Agreement still pending approval
Volkswagen announced it has reached an agreement with U.S. regulators, private plaintiffs, and 44 U.S. states regarding the emissions defeat devices installed on its diesel-powered vehicles. The agreement only extends to vehicles equipped with the 2.0-liter turbodiesel engines and has been submitted for court approval. An agreement for vehicles equipped with the larger 3.0-liter turbodiesel V-6 is still in the works.
The proposed settlements for owners of vehicles equipped with 2.0-liter turbodiesel engine include the buy back and lease termination of affected vehicles, added emissions modifications approved by the EPA and CARB, and make payments for current owners and lessees. Those who chose to sell their vehicle back to VW or terminate their lease will receive a cash settlement from the German automaker. Volkswagen said in a press release that its maximum funding amount won’t be more than $10.3 billion USD, the final figure is dependent on how many owners and lessees participate in the program and the type of option they choose.
As an additional part of its agreement with U.S. regulators, Volkswagen confirmed that it will pay $2.7 billion USD through a three-year period to an environmental trust in an effort to offset the excess diesel emissions. VW will also invest $2 billion USD in zero emissions vehicles over 10 years to build infrastructure and increase both awareness and accessibility. The settlements with U.S. regulators and private parties will begin once it receives approval from the United States District Court Judge Charles R. Breyer who remains the presiding judge in this ongoing case.
Volkswagen also said in the press release that the announced agreements are not an admission of liability and aren’t intended to apply or affect the automaker’s obligations outside of the U.S. VW says there are different rules regarding emissions in other parts of the world.
In total, Volkswagen is expecting to spend around $17.9 billion USD for vehicle modifications, legal costs, buybacks, and cash payouts related to the scandal. However, a report from Reuters suggests that the separate settlement for Puerto Rico, the District of Columbia, and at least 44 U.S. states will cost at least $600 million USD, meaning that in the U.S. alone, it’s likely that Volkswagen could spend more than what they’ve set aside. Should many owners opt for an approved fix, the amount Volkswagen could spend on buybacks would likely be a lot less. Owners will also get a minimum of $5,100 USD from the automaker as compensation along with vehicles’ pre-scandal value plus an additional sum that could be up to $10,000 USD, according to Reuters’ report.
Until a fix is approved by U.S. regulators, Volkswagen cannot resell the vehicles it buys back and is expected to begin the buyback process this October in the U.S. when a final approval for the settlements is given. Proposals for fixes could start by November of this year and it’s likely that some vehicles will need major mechanical modifications.
Source: Volkswagen, Reuters