EPA Notifies Volkswagen of Added Emissions Violations
VW, Audi, Porsche 2014-16 diesel models used defeat devices during testing, regulator says
Volkswagen AG installed defeat devices aimed at manipulating U.S. emissions tests on thousands of additional diesel-powered vehicles, the Environmental Protection Agency said, widening a scandal at the German auto maker that has prompted widespread investigations and cost the chief executive his job.
Volkswagen AG installed defeat devices aimed at manipulating U.S. emissions tests on thousands of additional diesel-powered vehicles, the Environmental Protection Agency said, widening a scandal at the German auto maker that has prompted widespread investigations and cost the chief executive his job.
Newer Volkswagen, Audi and Porsche vehicles with model years between 2014 and 2016 contain the devices, the EPA said Monday, allowing nitrogen-oxide emissions up to nine times the agency’s standard. The agency sent Volkswagen a notice of violation pertaining to the vehicles, all equipped with 3.0 liter diesel engines sold since the 2014 model year, the EPA said.
The EPA’s notice, the second to Volkswagen since the agency revealed its initial findings in September, covers roughly 10,000 diesel passenger cars already sold in the U.S. since the 2014 model year. There are an unknown number of 2016 models covered by the notice, the EPA said.
The EPA and California Air Resources Board have both opened probes into the newly-disclosed allegations. California regulators on Sept. 25 sent a letter to all auto makers alerting them that they would be screening for possible defeat devices. The EPA, along with regulators in California and Canada, since then tested additional diesel-powered cars and sport-utility vehicles, leading to Monday’s allegations.
The September notice from the EPA to Volkswagen affected nearly a half million cars sold since 2008. The defeat devices detect when vehicles are undergoing tests, showing them to emit less than they do in normal driving conditions. Like the vehicles referenced in September, the EPA said Volkswagen’s defeat devices on the models detailed on Monday violated the federal Clean Air Act.
“VW has once again failed its obligation to comply with the law that protects clean air for all Americans,” said Cynthia Giles, the EPA’s associate administrator of enforcement and compliance assurance, in a call with reporters.
Volkswagen had no immediate comment. It remained unclear whether Volkswagen planned to halt sales of the affected models as it did with the 482,000 diesel-powered vehicles that were revealed in September to contain defeat devices. EPA officials declined to comment on Volkswagen’s plans or their discussions with the auto maker.
The EPA and California Air Resources Board have both opened probes into the newly-disclosed allegations. California regulators on Sept. 25 sent a letter to all auto makers alerting them that they would be screening for possible defeat devices. The EPA, along with regulators in California and Canada, since then tested additional diesel-powered cars and sport-utility vehicles, leading to Monday’s allegations.
Regulators said they uncovered the additional defeat devices after they started testing additional vehicles in the wake of the earlier discoveries.
The vehicles affected by the newly-disclosed violations are the 2014 VW Touareg; 2015 Porsche Cayenne; and 2016 Audi A6 Quattro, A7 Quattro, A8, A8L, and Q5.
*DJ Affected Vehicles: 2014 VW Touareg; 2015 Porsche Cayenne; 2016 Audi A6 Quattro, A7 Quattro, A8, A8L, and Q5
*DJ VW Violations on 2014-16 Diesel Models Uncovered in EPA Testing -- EPA
*DJ VW, Porsche, Audi Diesel Vehicles with 3.0 Liter Engines Have Defeat Devices -- EPA
*DJ EPA, Calif. Regulators Both Open Probes on New VW Violations -- EPA
*DJ VW Emissions Violations Cover 10,000 Vehicles -- EPA
*DJ VW, Audi Porsche Excess Nitrogen Oxide Emissions Up to Nine Times EPA Standard -- EPA
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In reaction to strong earnings/guidance: CEVA +11.3%, CLX +6%, EL +5%, DO +4.6%, CAH +3.1%, SYY +0.8%
M&A news: DYAX +33.7% (to be acquired by Shire (SHPG) for $37.30/share), CTCT +21.1% (Constant Contact to be acquired by Endurance International Group (EIGI) for $32/share), CAG +4.8% (to acquire ConAgra Foods' (CAG) private brands operations for $2.7 billion; expects dilution in year one, and accretion thereafter; preannounces Q3)
Other news: UNXL +50.5% (reports receiving a pre-production order, from a major PC OEM for a 10 inch tablet product), ACAD +9.1% (announces FDA Priority Review of NUPLAZID (Pimavanserin) New Drug Application for Parkinson's Disease Psychosis), SORL +5.2% (confirms non-binding proposal to be acquired for $2.84 per share), VRX +4.5% (continuing to rebound after recent decline), NEO +3.4% (General Electric (GE) discloses 7.7% active stake in 13D filing ), FIT +2.9% (favorable commentary on Friday's Mad Money), WYNN +2.6% (Macau Oct gaming revs released), BLDP +2.6% (signs agreement with Tangshan Railway Vehicle Co for development of a new fuel cell module; valued at $3 mln), MGM +2.4% (Macau Oct gaming revs released), PFE +0.7% (Pfizer (PFE) and AGN plan to secure deal this month, according to Bloomberg )
Analyst comments: WEN +3.7% (upgraded to Outperform at RBC Capital Mkts), RAX +2.5% (upgraded to Buy from Neutral at BofA/Merrill ), MGM +2.4% (upgraded to Buy from Neutral at UBS), ABBV +2.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley), RBS +2.1% (upgraded to Outperform from Neutral at Exane BNP Paribas), KEY +1.8% (upgraded to Outperform from Mkt Perform at Keefe Bruyette
)
In reaction to strong earnings/guidance: CEVA +11.3%, CLX +6%, EL +5%, DO +4.6%, CAH +3.1%, SYY +0.8%
M&A news: DYAX +33.7% (to be acquired by Shire (SHPG) for $37.30/share), CTCT +21.1% (Constant Contact to be acquired by Endurance International Group (EIGI) for $32/share), CAG +4.8% (to acquire ConAgra Foods' (CAG) private brands operations for $2.7 billion; expects dilution in year one, and accretion thereafter; preannounces Q3)
Other news: UNXL +50.5% (reports receiving a pre-production order, from a major PC OEM for a 10 inch tablet product), ACAD +9.1% (announces FDA Priority Review of NUPLAZID (Pimavanserin) New Drug Application for Parkinson's Disease Psychosis), SORL +5.2% (confirms non-binding proposal to be acquired for $2.84 per share), VRX +4.5% (continuing to rebound after recent decline), NEO +3.4% (General Electric (GE) discloses 7.7% active stake in 13D filing ), FIT +2.9% (favorable commentary on Friday's Mad Money), WYNN +2.6% (Macau Oct gaming revs released), BLDP +2.6% (signs agreement with Tangshan Railway Vehicle Co for development of a new fuel cell module; valued at $3 mln), MGM +2.4% (Macau Oct gaming revs released), PFE +0.7% (Pfizer (PFE) and AGN plan to secure deal this month, according to Bloomberg )
Analyst comments: WEN +3.7% (upgraded to Outperform at RBC Capital Mkts), RAX +2.5% (upgraded to Buy from Neutral at BofA/Merrill ), MGM +2.4% (upgraded to Buy from Neutral at UBS), ABBV +2.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley), RBS +2.1% (upgraded to Outperform from Neutral at Exane BNP Paribas), KEY +1.8% (upgraded to Outperform from Mkt Perform at Keefe Bruyette
)
Gapping down
In reaction to disappointing earnings/guidance: EIGI -17.5%, CCJ -9.5%, GRBK -6.2%, L -5.4%, CRNT -2.3%, V -2.2%, THLD -1.6%
M&A news: PMCS -1.4% (receives proposal from Microsemi; reiterates commitment to Skyworks (SWKS) transaction; proposal from Microsemi (MSCC) is not a superior proposal), MY -0.9% (receives non-binding 'going private' offer for $2.51 per ADS)
Select metals/mining stocks trading lower: RIO -1.6%, BBL -1.1%, BHP -1.1%, HL -1%, FCX -0.3%
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Analyst comments: JMEI -3.2% (downgraded to Neutral from Buy at Goldman), ANET -1.9% (downgraded to Sell from Neutral at Goldman), ATVI -0.9% (downgraded to Neutral from Buy at BofA/Merrill), KATE -0.8% (downgraded to Neutral at Monness Crespi & Hardt), STX -0.5% (downgraded to Hold at Maxim Group
)
In reaction to disappointing earnings/guidance: EIGI -17.5%, CCJ -9.5%, GRBK -6.2%, L -5.4%, CRNT -2.3%, V -2.2%, THLD -1.6%
M&A news: PMCS -1.4% (receives proposal from Microsemi; reiterates commitment to Skyworks (SWKS) transaction; proposal from Microsemi (MSCC) is not a superior proposal), MY -0.9% (receives non-binding 'going private' offer for $2.51 per ADS)
Select metals/mining stocks trading lower: RIO -1.6%, BBL -1.1%, BHP -1.1%, HL -1%, FCX -0.3%
Other news: MNKD -5.4% (cont weakness), CMG -3.9% (shut down 43 restaurants in Washington/Oregon in relation to an E. coli outbreak), KMI -2.9% (Barron's profiles cautious view on Kinder Morgan), SZYM -2.7% (terminates operating agreement with Archer-Daniels (ADM)), VRTX -2.5% (discloses in 10-Q filing that it received a subpoena from the U.S. DoJ related to co's marketed medecines), JD -2.2% (Shanghai down nearly 2% overnight)
Analyst comments: JMEI -3.2% (downgraded to Neutral from Buy at Goldman), ANET -1.9% (downgraded to Sell from Neutral at Goldman), ATVI -0.9% (downgraded to Neutral from Buy at BofA/Merrill), KATE -0.8% (downgraded to Neutral at Monness Crespi & Hardt), STX -0.5% (downgraded to Hold at Maxim Group
)
Morgan Stanley Raised ABBV to Overweight from Equal Weight, price target: $73
- price target raised to $73 from $62
- Firm raises their 2016-20 EPS CAGR to 15% from 8%
- Firm notes that management projected a mnuch stronger outlook than firm modeled
Early premarket gappers
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Gapping down: CMG -4.9%, MNKD -4.2%, JMEI -3.2%, SDRL -2.9%, KMI -2.4%, JD -2.2%, RIO -2%, BBL -1.4%, MY -1.4%, BP -1%, FCX -0.9%, MA -0.8%