It was in September 2015 that many Volkswagen manufactured cars which were sold in the United States were found to have a "defeat device". These devices and software were designed to detect when the car was operating under controlled conditions, which meant it was being tested. That then caused the device to lower the car's power and performance to cheat emissions test.
The discovery was made by the US Environmental Protection Agency that these cars actually produce more than 40 times the legal amount of Nitrogen Oxide Pollutants for motor vehicles in the US. The VW Jetta, VW Bettle, Audi A3, Audi A8, VW Passat and Porsche Cayenne are just some of the affected vehicles with said device. (Complete list of vehicles available at the EPA website.)
According to BBC, this caused panic in other parts of the world as countries such as France, the UK, Italy, Canada, South Korea, and Germany have all opened investigations into VW in their markets. This incident has forced VW to recall 8.5 million cars from Europe and 500,000 cars from the US. The company has also pleaded guilty to breaking certain US laws and entered into a hefty settlement agreement.
It also came into light that certain VW executives were aware of the fact that their vehicles were able to cheat the emissions tests even before it was discovered by the EPA. One of those executives was Oliver Schmidt, the one in charge of the US environmental regulatory compliance office for VW from 2012 to March 2015.
While the final agreement is still awaiting approval, the draft included the payment of $4.3 billion in criminal and civil fines. They are also required to appoint an independent third-party monitor to inspect their products for the next three years. This resulted in the company having its first quarterly profit loss in the last 15 years and their share prices to drop significantly.