VW to pay over $10 billion for emissions scandalPosted On: Jun. 23, 2016 12:00 AM CST
(Reuters) — Volkswagen A.G. will pay nearly $10.3 billion to settle claims by U.S. regulators stemming from its diesel emissions cheating scandal, a source briefed on the agreement said on Thursday.
The settlement includes offers to buy back nearly 500,000 polluting U.S. vehicles and to set aside billions of dollars for green energy projects and a program to offset excess diesel pollution, the source said.
Speaking on condition of anonymity, due to court-imposed gag rules, the source told Reuters the average compensation to owners was around $5,000. The settlement is currently valued at $10.29 billion in some settlement documents, the source added, saying final numbers could change before a Tuesday court deadline.
Volkswagen and the U.S. Environmental Protection Agency declined to comment.
There may be additional costs to VW disclosed on Tuesday, beyond the $10.3 billion figure, sources familiar with the matter said.
Reuters reported last week the initial VW settlement would not include civil penalties under the U.S. Clean Air Act or address about 80,000 larger 3.0 liter Audi, Porsche and VW vehicles that emitted less pollution than 2.0 liter vehicles. A deal covering the 3.0 liter vehicles may still be months away.
The settlement also does not address lawsuits filed by U.S. states or investors or a criminal investigation by the Justice Department.
In April, U.S. District Judge Charles Breyer said the settlement will also include an offer to repair polluting vehicles if regulators approve it.
Regulators will not immediately approve fixes for the 2.0 liter vehicles — and may not approve fixes for all three generations of the polluting 2009-2015 vehicles, the sources told Reuters.
The settlement is complex, requiring owners to fill out detailed worksheets about their vehicle to calculate the buyback value.
Reuters reported in April that owners may have two years before having to decide whether to sell back vehicles.
The EPA, California Air Resources Board, U.S. Justice Department, Federal Trade Commission and lawyers representing owners have been working for weeks to hammer out the final agreements.
VW is not expected to be allowed to resell or export repurchased vehicles, unless they convince regulators that they can be fixed, sources said.
Former owners of the polluting vehicles will also be eligible for compensation — although less than current owners, sources said.
In April, Volkswagen said it would set aside €16.2 billion ($18.27 billion) and slash its dividend to cover the costs from the scandal known as Dieselgate — including nearly €8 billion ($9.02 billion) to cover buying back and fixing polluting vehicles.
EPA initially said VW's emissions cheating impacted 482,000 2.0 liter vehicles produced by VW, but the agency told Reuters last week the actual figure is 499,000 — since the original figure did not include some 2012 Passat diesels.
In September, VW disclosed that it had used sophisticated software to evade emissions requirements in nearly 11 million vehicles worldwide. It also misled the EPA, which had started asking questions in 2014. The company's CEO Martin Winterkorn resigned in the wake of the scandal.
German prosecutors are investigating Mr. Winterkorn and VW brand chief Herbert Diess over whether they effectively manipulated markets by delaying the release of information about the emissions test cheating.