Reducing emissions usually comes at the expense of worse power or fuel economy.

By only reducing emissions during testing, they can demonstrate better engine power and fuel efficiency while also claiming to meet the emissions requirements.

Don't the emissions systems affect performance? I have a 2012 Golf TDI and really like it, one of the advantages over one of the hybrids is that I get pretty great fuel economy for the kind of driving I do, but it doesn't feel like I'm driving a weed eater.

This really pisses me off. It doesn't surprise me I guess but it never occurred to me that a car manufacturer could get away with something like this for, apparently, 6 model years.

Yes, a common strategy is to inject more EGR (exhaust gas) into the fresh intake air. As EGR is already burned, it is inert, so it negatively affects the combustion, lowering the temperature. With lower combustion temperature you get less NOx... but less power for each amount of fuel, so your efficiency/performance is lower, and also non burned products (CO, C) increase. You then trap those with the Diesel Particulate Filter... it's a very complicated game with very small margins, that's the reason of so much cheating.

Since this EPA action is about NOx, it seems VW will need to lower combustion temperature, leading to higher soot and therefore more particulate filter cycles. That will also increase fuel consumption.

In addition to the recall, and likely upcoming penalty, VW can now look forward to a class action suit regarding vehicle fuel economy.

Yep! And increased fuel consumption = increased CO2. Endless fun! x)

EGR on a diesel also terribly gunks up the intake manifold downstream of the EGR introduction point. For that reason (and the loss of power and efficiency), it's often defeated.

To pass the test with lower emissions. This means lower taxes in some countries, and good PR in every one. Edit: to expand this, consider that in order to reduce emissions like NOx, you often must sacrifice performance, so the customer will complain. When standarised tests were introduced, a crude counter strategy was to trade performance for lower emissions for X amount of minutes (the duration of the test). So customers noticed "hey, my engine works much better after 15 min!" :P

It's possible that the engine power / automatic transmission shift profile / maximum RPM / etc. is being manipulated to output less emissions at the cost of acceleration, top speed, ride comfort, etc.

The most fuel-efficient / eco ride is rather "boring" by the standards of car enthusiasts and reviewers and I guess the cars wouldn't be configured for that mode by default.

(Just a guess though.)

Or, you just pay more for a car that has those performance characteristics both in taxes/registration fees and in fuel.

That said, cheating like this is really bad on a very large scale, and should probably face fines and maybe criminal charges, unfortunately discovery is likely to fall outside U.S. juristiction so it would be hard to prove enough to bring criminal charges against the appropriate managers and executives.

It probably ruins performance -- that's the usual tradeoff with emissions systems.

Help sell cars. I have a TDI sportswagon and this will be the second performance hit. A couple years after purchase there was a recall to reduce the power a bit via software "upgrade". Seems fuel filters were occasionally failing at high acceleration or with people that used high acceleration a lot. The power drop was minor but noticeable. I suspected then and even more after this indecent that VW knew about the problem but wanted max power to help sell cars during the test drives.

The VW/Audi 2.0t EA888 engine is capable of producing 100 more hp with a software update. These turbo/diesel/supercharged engines have a million parameters that they can modify to change driveability. I cant believe that they would do something like that to pass emissions testing though, that seems incredibly foolish. I would imagine that with diesel engines, economy and certain emissions are at odds with each other.

They are, in particular the higher the in cylinder combustion temperature the higher the efficiency, and the higher the NOx production. This caused heavy diesels to get less efficient for a few years when NOx stringencies were tightened. Then they were tightened far enough to require catalytic reduction, and manufactures went back to high efficiency high NOx combustion and removed the NOx downstream.

My guess is it uses some part that would need to be replaced (or replaced more often) if left in full use all the time ?

That could be—especially since automakers are required by the EPA to include emissions warranties of 8 years/80,000 miles.