Volkswagen TDI Diesel Settlement With Government To Cost Nearly $15B

Volkswagen has agreed to pay $14.7 billion to settle problems with TDI “Clean Diesel” vehicles, which included software designed to cheat on federal emissions tests, resolving claims brought by U.S. regulators. 

Today, the Department of Justice issued a press release announcing the Volkswagen TDI Diesel settlement reached with the German automaker over “defeat device” software.

The deal will require the company to spend $10 billion buying the vehicles back from owners, and another $4.7 billion on mitigating pollution and investing in zero-emission technology. However, that may not be the final price tag.

The Justice Department points out that the settlement does not affect Volkswagen owner lawsuits filed in courts throughout the U.S., and does not resolve potential criminal liability the company faces.

The deal is an attempt to resolve the controversy surrounding the Volkswagen TDI “clean diesel” scandal. In September 2015, the manufacturer admitted to the U.S. Environmental Protection Agency (EPA) that the vehicles were equipped with software designed to artificially lower emissions during testing, while increasing the level of pollutants released during normal operations.

Although the Volkswagen TDI “Clean Diesel” vehicles were sold for a premium price, as “environmentally friendly” cars, some researchers from the EPA have recorded emissions levels up to 40 times the allowable rate during normal operation. However, when connected to EPA testing devices showed approved levels.

The Volkswagen recall affected nearly 500,000 diesel vehicles sold in the United States. The problems expanded after the investigation began to also include some 80,000 Audi and Porsche SUV models with bigger 3.0 liter diesel engines. The illegal devices are believed to have been installed in nearly 11 million vehicles across the globe, sparking major concerns about the company’s ethics and business practices.

“By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment,” Deputy Attorney General Sally Q. Yates said in the press release. “This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public’s trust. And while this announcement is an important step forward, let me be clear, it is by no means the last. We will continue to follow the facts wherever they go.”

The Justice Department filed the complaint against the company on behalf of the Environmental Protection Agency (EPA) in January, followed by a Federal Trade Commission (FTC) lawsuit filed against Volkswagen in March.

Under the terms of the agreement, Volkswagen will have to offer to buy any affected vehicles back from owners and have to offer those who leased the vehicles a lease cancellation at no cost. The company also has the option of filing an emissions modification plan to the EPA and California Air Resources Board (CARB). If that plan is approved, the company can offer the fix to current affected vehicle owners.

In addition, the company will spend $2.7 billion on U.S. projects aimed at cutting air pollution and will invest $2 billion into zero emissions infrastructure, access, and education over the next 10 years.