Volkswagen Reaches Settlement With 10 States

Volkswagen (VLKAY) has announced that it has settled environmental claims with 10 different US states for $157.45 million. The participating states include Connecticut, Delaware, Maine, Massachusetts, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington. The attorneys general of those states have all agreed to drop pending litigation against the German automaker. Not every state will receive the same amount of money.

The settlement addresses consumer claims alongside state-level ones. As part of the settlement, Volkswagen has also agreed to sell at least three new electric vehicles in all 10 states by 2020. The settlement is significantly less than what the states had sought when they sued Volkswagen last year. The state of Washington alone had sued the company for nearly $200 million.

This most recent settlement brings the automaker one step closer to putting the incident behind it. The payouts join prior agreements to pay $14.7 billion to fix or buy back about 475,000 rigged 2-liter diesel vehicles and $1.2 billion to fix or buy back approximately 78,000 additional 3-liter diesels. It also promised to spend $2.7 billion on projects to mitigate nitrogen-oxide emissions and $2 billion on building out EV infrastructure and on education efforts about zero-emissions vehicles.

Volkswagen said in its statement, “The agreement avoids further prolonged and costly litigation as Volkswagen continues to work to earn back the trust of its customers, regulators and the public.” To date, the scandal has cost Volkswagen more than $20 billion in fines and settlements. Volkswagen still faces an ongoing criminal investigation in Germany.

In March of this year, the automaker plead guilty to U.S. charges including fraud, obstruction of justice and falsifying documents. The charges stemmed from a finding that the company had used special software to cheat U.S. emission standards over about a six-year period. The cheating was revealed by the U.S. Environmental Protection Agency in September 2015.

The software allowed the vehicles to lower its emissions during testing, while emitting far in excess of legal limits during real world driving. The affected vehicles had been marketed as “clean diesels” for the Volkswagen, Audi and Porsche brands between 2008 and 2015. Hundreds of thousands of diesel cars were rigged with the software.

Volkswagen has stopped selling diesel cars in the U.S. since it admitted to using the software to evade emission tests, losing out on a lucrative market. The disclosure also led to the ouster of its chief executive, damaged the company’s reputation, and launched the costliest automotive industry scandal in history. Six present and former Volkswagen executives have been indicted and the company has been charged with three criminal felony counts for the cheating.

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