Under the terms of the settlement, owners and lessees of the affected vehicles will have the option of either accepting a buyback or lease termination, or receiving an approved emissions modification for their vehicle “if and when it becomes available.”
It’s this portion of the settlement that will cost VW the most. The company established a maximum funding pool of $10 billion as part of its initial agreement with the government earlier this year.
Volkswagen has also agreed to pay $2.7 billion over three years into an environmental trust, to be managed by a court-appointed trustee, in order to remediate the excess nitrogen oxide emissions generated by 2.0L TDI vehicles in the U.S. The company will also invest an addition $2.0 billion over 10 years in zero emissions vehicle infrastructure, access and awareness initiatives.
At a total of $14.7 billion, this is one of the largest corporate settlements in U.S. history.
"Final approval of the 2.0L TDI settlement is an important milestone in our journey to making things right in the United States, and we appreciate the efforts of all parties involved in this process,” said Hinrich J. Woebcken, president and CEO of Volkswagen Group of America, Inc. “Volkswagen is committed to ensuring that the program is now carried out as seamlessly as possible for our affected customers, and has devoted significant resources and personnel to making their experience a positive one."
Volkswagen and Sustainability
VW has been going to great lengths to emphasize its commitment to reducing emissions and improving automotive sustainability.
For example, the company recently announced its appointment of an international “Sustainability Council” that will act as an independent advisor to the Volkswagen Group. The nine-member council consists of climate researchers, industry experts and former federal officials, including a former Prime Minister of Belgium.
More tangibly, Volkswagen has announced that it will begin using two cargo ships powered with liquid natural gas (LNG) starting in 2019. The 656-foot ships have a capacity of 4,500 vehicles each, and will be used for shipments between Europe and North America. According to VW, the LNG drive system significantly reduces ship emissions—CO2 by up to 25 percent, NOx by up to 30 percent, particulate matter by up to 60 percent and SOx by up to 100 percent.
All of these efforts point to a company doing its best to make things right, or at least to assure consumers that it’s making the attempt. From a purely pragmatic point of view, the distinction is irrelevant: the environment doesn’t care whether it’s being cleaned for selfish or altruistic reasons, so long as it gets clean.
On the other hand, a push toward the mere appearance of sustainability, rather than the real thing, could lead VW to prioritize ineffective solutions that play well in the media over better options that make for weaker headlines.
What do you think? Does this settlement mark the beginning of a new chapter for Volkswagen, or has the company already suffered a mortal blow? Comment below.