The Electric-Vehicle Cheating Scandal

It’s hard to think of a worse environmental scandal in recent years than Volkswagen’s 2015 diesel-emissions cheating. The German automaker was rightly pursued by regulators, enforcement agencies and class-action lawyers.

The scandal ended up costing Volkswagen an estimated $33 billion in fines and financial settlements—and revealed that diesel-emissions cheating was endemic. In 2020 Daimler
AG made a $1.5 billion settlement over emissions cheating in Mercedes-Benz diesel vehicles. (One of us helped secure that settlement.) Last year engine maker Cummins agreed to pay $1.7 billion to settle claims that it skirted diesel-emissions standards.

In all of these cases, regulators punished carmakers that had cut corners and misled the public. But when it comes to electric cars, the government has a cheating scandal of its own. That scandal, grabbing far fewer headlines, is buried deep in the Federal Register—on page 36,987 of volume 65.

When carmakers test gasoline-powered vehicles for compliance with the Transportation Department’s fuel-efficiency rules, they must use real values measured in a laboratory. By contrast, under an Energy Department rule, carmakers can arbitrarily multiply the efficiency of electric cars by 6.67. This means that although a 2022 Tesla
Model Y tests at the equivalent of about 65 miles per gallon in a laboratory (roughly the same as a hybrid), it is counted as having an absurdly high compliance value of 430 mpg. That number has no basis in reality or law.

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