The Justice Department announced on Tuesday that Volkswagen will pay a record $14.7 billion as a part of a settlement for cheating emission tests.
As a part of the settlement, the German automaker must pay consumers to take their “clean diesel” vehicles off the road, fund pollution-reduction projects to offset the emissions dumped into the atmosphere and invest in projects encouraging zero-emissions vehicles, Deputy Attorney General Sally Yates said at a press conference.
“We can’t undo the damage VW caused to air quality, but we can offset that damage by reducing pollution from other sources,” she said.
The settlement is even larger than the $10.2 billion settlement rumored in reports released last week.
Much of the money would go toward the 482,000 owners of VW diesel vehicles that were caught up in the scandal. The vehicles contained “defeat devices” that allowed the vehicles to pass emissions tests, but then the software would switch to a normal mode when tests were done, allowing the cars to spew about 40 times the legal limit of nitrogen into the atmosphere.
Volkswagen equipped its 2.0-liter and 3.0-liter clean diesel vehicles with the rigged software. About 585,000 vehicles in the U.S. have the software.
Nitrogen pollution can cause smog and release fine particulate matter into the air. Those pollutants are linked to asthma and other respiratory illnesses that can cause premature death. Children, the elderly and people with pre-existing conditions see increased risk for harm when they are exposed to the pollutants, the EPA says.
The scandal forced top company officials to resign and led to a drop in sales for the German automaker.
The settlements are a combination deal between the federal government and California and end the civil cases against VW. Criminal investigations are ongoing.
The company must offer to buy back any car that is covered by the settlement, which consists only of the 2.0-liter “clean diesel” vehicles. Negotiations over the 3.0-liter “clean diesel” vehicles, about 103,000 cars in the United States, also continue.
Yates said the company must spend $10 billion buying back cars from people who bought 2.0-liter “clean diesel” vehicles, $2.7 billion on projects to reduce nitrogen oxide emissions in the atmosphere where their vehicles were operated and $2 billion in zero-emissions vehicle infrastructure.
Yates said the $2.7 billion commitment to reduce nitrogen oxide pollution is unprecedented. “This marks the largest monetary mitigation obligation in the history of the Clean Air Act,” she said.
Matthias Mueller, Volkswagen’s CEO, called the settlements a significant step forward. He said the company intends to earn back the trust of its customers.
“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,” he said in a statement.
“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.”
