Volkswagen Reaches Tentative Settlement on Diesel Emissions Cheating
Hoping to put an extremely ugly chapter of its history in its
smoke-filled rear view mirror, Volkswagen announced today that it had reached a tentative agreement with U.S. authorities on a path out of its diesel emissions cheating problems.
U.S. District Judge Charles Breyer announced the tentative settlement in San Francisco today. While the details of the settlement are confidential until July, it appears that the basic points are that the company will attempt to make things ‘right’ with owners of 2.0 liter diesels in one of three ways:
- allowing lease cancellations
- buying back affected cars at their estimated value as of September 2015 (before news of the scandal broke)
- fixing affected cars (assuming that it is actually technically feasible, and the EPA/CARB approve of the fixes
In addition to resolving issues with owners, other issues remain. Volkswagen will establish a fund to remediate the environmental damage caused by the excess emissions and will also be required to commit funds to promoting green vehicle technologies.
Should the settlement be approved, it is estimated that it will cost VW in excess of $10 billion. That’s obviously a ton of money – enough to put many companies completely out of business – but if that’s the extent of the damage, it would actually represent some degree of a victory for Volkswagen. Why? Because potential fines alone could have tallied more than $40 billion in the U.S. alone.
News of the settlement sent Volkswagen’s stock soaring – investors prefer settlements and certainty rather than the unknown of bad news and lawsuits – though it’s still down over 20 percent from its pre-scandal levels.
Left unsaid is how the company plans to make things right with its U.S. dealer body, who has been rightfully vocal in objecting to the way the company has been silent in the midst of angry customers and lots full of diesel cars they can’t sell.
Today’s news is a waypoint on VW’s journey toward settling the many issues, but there’s still plenty of news and drama still to come.