In one of the biggest class-action settlements in U.S. history, Volkswagen will pay as much as $14.7 billion to partly resolve claims related to its cheating of diesel emissions tests, federal authorities announced Tuesday.
The company will set aside up to $10.03 billion to buy back affected vehicles at their pre-scandal values, plus fork over cash compensation ranging from $5,100 to $10,000 per vehicle – a settlement designed to remove about 85 percent of the vehicles from the road. The company is also developing a fix for owners who want to keep their cars, but the repair has yet to be approved by regulators, and it’s likely to affect the vehicles’ driving performance.
The agreement settles a lawsuit brought by the Justice Department in January, and it covers about 475,000 VW and Audi TDI diesel cars in the U.S. – a fraction of the roughly 11 million worldwide that VW has said it equipped with software to defeat emissions tests the cars would have otherwise flunked.
The scandal includes diesel cars and SUVs made by Porsche and Audi, which are part of Volkswagen. The cheating scheme, ongoing since 2009, was revealed by U.S. and California regulators in September.
“VW turned over half a million American drivers into unwitting accomplices in an unprecedented assault on our country’s environment,” Assistant Attorney General Sally Yates said at a press conference Tuesday at the Justice Department announcing the settlement. The cheating regime, she added, amounts to “one of the most flagrant violations of our country’s consumer and environmental laws.”
About $2.7 billion will be paid to a federal trust that funds pollution reduction measures. Another $2 billion will go toward charging stations, education programs, and other initiatives and infrastructure to support the growth of zero-emissions vehicles.
The Justice Department’s criminal investigation remains ongoing, and the settlement does not resolve civil penalties under the Clean Air Act, which could mount to $18 billion, or a maximum fine of $37,500 per vehicle. It also applies only to smaller 2.0-liter vehicles, not cars and SUVs with larger 3.0-liter engines, which were subsequently added to the federal investigation in November.