to scoff at China posturing against Volkswagen for selling fewer than 2,000 polluting cars. The country has some of the most intense air pollution in the world, after all, so Volkswagen’s Tiguans are a drop in a smoggy bucket.

But in recent years China has moved to address air pollution. This public health disaster is among the country's leading causes of death and is “sowing the seeds of social unrest,” as Reuters put it. Last year, China pushed forward a new set of gas and diesel emissions regulations aimed at passenger vehicles and trucks, sending automakers scrambling to meet the demands of the largest market for vehicles in the world. That Volkswagen sold imported cars skirting those rules is certainly a PR problem, even if those cars didn’t contribute a whole lot to the smog layer in China.

The 1,950 cars that Volkswagen will recall were all imports—Volkswagens made by Volkswagen Group China, a separate division of the umbrella company, were not affected by the defeat device according to the company. "Technical solutions are being developed and will be presented to responsible authorities,” Volkswagen Group said in a statement. "After the internal evaluation, Volkswagen is now working full speed on a technical solution."

Fortune also notes that China’s auto market is much less diesel-focused than Europe’s, where diesels were marketed as a clean alternative to gas-powered cars. "Because China has been more focused on cutting overall levels of pollution rather than just carbon dioxide emissions, it has preferred to promote electric vehicles as an environmentally friendly alternative to gasoline," the paper suggests.

Speaking of Europe, this weekend the president of the European Union’s public lending bank told a German newspaper that the European Investment Bank (EIB) could recall €1.8 billion ($2.04 billion) in outstanding loans that the bank lent to Volkswagen Group to develop low-emissions vehicles. The bank president said that EIB would be conducting “very thorough investigations” into how Volkswagen used the funds, which were lent to Volkswagen as part of a program to address climate change.

Finally in Volkswagen news, it seems the scandal is already getting its own movie based on a book that hasn't been written yet. Deadline reports that The New York Times' Jack Ewing sold a four-page book proposal to publisher Norton for "mid-six figures." The book proposal was then acquired by Paramount Pictures and Appian Way, a production company owned by Leonardo DiCaprio. As Deadline describes it:

The book will reveal how the “more, better, faster” dictum that prevails in 21^st century boardrooms can lead down a dark path. The story follows the events of the scandal in which the company placed illegal software in their Clean Diesel cars that could tell when a car was being tested for fuel emissions and would turn on the emissions controls to cheat the test and meet EPA standards.