The bill for Volkswagen's Dieselgate crisis grew by $157 million (running total: $22.3 billion)

April 3, 2017

Back in the early days of the Volkswagen Dieselgate fiasco, we estimated that the crisis would cost Europe's largest automaker at least $25 billion

As it turns out, that estimate may have been too conservative. The company's bill in America alone has topped $22 billion, and thanks to a settlement with ten states that had sued the automaker for environmental damages, the sum has now crept up by another $157.45 million

The states in question are Connecticut, Delaware, Maine, Massachusetts, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington. Not coincidentally, all ten follow stringent emissions policies set by the California Air Resources Board--policies that have so far largely dovetailed with those of the Environmental Protection Agency but which may diverge very, very soon

(Some of those states were also included in a roughly $600 million settlement last June over illegally rigged 2.0-liter diesels from Audi and VW. This most recent settlement, however, was over different matters, largely dealing with air pollution.) 

Also included in the settlement announced late last week was a requirement that Volkswagen sell at least three new electric models in all ten states by the year 2020. Furthermore, at least two of those new vehicles have to be SUVs. This is in line with a similar agreement that Volkswagen reached with California last December. 

The $157.45 million sum is a mere fraction of what the ten states had initially wanted. (Washington state alone had sought penalties of $176 million). However, in at least Massachusetts and New York, attorneys general say that their portions of the settlement are the largest air pollution fines ever received at the state level.

States can use those funds for anything they like. 

How deep is the rabbit hole?

By our back-of-the-envelope calculations, this brings Volkswagen's total bill in the U.S. to around $22.3 billion, including:

To date, the company has said that it's prepared to spend $25 billion to deal with the fallout in America. 

However, the scandal is much, much bigger than the U.S. Of the 11 million diesels equipped with Volkswagen's emissions-test-cheating software, only about 480,000--just over four percent--are registered in America. 

Granted, the U.S. tends to have stricter laws about emissions, advertising fraud, and such, which is why Volkswagen began installing the software to begin with. (You might recall that in December 2015, Volkswagen's board chair Hans Dieter Poetsch said that the issue started in 2005 when Volkswagen engineers "could not find a way" to meet America's new, stricter emissions standards.) 

Americans are also known for being litigious, and we have many, many laws on the books to protect consumers in courtrooms.

That said, Volkswagen isn't off the hook in other countries. For example, even though Germany doesn't allow for class-action lawsuits the way that America does, Volkswagen's violations are so egregious, some angry consumers have been prevailing in German courts, which is a little rare. A U.S. law firm is helping to organize other diesel owners in Germany into what could amount to a de facto class-action suit, which could cost the automaker a very, very pretty Euro down the line. 

And let's not forget the ongoing criminal investigations into Dieselgate, which have now snared at least six Volkswagen executives. Maybe those execs acted alone, but if they didn't...well, let's just say that the bill could go exponentially higher. 

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