Volkswagen Hit With Federal Lawsuit Over Diesel Cheats: $48 Billion In Fines Possible

January 6, 2016

Volkswagen staffers have been working overtime at the Consumer Electronics Show, wowing attendees with VW's e-Golf Touch and Budd.e concept -- both part of the automaker's new focus on electric vehicles.  

But don't let the charm offensive fool you: Volkswagen is still in a heap of trouble over its ongoing emissions-cheating scandal. This week, the U.S. Justice Department sued the automaker for violating federal regulations, and the Environmental Protection Agency has yet to approve fixes for nearly 570,000 diesel vehicles registered in the U.S.

VOLKSWAGEN'S DAY IN COURT

The DOJ lawsuit is a doozy (legal types can take a look at it here) that could put Volkswagen on the hook for fines of up to $48 billion -- nearly twice our initial estimates. The suit includes four claims for relief:

  • Claims one and three would each fine the company up to $37,500 per affected diesel;
  • Claim two would levy a fine of up to $3,750 for every defeat device employed; and,
  • Claim four would fine the company $37,500 for every day of the violation.

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The diesel scandal affects roughly 567,000 vehicles in the U.S. -- 482,000 VW and Audi 2.0-liter diesels, as well as 85,000 VW, Audi, and Porsche 3.0-liter diesels -- and it extends back to the 2009 model year. Add all that up, carry the one, and you've got a very spicy bratwurst.

Of course, it's unlikely that Volkswagen will receive the maximum fine, but even if the sum is halved, it would be higher than the $21.5 billion floated back in November. And of course, that figure doesn't include the cost of actually fixing those vehicles, or any fines that might be levied by California's Air Resources Board (CARB), or tax breaks rescinded by Volkswagen's U.S. home base, the state of Tennessee, or the cost of settling class-action suits from angry owners. Nor does it include the price of any fees or repairs in other countries, where the majority of Volkswagen's 11 million tainted diesels are registered.

FIX ON THE HORIZON?

Threats like these help explain why Volkswagen is taking every opportunity to apologize for its misdeeds. As you can see from the video above, even the CEO for the VW brand, Herbert Diess, delayed introducing new products for a couple of minutes at CES so he could once again say, "We're sorry."

He also noted that Volkswagen was engaged in ongoing, constructive talks with the Environmental Protection Agency and CARB. However, he stopped short of offering a timetable for approval of Volkswagen's proposed fixes. Instead, he expressed hope that the automaker's proposals would be approved within the coming weeks or months -- which says little.

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Details of those fixes haven't been made public, however Volkswagen has said that they're simpler and cheaper than previously feared. That said, chances are good that the repairs will put a dent in diesels' performance numbers, which could trigger even more lawsuits from owners -- not to mention investigations from federal agencies, like the FTC.

We're not entirely sure what to think at this point. According to Volkswagen board chair Hans Dieter Poetsch, the cheats were initially implemented because engineers couldn't find a way to make their "clean diesel" engines meet strict U.S. emissions standards. So, if the fixes are truly simple and cheap, why didn't the company implement them years ago?

We'll keep you posted as this story progresses. In the meantime, if you have thoughts about the lawsuit, the fixes, and Volkswagen's future, feel free to share them in the comments below.

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