Volkswagen’s stock took a nosedive Tuesday as investors continue to worry the U.S. government will fine the German automaker into bankruptcy.
The stock drop came after recent news reports that the Department of Justice is “assessing how big a criminal fine it can extract from Volkswagen AG over emissions-cheating without putting the German carmaker out of business.”
The company’s shares in Germany plummeted 3.4 percent Tuesday morning.
The U.S. is considering the size of VW’s fine at the same time it’s trying to settle a civil case with the country’s largest bank, Deutsche Bank AG. Both VW and the bank directly account for more than 320,000 German jobs.
Deutsche Bank, which is working to settle allegations over its supposedly dodgy crisis-era mortgage securities business, is asking whether the DOJ would enact a penalty so high that it would render the bank nearly financially insolvent.
VW is similarly concerned government fines associated with last year’s fuel emission cheating scandal would essentially destroy the company’s capital, forcing it to dump enormous amounts of stock.
“Volkswagen continues to cooperate with the Department of Justice as we work to resolve remaining matters in the United States,” Volkswagen said Tuesday in a statement.
The government fines come after court slapped VW with a huge settlement in June related to the emission scandal.
VW’s fuel emission cheating scandal will cost a total of $14.7 billion, $10 billion of which will go to the owners of the tainted vehicles, while another $2.7 billion to the Environmental Protection Agency for environmental mitigation. The company will plow another $2 billion investment into electric vehicle technology, which will be distributed within the next decade.
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