Research firm predicts VW scandal will end era of diesel cars, good for Tesla

VW has admitted that up to 11 million vehicles it made could be misreporting their true emission levels. The markets crashed on hearing the news, wiping significant value off the company.

VW stock has added 6% as of today. However, some analysts predict that the bounce back is short lived. And in the long-term, the VW crisis may fatally wound the whole diesel car industry and put electric carmakers like Tesla at advantage.

City firm Bernstein has predicted that the Volkswagen crisis will end the era of diesel cars in Europe.

Analyst Max Warburton argues that European regulators had already begun to backtrack after promoting diesel in the 1990s. This week’s revelations will spur them on.

Future emissions standards in Europe were already set to tighten the rules on NOx and particulate emissions and even though diesel could theoretically hit these standards, the costs of compliance (due to additional hardware and tech) was going to make diesel uncompetitive in small cars with low price points.

Warburton points out that this is a great news for petrol and electric vehicles.

The move against VW is going to act as a catalyst to accelerate the drop in diesel market share in Europe and suspend it in the US. In fact, regulators will now be much more conservative about what they permit and much tougher real world tests may prove either too difficult – or too expensive – for diesel to meet.

Meanwhile, the Guardian reports that the German government is dragged into the scandal.

Green Party suggests that Angela Merkel’s government were aware that carmakers were using illicit techniques to fool emissions testers this summer.