25 October 2015

The Tyranny of Average Cost, part the third

Once more, The Tyranny of Average Cost™, Volkswagen's emissions venture:
EA stands for "entwicklungsauftrag," or "development order," and signified a major new engine line. Volkswagen deploys its engines and other components not only in Volkswagen cars but also in other brands belonging to the company, like Audi and Skoda. The strategy saves money because costs of development and production are spread across a large number of vehicles. But it means that any problems potentially affect a large number of vehicles.

Once more (the EA189 and EA288 engines): 'we lose money on each unit, but make up for it with volume'. Thus spreads the infection.

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