To punish Volkswagen for its emissions scandal, make it build electric cars

You can't cheat on the emissions test of a car that doesn't make emissions. Photograph: John Stillwell/PA

Once the media storm around Volkswagen's emission cheating scandal calms down, the most likely outcome is a massive recall and a huge fine. Neither will achieve a lasting result, nor would they meaningfully contribute to reducing emissions, the goal of the regulation VW broke and covered up. Instead, we have the chance to impose a punishment that will have lasting impact: make Volkswagen build all-electric cars.

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A recall would be ineffective at best. Many VW car owners in the US are unlikely to voluntarily surrender cars that function properly and do not present, at the individual car level, a health risk. It is not certain that a fix can even be implemented. The best-case scenario of a recall is that some of the cars are brought in and have the emissions issue fixed at the expense of reduced gas mileage, thereby increasing greenhouse gas emissions. The worst-case scenario is that VW sends millions of cars to the junkyard. Both outcomes are negatives for the environment.

As for a fine, $10bn seems to be the ballpark figure at this point. Some of it might help fund the Environmental Protection Agency but, if past fines to the financial industry are any indication, the money will mostly be used in areas that have little connection to the original issue. And fines, even really big ones, often fail to deter future misdeeds. Look at Wall Street, where fines have increased in both frequency and dollar amounts without ever reshaping the industry's culture.

Here's a better outcome: the EPA should mandate that Volkswagen exclusively produce electric vehicles within five years for the US market. This would remove the emissions from millions of cars, not only health pollutants like nitrous oxide but also more essentially the other greenhouse gases that threaten our whole planet. The company is well on its way to commercializing electric vehicles, and the $10bn fine could be put to better use by building a battery factory in the US to supply those electric models, creating jobs along the way. Add in an obligation for VW to equip US highways with electric charging stations and we'll have changed the transportation landscape of this country for the better.

If you think this is impossible, look at Tesla. In less than a decade, they went from an unlikely startup to the producer of the world's highest-rated car. The company is currently building a battery gigafactory. All this with zero emissions and zero pollutants. No need to cheat on emissions testing – there is no need for emissions testing at all. This was done with a total expenditure of $3bn. Imagine what $10bn could do.

The automobile industry, like most incumbents in other sectors, has too often been reluctant to embrace real innovation and change. The commitment to reducing pollution and greenhouse gas emissions as well as improving safety has been half-hearted at best. The cars we drive today basically run on the same technology and the same fuel that were used a hundred years ago. Mileage, performance, emission levels and safety have improved, mostly because of increased regulation, but it's still about burning fuel in a combustion engine.

It's time for a much bigger shift. Volkswagen should use its know-how and capital to end all emissions from its vehicles. That would be a fitting punishment – and an opportunity to do lasting social and environmental good.

The author is an investor at Tesla.

Source: To punish Volkswagen for its emissions scandal, make it build electric cars