Volkswagen AG’s settlement with nearly 500,000 United States (U.S.) customers and government regulators over polluting diesel vehicles is valued at more than $15 billion dollars.
The settlement includes $10.033 billion to offer buybacks to owners of about 475,000 polluting vehicles and nearly $5 billion in funds to offset excess diesel emissions and boost investment in zero emission vehicles.
A separate settlement with nearly all U.S. state attorneys general over excess diesel emissions will be announced on Tuesday and is expected to be more than $500 million and will push the total to over $15 billion, a separate source briefed on the matter said.
Spokeswomen for U.S. Environmental Protection Agency (EPA) and Volkswagen (VW) declined to comment.
The settlement stems from the German automaker’s admission in September that it intentionally misled regulators by installing secret software that allowed U.S. vehicles to emit up to 40 times legally allowable pollution.
The deal, based on the largest ever automotive buyback offer in U.S. history and most expensive auto industry scandal, will move VW close to the 16.2 billion euros ($18 billion) it has set aside to cover the costs of the scandal.
Though about five billion higher dollars than previously reported, the settlement gave firm details of costs in the U.S. where VW faces the bulk of expenses for its wrongdoing, more than nine months after the scandal broke.
But criminal and civil legal action is still pending in other countries, while European governments are demanding VW offer similar compensation to the owners of 8.5 million rigged cars in the region, adding to risks that the costs could climb.
The $10.033 billion is the maximum VW could pay if it had to buy back all vehicles, but the actual amount VW will pay could be much less if a large number of owners don’t take buybacks.
Prior owners will get half of current owners, while people who leased cars would also get compensation.
Owners would also receive the same compensation if they choose to have the vehicles repaired, assuming U.S. regulators approve a fix at a later date.
The settlement includes $2.7 billion in funds to offset excess diesel emissions and two billion dollars in VW investments in green energy and zero emission vehicles.
The diesel offset fund could rise if VW has not fixed or bought back 85 per cent of the vehicles by mid-2019.
Owners will have until December 2018 to decide whether to sell back vehicles and fixes may not eliminate all excess emissions.
VW cannot resell or export the vehicles bought back unless the EPA approves a fix, Reuters reported last week.
