Volkswagen to Pay Billions in Settlement

Detroit — Volkswagen will spend about $10.2 billion to settle an emissions cheating scandal in the U.S. that has turned into one of the largest cases of corporate deception in the nation’s history.

Two people briefed on settlement talks said most of the money would go to compensate 482,000 owners of cars with 2-liter diesel engines that were programmed to turn on emissions controls during government lab tests and turn them off while on the road.

Investigators determined that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems in humans. VW diesel owners first learned of the deception in September, and most have seen the value of their cars decline. According to the two people, Volkswagen will offer to fix the cars for free, but any fix will likely hurt the cars’ acceleration and fuel economy. Alternatively, owners can sell their car back to the company.

Volkswagen, which admitted to intentionally deceiving regulators, will also pay penalties to government agencies such as the Environmental Protection Agency, California Air Resources Board and the Federal Trade Commission, one of the people said.

The settlement is not final yet and terms could change as lawyers work around the clock on final details, said the people, who asked not to be identified because a judge in the case has issued a gag order. Details are scheduled to be released Tuesday by Senior U.S. District Court Judge Charles Breyer in San Francisco.

The $10.2 billion would eclipse the cost of all recent automotive scandals — and the amount VW ultimately pays out could grow by billions of dollars. A lawsuit by the Justice Department is ongoing, and the company could be fined by the state of California. The company also faces as much as $20 billion in fines for violating the Clean Air Act.