The European Investment Bank (EIB) has apparently decided to cut off Volkswagen from any type of funding for research activities owing to the alleged emissions cheating scandal. This move is likely to prove disastrous for Volkswagen, considering its present vulnerable market situation.
For the record, EIB is EU’s long-term non-profit institution that provides sound investments to organizations with an aim to transform the economy of the continent. EIB, in 2009, had granted a loan of EUR 400 million to VW for developing advanced technology, which it suspects, were used to develop technology for cheating in the emission tests. Reports claim that since 1990, Volkswagen has received about EUR 5 billion from the EIB, out of which, more than 30% was invested in the development of eco-friendly cars. Based on the investigation undertaken by EU’s antifraud wing OLAF on VW’s strategy regarding the development of fuel efficient & pollutant free diesel engine as well as expenditure structure of the 400 million euros since November 2015, EIB has levied fraud charges against the company.
EU’s antifraud agency has been in touch with the German authorities to effectuate the necessary action against company’s officials, as OLAF has an authorization to solely investigate, and not to prosecute the fraudsters within the EU companies. Reports claim that German prosecutors have been making several investigations on VW’s former top executives charged with the case of fraud.
Volkswagen has admitted that their vehicles were indeed emitting harmful nitrogen oxides, but in September 2015, the company installed software devices in 11 million diesel engine cars across the globe to reduce the emission of harmful gases. Subject to the allegation filed by the EIB, VW denied any wrongdoing with the loan received from the EIB, and has claimed that it used all the funds for the designated purpose. In defense, VW also added that it has been investing some resources into the development of automated electric vehicles.
The President of the European Investment Bank Werner Hoyer has stated that the bank has been verifying the investigation profiled by OLAF regarding the Dieselgate scandal. He has also stated that in the light of recent events, the EIB has scrapped all the business tie-ups with Volkswagen and bank won’t consider any loan proposal from this automaker until the end of the investigation. Though this decision is temporary, the research contribution of VW in the automotive market is likely to suffer a major hit pertaining to shortage of funds. In addition, the reputation of the company has gone down the drain, in the wake of the ongoing electric vehicle project. It now remains to be seen what the investigation results bring forth for Volkswagen and whether they will help the company regain its business position.
Sunil develops content for Market Size Forecasters. A Post graduate mechanical design engineer by qualification, he worked as an intern at the defense lab for one year in the engine design and development department before switching his professional genre. Following his technical writing skills, he ...