Volkswagen Close to Latest Billion Dollar Settlement Covering 83,000 Vehicles
Details of the next chapter in Volkswagen’s (VW) diesel emission cheating scandal have surfaced, raising the current estimated cost to $17.5 billion in the United States alone. The Environmental Protection Agency (EPA) said that this latest settlement, between VW and 83,000 owners of their 3.0L V6 diesel engine sold under VW, Audi, and Porsche brands, could cost the German automaker at least $1 billion. But the final agreement is awaiting the approval of Judge Charles Breyer, who will reportedly add additional damages for VW’s allegedly dishonest marketing practices that purposefully misled U.S. consumers.
The “EPA has a public health imperative to hold Volkswagen accountable and remedy the illegal pollution their cars put into the air,” said Cynthia Giles, representing the agency. “From the start, our team vigorously pursued this case to ensure these cars were fixed or taken off the road.” But insiders do not expect Breyer’s final approval until Spring 2017, which means it will be months before any action is taken, leaving the 3.0L V6 diesel engines (that can release up to nine times the legal limit of nitrogen oxide) on the road.
According to released documents from the pending agreement, around 20,000 of the 3.0L diesel engines found in 2009-2012 VW Touareg and 2009-2012 Audi Q7 SUVs will be bought back or their leases will be terminated. But VW claims that the other 63,000 vehicles with a 3.0L V6 diesel engine (2013-2016 VW Touareg, 2013-2016 Porsche Cayenne, 2013-2015 Audi Q7 and 2014-2016 Audi A6, A7, A8, A8L & Q5) can meet emissions standards after a simple software upgrade. But Judge Breyer and U.S. authorities are not yet sold on the plan and will scrutinize the fix before approving the settlement to ensure the “defeat devices” have been deactivated.
In addition to the 3.0L V6 diesel negotiations, under the agreement, VW will reportedly pay $225 million to the fund that they agreed to establish to offset the pollution caused by their emissions scandal. In a separate decision, VW has also agreed to pay California $25 million in damages and promised to sell an average of 5,000 electric cars in the state every year until 2025. The money will go to the California Air Resources Board, a government organization setup to increase the use of zero-emission transportation.
In October Judge Breyer approved a $14.7 billion settlement (that was agreed upon in June), which covered around half a million affected VW vehicles with 2.0L diesel engines (model years 2009 to 2015) that were programmed to deceive regulators during emissions tests before polluting up to 40 times the legal limit once they hit the road. In that agreement, VW set aside $2.7 billion to create the fund designed to fight the pollution related to the scandal and another $2 billion for their own zero-emission vehicle infrastructure to be spent over the next decade.
North of the border, VW has also announced a $1.57 billion settlement with Canada over their 2.0L diesels, but this does not cover the 3.0L (which could account for hundreds of millions more). This is in addition to the $1.2 billion settlement approved in August that covered U.S. dealers impacted by the automaker’s illegal activities.
Volkswagen Aims to Win Back Trust
“We are committed to earning back the trust of all our stakeholders and thank our customers and dealers in the United States for their patience as the process moves forward,” said Hinrich J. Woebcken, the President and CEO of Volkswagen Group of America, Inc., who employs over 6,000 individuals in the United States. In a statement the automaker said that they will spend $900 million to expand their “U.S. manufacturing footprint” as part of their promise “to invest more than $7 billion in North America from 2015 though 2019.”
This settlement will get VW one step closer to shutting the door on what has been an 18-month ordeal, but the U.S. Department of Justice said this current deal will “not resolve any pending claims for civil penalties, nor does it address any potential criminal liability.” The department went on to say that the settlement will not “resolve any consumer claims, claims by the Federal Trade Commission or claims by individual owners or lessees who may have asserted claims in the ongoing multidistrict litigation.” It is expected the Justice Department will seek around $3 billion in fines and there are also probable penalties and criminal charges coming from Europe and South Korea.
Meanwhile, drivers of affected VW 3.0L V6 diesel vehicles in the U.S. can do nothing to stop polluting the atmosphere unless they have an alternative means of transportation. Owners are currently being told that they do not have to do anything except wait for the final settlement to be approved—at which time they will be notified of their options and potential payouts.
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