Subject: European Parliament Committee of Inquiry questionnaire

Subject: European Parliament Committee of Inquiry questionnaire 1. In previous hearings we have heard that the exhaust systems are vulnerable to clogging and corrosion. Can you describe how you as a producer adapted the materials used in order to fulfil warranty requirements, leak-free assembly requirements and customer demands for long service life? Regarding the durability of Diesel exhaust systems one problem recognized by BMW was the clogging of the SCR system. Clogging can occur during AdBlue dosing at low exhaust gas temperatures. BMW prevents clogging by an optimized position of the dosing valve. Moreover only special stainless steel is used in order to successfully prevent our SCR systems from corroding. Regarding of EGR systems clogging of the EGR cooler can occur during low exhaust gas temperatures and cold engine temperatures (please refer also to question 5). In order to achieve best reliability only high quality stainless steel is used for EGR pipes and coolers. However, as clogging is a physo-chemical process, the usage of high quality materials can mitigate this effect but control strategies need to be applied in order to prevent damage to the engine at certain operating conditions. Company Bayerische Motoren Werke Aktiengesellschaft Postal address BMW AG 80788 München Office address Petuelring 130 Office address Forschungs- und Innovationszentrum (FIZ) Knorrstraße 147 Telephone Switchboard +49 89 382-0 Fax +49 89 382-25858 Internet www.bmwgroup.com Bank details BMW Bank IBAN DE02 7022 0300 5100 9409 40 BIC BMWBDEMUXXX Chairman of the Supervisory Board Norbert Reithofer Board of Management Harald Krüger, Chairman Milagros Caiña Carreiro- Andree Klaus Draeger Friedrich Eichiner Klaus Fröhlich Ian Robertson Peter Schwarzenbauer Oliver Zipse To ensure the robustness of all emission relevant components, BMW runs durability tests on the road and on the test bench covering the useful life of the vehicle. All relevant emissions systems like EGR or SCR comply with the on board diagnostic standards and are able to detect failure behaviour over the useful life of the vehicle. BMW exhaust systems are also designed to facilitate leak free assembly, installation and operation for the useful life of the vehicle and to maintain leak-free operation. What is the effect of the higher temperatures that SCR needs to properly function with the materials used? Currently available SCR catalysts need about 200 C temperature to reach a sufficient NOxconversion. At lower temperatures the chemical processes needed to stabilize the NOx conversion do not work and the SCR system shows limited NOx conversion. For this reason, SCR, if implemented, is always combined with an additional NOx trap. To optimize the NOx conversion over the whole temperature range. There are no problems noted by BMW in relation to the materials used regarding this Light Off temperature. Registered in Germany München HRB 42243

2. On average, how much does a diesel emissions reduction system cost when purchased and built in? Could you please specify these prices for an exhaust gas recirculation (EGR) system, a NOx storage catalytic converter (NOx trap) and a Selective Catalytic Reduction (SCR) system? And how much would a combination of multiple systems like these costs? In your experience: How many of these costs can be passed on to the buyer? To fulfil emission standards like EU6, a diesel emission concept is always a combination of injection technology, EGR technology, turbocharging systems and exhaust after-treatment systems. Any specification of prices for exhaust after treatment systems are strongly dependent on vehicle size, engine volume and performance, and other design characteristics. It may vary in a wide range. A recent examination by ACEA came to following conclusion: Incremental manufacturing cost of moving from Euro 5 (oxidation catalyst, particulate filter) to Euro 6 would be in the range of 600 to 1,300 per vehicle. Incremental manufacturing cost to combine NOx trap functionality would add in the range of 250 to 400 per vehicle. The final increment on vehicle price to the customer to account for taxes, profit margins, sales and distribution, warranty costs etc. could be expected to double those figures, but that depends on the manufacturer. (ACEA Paper 2016: Background note on costs and impacts of Real Driving Emissions (RDE)) We can confirm the ranges mentioned by ACEA. Based on our experience customers are in general - not willing to accept any additional costs for low emission technologies though is not predictable to what extent those costs could be passed on to the customers. We do not consider this possibility too likely. 3. Why did car manufacturers focus mostly on the legal testing cycle NEDC if they knew that it was far from reality and had nothing in common with real emissions? The NEDC is a legal requirement that every OEM must fulfil. Due to the specific load conditions it covers today s city driving well and therefore gives a good picture of the inner city NOx behaviour. However within our development process we focus also on NOx emissions at various load, temperature and altitude conditions. We design our systems for these often conflicting requirements. The results of our development work can be seen in the published test results by various independent NGOs. https://www.adac.de/infotestrat/tests/autotest/euro_6_dauertest/bmw_dauertest.aspx?componentid=233044&sourcepageid=0

http://www.theicct.org/news/faq-use-nox-emissions-diesel-passenger-cars http://www.theicct.org/nox-control-technologies-euro-6-diesel-passenger-cars Was it not possible to orientate yourself towards real driving emissions (RDE) - like values from the beginning to generate more trust from the costumer? Why did the automobile industry not take the initiative on its own and communicated more realistic exhaust values of their products? The NEDC is part of existing law. We are obliged to meet these legal requirements. Our compliance is monitored by the relevant technical authorities. The vehicle certificate issued contains the Euro classification. There is no agreed alternative standard so if each manufacturer were to publish its own reference value as it deems appropriate, this would soon lead to confusion for the customers and to an unfair competitive situation. Another aspect is that the manufacturers need to take responsibility for all product values officially given, thus emission values can only be given in relation to a repeatable measurement procedure such as the NEDC today or in near future with WLTP. 4. Article 5(2) of Regulation 715/2007/EC allows for certain derogations to the prohibition of defeat devices that reduce the effectiveness of emission control systems. Do the vehicles you produce make use of the derogation, and if so could you please describe in detail under what conditions do you employ the derogation? The BMW Group does not manipulate or rig any emissions tests. We observe the legal requirements in each country and fulfill all local testing requirements. Our exhaust treatment systems are active whether rolling on the test bench or driving on the road. However, for certain emission control technologies, it is necessary for valid technical reasons to use restriction strategies. All restrictions are used to prevent damage of the engine or other engine components and are in line with Article 5(2) of Regulation 715/2007/EC. Examples are ambient temperatures that are too low (e.g. significantly below freezing temperature) for the EGR rate, which needs to be reduced in order to prevent the cooling system from clogging and thereby significantly damaging the engine. This is the reason why these restrictions are legal and therefore shall not be considered as defeat devices as they would doubtless lead to a damage of the engine (see also page 18 of Volkswagen investigation commission report, German Federal Ministry of Transport and Digital Infrastructure, 22.4.2016) The BMW Group is currently providing a list of the basic and the auxiliary emission strategy according to Regulation (EU) 2016/646 to the competent type approval authorities and trusts that this information will be treated confidentialy in accordance with said Regulation.

Have you indicated and justified the conditions of the operation of such defeat devices to the type approval authority when applying to type approval? If not, why not? Were you ever requested by the technical services or type-approval authorities to provide clarifications on the use of derogations under article 5(2)? Regulation 692/2008 requests OEMs to disclose Diesel engine behavior at low temperatures. BMW has fulfilled this obligation and has provided all necessary documentation. The European Legislators have introduced the requirements for basic and auxiliary emission strategies in October 2015 (publication in the Official Journal of the European Union in April 2016, EU Regulation 2016/646): Base Emission Strategy (hereinafter BES ) means an emission strategy that is active throughout the speed and load operating range of the vehicle unless an Auxiliary Emission Strategy is activated; Auxiliary Emission Strategy (hereinafter AES ) means an emission strategy that becomes active and replaces or modifies a BES for a specific purpose and in response to a specific set of ambient or operating conditions and only remains operational as long as those conditions exist. The BMW Group is not only providing information according to these new legal requirements for all new type approvals since May 2016, but is also successively submitting the BES and AES information for the current models. 5. During recent investigations (e.g. in Germany) manufacturers admitted to using so called thermos- windows to switch off emission control systems under certain ambient temperatures in order to protect the engine. It has become clear that there is a broad range of temperatures used for lower switch-off limits (e.g. below 10 C or 17 C). This suggests that the setting of these temperature limits are rather arbitrary. Please explain the discrepancy in temperature limits used by car manufacturers to justify switching off emission control systems (including EGR). Are these limits really needed to protect the engine and at which ambient temperatures? Within a Diesel engine the EGR system is an important component to reduce nitrogen oxides during combustion, i.e. before being further reduced in the process of exhaust emission purification. If the temperature falls below a certain point, physical/chemical phenomena set a technical limit to maximum EGR rate. On one hand we refer to clogging as mentioned above and on the other hand to combustion problems of the Diesel/Air mixture at low temperatures. For this reason the rate of exhaust gas recirculation has to be reduced. Especially where clogging is concerned certain components of the EGR system could be damaged. To improve this situation it was always our aim to shift this limit to lower temperatures with every new engine development, so that our modern diesel engines working with EGR far below 0 C. The

detailed values are also disclosed to our type approval authorities and are considered to be in full compliance with the current Regulation. 6. Do you use emissions control systems with different operational limits (e.g. ambient temperature or engine loads) or quality (design, components or materials used), or of discrepancy between OEMs on the EU market? To fulfil the EU6 NOx emissions limits it is necessary to use a well-balanced technology package including injection, EGR and turbocharging system combined with exhaust after treatment. The optimal combination of emission reduction technologies depends strongly on the engine/vehicle combination, performance characteristic and other boundary conditions. Both the chosen technology package and the single vehicle / engine combination leads to different specific operational limits. For example, if you compare the exhaust emissions system NOx trap to SCR, NOx trap has a better operating range at low load city driving and at cold start conditions, SCR systems on the other hand have advantages at higher load driving. BMW is striving for the best possible combination of available technologies for all vehicle models to get the best operational limits. 7. At a meeting of transport ministers in Luxembourg on 7 June 2016, the following wording on when the ban on defeat devices should not apply was proposed: even if the best available technologies are included, no other technology is available to protect the engine against damage or accident and for safe operation of the vehicle. In this regard, what is your understanding of the best available technologies? Can you provide us with a list of currently best available technologies for lowering NOx and CO2 emissions? From BMW s point of view there is not just one best available technology, only an optimized combination of engine and exhaust technologies adjusted to the specific vehicle can provide low NOx and CO2 emissions. There are different ways to accomplish low exhaust emissions. At BMW we consider inner engine provisions as part of a balanced implementation concept to minimize exhaust gas pollution. We believe that emissions that do not occur, do not have to be converted in the after treatment process later.

BMW is striving for the best possible combination of available technologies. For example, with the advancement of engine development like injection systems, it has been possible to extend the temperature limits of EGR far below 0 C. 8. With emissions norms progressively tightening, the introduction of the WLTP testing in 2017 and new emissions measurement procedures better reflecting real-driving conditions (RDE), what is, according to your own research and experience, the optimal combination of the best available technologies in order to comply with NOx and CO2 standards? Are the required technologies currently available for mass production or do they need more research and development before they can deliver the expected results? Do certain best available technologies damage the engine? If yes, why? To fulfil the Euro 6 standards for current Diesel engines EGR, NSC and SCR systems are used in series production. The WLTP and RDE legislation demands the optimization of the engine and exhaust system over the whole operation range and furthermore only the best combination of technologies will comply with WLTP and RDE standards. BMW focuses on minimizing both pollutant emissions and fuel consumption (CO2). The lead time to further improve engine or exhaust concepts before series production commences is about 5 years. This lead time is essential to ensure no damage to engine parts and to guarantee quality and emission reliability. 9. Do you agree with the statement that the engine control unit (ECU) is a black box, without type-approval obligation and without external supervision on how it is configured or how it functions? Would you be in favour of the introduction of a typeapproving provision for this unit with, for instance, the possibility for the certificating authority of accessing the software and its code, and request detailed information on the use of the software, in order to avoid any unwanted software modifications, including unwanted modifications after type approval and before true production? What benefits or risks would you identify in such a procedure? The checking of the software is a redundant procedure with massive burden for authorities. The future application of PEMS for RDE tests gives insight into the emissions performance under all possible load and driving conditions. These results will in the future provide a solid basis for the evaluation of the robustness of the engine and emission control systems. Therefore, checking 10,000 pages of source code is unnecessary. As noted before, BMW will provide to the authorities a detailed list of AES/BES which describe all emission relevant functions of the engine control unit.

BMW has signed agreements with the suppliers of the ECU software that the code provided to BMW is free from any defeat device code. As this code is also partially intellectual property of the suppliers, BMW is not entitled to disclose this code to any third party. 10. From the manufacturers point of view, what kind of role other aspects such as increase engine efficiency play in the emission reduction? What kind of research is carried out, other than the pipe-end technologies, to reduce the emissions? Our main task is to minimize the reciprocity between pollutant emissions and fuel consumption (CO2) as well as minimizing emissions altogether. For that reason we continue our research into injection systems, combustion processes, emission after treatments as well as heat management and exhaust gas turbocharging. 11. According to the JRC, exemption for the use of devices interfering with pollution control systems, as provided for in Article 5(2) of Regulation (EC) 715/2007, are not justified from a technical point of view as the same results (i.e. protecting the engine from damages) can be obtained in many different ways. Do you agree with this assumption? If not can you explain in detail why? In our opinion the EGR is the most effective core engine method to reduce emissions. It cannot be replaced fully by SCR and/or NSC. We therefore do not agree. 12. The EU law (Regulation 715/2007/EC Article 5(1)) requires manufacturers to equip vehicles so as to enable the vehicle to comply with the emission limit values contained in the Regulation in normal use. How do you explain the conclusions of the German Federal Motor Transport Authority (Kraftfahrt-Bundesamt) investigation that on average the Emission Control Technologies are off or turned down around 75-80% of the time? Please describe in detail for which normal use conditions (temperature, altitude, engine load, etc.) your engines are designed to operate in Europe? The emission control devices for BMW Group vehicles work far beyond the regulated cycles as can be seen from the independent studies (see answer to Q3). The operating functions are in general based on physical parameters such as temperature, pressure, exhaust flow, etc. and are not oriented on the operating map of the regulated cycle. However, certain emission control technologies require a restriction of their use to prevent damage to the engine or other parts of the emission control system as allowed by Article 5(2) of Regulation 715/2007/EC or might also need limitations when operating beyond the physical limits would occur.

Our vehicles cover a very broad range of various operating conditions; exact values depend on the specific vehicle/engine combination. It is our goal that the optimum emission conversion rate is applied at all possible driving conditions which can occur during the regular operation of our vehicles at, e.g. various ambient temperatures or altitude conditions. Unfortunately, no general normal use conditions have been defined; only since October, with the RDE 2 nd package, there is at least partly a definition of normal use. Please refer also to Question 3.