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23/09/2015 11:43 BST | Updated 24/09/2015 08:59 BST

Volkswagen's 'Defeat Devices' Explained: This Is How VW Covered Up Emissions Results

By the end of yesterday's trading Volkswagen's shares had dropped almost 20 per cent, wiping a staggering €26bn from the company's value.

Add to that the €6.5bn that the company had set aside to initially deal with the crisis and then finally the potential €18bn in fines that the US Environmental Protection Agency can slap on top and you can start to get a picture of what this scandal could do to the company.

vw cars

CEO Martin Winterkorn has revealed on Wednesday that he would be stepping down from the company.

A potential loss of €50bn is an almost incomprehensible amount, and while the final cost will remain to be seen this all asks the question: How did Volkswagen do it?

The emissions scandal focuses around one piece of software, a 'defeat device' that can fake emissions results during testing and has apparently made Volkswagen's US diesel cars appear to be far more environmentally friendly than they really are.

What actually is a defeat device and how were Volkswagen able to fool US regulators with over half a million potential vehicles?

So what has Volkswagen done?

The US Environmental Protection Agency claims that Volkswagen installed an illegal piece of software in its diesel cars that would allow the vehicles to appear far more environmentally friendly during testing than they would in the real world.

Called a 'defeat device' this piece of software changes the way the engine behaves, massively reducing the amount of harmful emissions being produced by the car.

How does a 'defeat device' work?

Modern diesel cars use a fluid called urea that's then pumped into the exhaust system which in turn reduces the amount of nitrogen oxide that's released into the atmosphere.

A 'defeat device' is a piece of software that can detect when the car is undergoing emissions testing at which point it will start pumping more urea into the system.

car exhaust

A sensor is placed inside the exhaust which then measures the car as it 'drives'.

The problem is that it's not sustainable. Under normal driving conditions the fluid would run out extremely quickly.

For short periods of time though such as say, in a laboratory, the system can make the car appear to be far more environmentally friendly than it actually is.

That sounds highly illegal?

You would be right, it absolutely is.

The accusation is that a car company has been mis-selling vehicles that are far more harmful to the environment and to people than they claim to be.

The Guardian reports that a legal firm in the US has already started a class action law suit in behalf of US car owners and it's strongly expected that Volkswagen's managers could face criminal charges.

How many cars are affected?

It's initially believed that around 11 million diesel cars made by Volkswagen are affected worldwide. There are however increasing concerns that the scandal won't just be limited to Volkswagen with many countries now re-examining their emissions testing procedures.

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