Volkswagen Dieselgate Settlement Includes $2 Billion Investment Towards Electric Cars

JUL 1 2016 BY MARK KANE 20

The Audi A3 Sportback e-tron

The Audi A3 Sportback e-tron

Volkswagen/Audi this week announced a settlement agreement with U.S. federal regulators, private plaintiffs and 44 U.S. states on Dieselgate, involving TDI diesel engine cars.

The costs for the company on the buybacks and lease terminations, emissions modifications (if approved) and cash payments to affected customers for approximately 475,000 eligible 2.0L TDI comes to $10.033 billion.

However, an additional $2.7 billion will be spent on a environmental remediation fund and $2.0 billion in initiatives to promote the use of zero emissions vehicles in the U.S.

Total bill? $14.7 billion.

We should note, that the $2 billion related to zero-emission cars says only that the amount will be spent over 10 years.

“Invest $2.0 billion over 10 years in zero emissions vehicle (ZEV) infrastructure, access and awareness initiatives.”

Well, Volkswagen probably will be able to use part of the compensation on a fast charging infrastrucutre rollout … or maybe in a less favorable way – building some new hydrogen fuel stations.

Press release:

VOLKSWAGEN REACHES SETTLEMENT AGREEMENTS WITH U.S. FEDERAL REGULATORS, PRIVATE PLAINTIFFS AND 44 U.S. STATES ON TDI DIESEL ENGINE VEHICLES

  • Proposed settlement program includes vehicle buybacks and lease terminations, emissions modifications (if approved) and cash payments to affected customers for approximately 475,000 eligible 2.0L TDI vehicles
  • Volkswagen agrees to $2.7 billion environmental remediation fund and to invest $2.0 billion in initiatives to promote the use of zero emissions vehicles in the U.S.
  • Separate resolution with U.S. states settles consumer protection claims
VW Emission Scandal Has Lead To A Firmer Embrace Of Plug-In Technology By The German Automaker

VW Emission Scandal Has Lead To A Firmer Embrace Of Plug-In Technology By The German Automaker

Volkswagen AG announced today that it has reached settlement agreements with the United States Department of Justice (DOJ) and the State of California; the U.S. Federal Trade Commission (FTC); and private plaintiffs represented by the Plaintiffs’ Steering Committee (PSC) to resolve civil claims regarding eligible Volkswagen and Audi 2.0L TDI diesel engine vehicles in the United States. Of approximately 499,000 2.0L TDL vehicles that were produced for sale in the United States, approximately 460,000 Volkswagen and 15,000 Audi vehicles are currently in use and eligible for buybacks and lease terminations or emissions modifications, if approved by regulators. Volkswagen will establish a maximum funding pool for the 2.0L TDI settlement program of $10.033 billion. That amount assumes 100% participation and that 100% of eligible customers choose a buyback or lease termination.

The agreements covering the proposed 2.0L TDI settlement program are subject to the approval of Judge Charles R. Breyer of the United States District Court for the Northern District of California, who presides over the federal Multi-District Litigation (MDL) proceedings related to the diesel matter.

Volkswagen also announced that it has agreed with the attorneys general of 44 U.S. states, the District of Columbia and Puerto Rico to resolve existing and potential state consumer protection claims related to the diesel matter for a total settlement amount of approximately $603 million.

Volkswagen Charger - probably a lot more of these will now arrive thanks to a $2 billion dollar fine/allocation for EVs

Volkswagen Charger – probably a lot more of these will now arrive thanks to a $2 billion dollar fine/allocation for EVs

“We take our commitment to make things right very seriously and believe these agreements are a significant step forward,” said Matthias Müller, Chief Executive Officer of Volkswagen AG. “We appreciate the constructive engagement of all the parties, and are very grateful to our customers for their continued patience as the settlement approval process moves ahead. We know that we still have a great deal of work to do to earn back the trust of the American people. We are focused on resolving the outstanding issues and building a better company that can shape the future of integrated, sustainable mobility for our customers.”

Three agreements have been submitted to the Court for its approval with respect to the proposed 2.0L TDI settlement program: (1) a Consent Decree filed with the Court by the DOJ on behalf of the Environmental Protection Agency (EPA) and by the State of California by and through the California Air Resources Board (CARB) and the California Attorney General; (2) a Consent Order submitted by the FTC; and (3) a proposed class settlement agreement with the PSC on behalf of a nationwide settlement class of current and certain former owners and lessees of eligible 2.0L TDI Volkswagen and Audi vehicles. The parties believe that the class settlement as presented to the Court will provide a fair and reasonable resolution for affected Volkswagen and Audi customers. Volkswagen continues to work expeditiously to reach an agreed resolution for affected vehicles with 3.0L TDI V-6 diesel engines.

On April 22, 2016, Volkswagen recognized total exceptional charges of €16.2 billion in its financial statements for 2015 for worldwide provisions related to technical modifications and repurchases, legal risks and other items as a result of the diesel matter. As noted at that time, due to the complexities and legal uncertainties associated with resolving the diesel matter, a future assessment of the risks may be different.

“Today’s announcement is within the scope of our provisions and other financial liabilities that we have already disclosed, and we are in a position to manage the consequences. It provides further clarity for our U.S. customers and dealers as well as for our shareholders. Settlements of this magnitude are clearly a very significant burden for our business. We will now focus on implementing our TOGETHER-Strategy 2025 and improving operational excellence across the Volkswagen Group,” said Frank Witter, Chief Financial Officer of Volkswagen AG.

The agreements announced today are not an admission of liability by Volkswagen. By their terms, they are not intended to apply to or affect Volkswagen’s obligations under the laws or regulations of any jurisdiction outside the United States. Regulations governing nitrogen oxide (NOx) emissions limits for vehicles in the United States are much stricter than those in other parts of the world and the engine variants also differ significantly. This makes the development of technical solutions in the United States more challenging than in Europe and other parts of the world, where implementation of an approved program to modify TDI vehicles to comply fully with UN/ECE and European emissions standards has already begun by agreement with the relevant authorities.

Proposed 2.0L TDI Settlements

Subject to Court approval of the proposed 2.0L TDI settlement program, Volkswagen has agreed, among other terms, to:

  • Buy back or terminate the leases of eligible vehicles, or provide free emissions modifications (if approved by the EPA and CARB), and also make cash payments to affected current and certain former owners and lessees.

o   Volkswagen will establish a single funding pool to cover the 2.0L TDI settlement program. The maximum funding amount will not exceed $10.033 billion and is dependent on how many customers participate in the program and which option they choose if proposed modifications are approved.

o   Customers can choose to sell back their vehicle to Volkswagen or terminate their lease without penalty, or, if a modification is approved, choose to have their vehicle modified free of charge and keep it. Customers who select any of these options will also receive a cash payment from Volkswagen.

o   An eligible vehicle’s value for a buyback will be determined based on the Clean Trade-In Value as published in the September 2015 edition of the NADA Used Car Guide, with adjustments for factory options and mileage.

  • Support the following environmental programs in the United States by agreement with the EPA and CARB:

o   Pay $2.7 billion over three years into an environmental trust, managed by a trustee appointed by the Court, to remediate excess nitrogen oxide (NOx) emissions from 2.0L TDI vehicles.

o   Invest $2.0 billion over 10 years in zero emissions vehicle (ZEV) infrastructure, access and awareness initiatives.

Volkswagen will begin the settlement program as soon as the Court grants final approval to the settlement agreements. At the earliest, approval will occur in the fall of 2016. Potential claimants under the class settlement do not need to contact Volkswagen or Audi, or their dealers, at this time. Individual class members will receive extensive notification of their rights and options (including the option to “opt out” of the settlement agreement) if the Court grants preliminary approval of the proposed class settlement at a hearing scheduled to take place on July 26, 2016.”

source: Green Car Congress

Categories: Audi, Volkswagen

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20 Comments on "Volkswagen Dieselgate Settlement Includes $2 Billion Investment Towards Electric Cars"

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Doggydogworld

I believe the 2 billion is divided into four 2.5 year periods of 500m each.

Brian

“Volkswagen will establish a maximum funding pool for the 2.0L TDI settlement program of $10.033 billion. That amount assumes 100% participation and that 100% of eligible customers choose a buyback or lease termination.”

soooo more like 6 Billion? Between wrecks and cars coming off lease by the time this goes in effect it won’t cost near that 10b mark.

kubel

Take that money and give it to Tesla for Supercharger access.

R.S.

That kind of money buys you much more than a Supercharging network the size Tesla has. About 100 times the size, if you just spend it on the US

Just_Chris

This is great, $2 billon in infrastructure will be a great boost.

Brian

“Invest $2.0 billion over 10 years in zero emissions vehicle (ZEV) infrastructure, access and awareness initiatives”

access and awareness could be anything really, I highly doubt VW will start pumping 150-200m into chargers every year for the next 10 years.

Just_Chris

I know nothing of how these things work out in reality but if I knew that in the next ten years I was going to have to invest 2 billion in ev infrastructure I would make sure I had a lot of ev’s in the market and that any infrastructure benefited them more than my competitors. A rival to the supercharging network and some cars that could use it would seem like a good place to start.

ModernMarvelFan

That is good for about 20,000 150kW CCS charging station.

Let us build them!

100 million dollars would pay for maybe about 500 next gen fast charge locations, which would be enough to give the U.S. good coverage.
I sure hope within 5 years we will see some fruit as a result of this funding from VW.
Fast charge infrastructure is definitely the most economical fueling infrastructure there is.

150kW chargers will cost at least $50k each to install.

Maybe 200 chargers. Tesla already has more chargers and has spent a LOT more money on Superchargers.

By the time they deploy less chargers than Tesla has today, I suspect Tesla will have 300-500kW DC charging.

John

Even if they only spend 10% of the 2 billion on a nationwide fast charging infrastructure, it would be a game changer.

But the question is, will they. I really wish the terms of the settlement had been more specific and concrete. A company stupid enough to conceive of and foist Dieselgate on the public is certainly stupid enough to p*** away $2 billion if there’s not some serious accountability tied to it.

Edgar

I drive a 2006 VW Jetta TDI and it is not covered by the agreement. However, I believe my resale value has dropped by three or four thousand dollars. Let’s face it, who would buy a VW diesel after all of this nonsense took place, I know I would not be a customer, all of my trust in VW has vanished.

kubel

Cars covered by the agreement have lost about 16% of their value. Gas cars of the same model fell by around 9% (depreciation by association).

Your Jetta did not lose $4000 in value because of this, unless you’re implying your 10 year old car was worth over $35,000 before all this happened.

Four Electrics

“ZEV” does not equal “EV” though expect most will be spent on EV. Some may go towards hydrogen.

So let me get this straight. Diesels, which are cleaner than Priuses, failed to meet some impossibly high and unrealistic climate change government test, which means they now have to JUNK all those cars because THATS better for the environment?

Tesloid

What are you talking about? 😀 Who’s talking about Priuses? 😀 What’s the factual basis for your claims? Stop trolling all over the threads with these stupid statements

Bill Howland

“Diesels, which are cleaner than Prius’s”.

All the kids with breathing trouble in London and Paris might disagree with you.

The illnesses in cities with a huge percentage of these cars is what made VW’s ‘little Fib’ a big deal.

A prius is a relatively low-pollution vehicle. A plug-in-prius even more so.

Since I’ve never seen you on here before, which Trade Group are you speaking for?

Or is yours just a ‘principled stance’? There is precious little of that these days, so its natural to assume you really just have an axe to grind.

Bill Howland

In a war between the big oil companies and the not-so-big coal companies, the oil companies have won on several levels – not the least of which is convincing everyone that CO2 is a ‘dangerous poison’.

Funny, I’ve lived downwind from supposedly the DIRTIEST coal plant in the state, and I know of no-one, (certainly not myself) who has suffered any ill effects.

But I do see PLENTY of Altzheimers and Autism lately that is plainly more than just a little bit tied to Global Radiation Management programs.

To this article’s point, since Big Oil has been so successful on the coal mine shutdown issue, it wouldn’t surprise me if almost all the ZEV funds:

1). Mostly went to California Hydrogen, since that’s where the CREDITS are.

2). Ended up getting an equivalent amount of cash from ‘government sponsered research’ into Hydrogen powered ZEV’s.

So Big Oil will then have the Governators’ Hydrogen Highway, who can then reap big profits from the sales, when everyone ELSE has paid for the infrastructure and vehicles.

Mister G

Have you gone swimming or eat fish from water bodies that are downwind of the dirtiest coal plant in the state?

Bill Howland

Ha! The plant is thermodynamically more efficient than any Nuclear Power plant (those ‘zero pollution’ things), since the discharge cooling water is cooler and affects marine life less.

Go to the Pacific Coast and ask California or Alaskan or British Columbian Fisherman how business is these days and you’ll get an eye opening response.

The unprecedented west coast sea life die off (billions of creatures) is of somewhat more importance.