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VW’s New Tainted Diesel Vehicles Could Cost Company Nearly $1 Billion

REUTERS/Suzanne Plunkett

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Chris White Tech Reporter
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German automaker Volkswagen agreed in principle on a final deal forcing it to either buy back or fix about 80,000 diesel vehicles tainted by last year’s fuel emission scandal.

The deal includes a buy-back or fix of 3.0-liter diesel vehicles, such as Porsche and Audi vehicles, and will close the chapter on a year-long saga involving so-called “defeat” devices the German automaker affixed on its diesel vehicles.

The Environmental Protection Agency (EPA) believes the deal could end up costing VW more than $1 billion. U.S. District Judge Charles Breyer remains silent on the cost of the deal, telling reporters in a press statement that owners would receive “substantial compensation.”

VW is required to offer a buy-back for the older 3.0 vehicles or terminate leases, and must offer modifications substantially reducing emissions if one is approved by the EPA. VW must also contribute $225 million to a mitigation fund created to reduce emissions of nitrogen oxide (NOx).

The EPA and the Department of Justice championed the deal during a Tuesday phone conference.

“This consent decree provides a remedy for every affected vehicle which will be removed from the road or meet enforceable standards that will reduce emissions, and will also require VW to provide additional funding to address the harmful impacts to human health and the environment from VW’s violations,” Assistant Attorney General John C. Cruden told reporters on the conference.

Tuesday’s decision is in addition to one made by Breyer in October, which directs the German automaker to buy back the nearly 500,000 diesel-powered vehicles tainted with so-called defeat devices to fool emission tests. The deal would cost VW more than $15 billion.

Breyer’s decision does not address any criminal or punitive damages wrought by the fuel emission cheating scandal.

Audi vehicles were fitted with a device in 1999 to stop a “disagreeable noise” the vehicles made during startup, which then resulted in fuel flooding the car’s system, causing them to run afoul of Europe’s fuel emission standards.

A lawsuit filed in July found that VW installed the cheating software that deactivated the new injection technology during road-testing situations. That technology would end up in all the cars tainted with the devices from model year 2004 to 2008.

Breyer also said German company Robert Bosch GmbH reached an agreement Monday to settle civil suits made by vehicle owners. The settlement in the Bosch case was expected to be worth more than $300 million.

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