As Dieselgate Deadline Approaches, News Reports Suggest VW Will Buy Back 500,000 Dirty Diesels in U.S.

Tomorrow, just one day before a weekend-long series of events kick off around the world to mark Earth Day, representatives from German automaker Volkswagen are due to appear in U.S. Federal Court.

That’s because tomorrow, April 21, is the deadline given Volkswagen back in March by U.S. Federal District Judge Charles Breyer by which it must submit plans to not only bring more than 580,000 non compliant diesel-engined vehicles in line with the Clean Air Act but also gain regulatory approval for those same plans from the U.S. Environmental Protection Agency and the California Air Resources Board.

Volkswagen will be appearing before a Federal judge tomorrow.

Volkswagen will be appearing before a Federal judge tomorrow.

It’s the latest chapter in the ongoing dieselgate scandal which began last September, when both the EPA and CARB issued Volkswagen with notices of noncompliance for knowingly producing and selling diesel-engined cars that failed emissions targets. Moreover, they alleged, Volkswagen engineers had programmed the emissions control systems of certain model-year diesel-powered Volkswagen, Audi and Porsche vehicles with a so-called “cheat switch” emissions mode. Designed to circumvent emissions testing altogether this mode gave the impression that affected cars were compliant with Clean Air Act limits while on a dynamometer, but as soon as the car was driven on a regular road switched off emissions control all together to improve fuel economy and performance, emitting up to 40-times the allowable NOx limit in the process.

Since then, Volkswagen, Audi and Porsche have all tried to distance themselves from the scandal, first blaming a few rogue engineers and then replacing large numbers of high-level executives who may or may not have been complicit in the deceit.

We'll know more this time tomorrow.

We’ll know more this time tomorrow.

But as Reuters reported today, Volkswagen and U.S. regulators are expected to tell a Federal judge tomorrow that they have reached an agreement on how Volkswagen will make amends for its misdeeds and the millions of pounds of harmful nitrogen oxides emitted into the air as a consequence.

At the heart of the deal, it claims, is Volkswagen’s agreement to buy back up to half a million of the affected 2.0-liter diesel cars.

Sadly, it’s not clear yet just how much Volkswagen will be required to pay for each car. Previously, we had heard that Volkswagen may be forced to pay owners the full (when new) sticker price for their cars. Other sources suggest it will have to pay the real-world market value of the cars as they were just before the dieslegate scandal broke.

German newspaper Die Welt meanwhile, suggested earlier today that the deal would involve Volkswagen paying each customer just $5,000 in compensation. And while some sites are proclaiming one or other story as being true, we’re going to wait until tomorrow to find out just what the details will be.

While the EPA, CARB and Volkswagen do now appear to have found a solution they’re all happy with (at least for now), ongoing investigations at Volkswagen’s headquarters in Wolfsburg Germany are being slowed by the massive amount of data investigators are having to sift through, much of which contains purposeful obfuscation of the truth.

As Bloomberg reported on Monday, Volkswagen’s own probe into the scandal — ordered by the Volkswagen Board of Directors and involving more than 450 independent investigators, some of which are from U.S. law firm Jones Day and Deloitte LLP — is finding it harder than expected to sift through the more than 102 terabytes of data and 1,500 laptops, computers and other devices seized as part of the investigation. Originally, Volkswagen had planned for the investigation to be complete by the end of April, but now seems far from confident that will happen.

Volkswagen is rumored to be buying back 500,000+ noncompliant cars.

Volkswagen is rumored to be buying back 500,000+ noncompliant cars.

The real kicker for investigators it the use of code words by engineers and executives working on the diesel engines in question. Citing both anonymous sources working on the investigation and with anonymous connections at Volskwagen, Bloomberg notes that the term “acoustic software” was one such code word used to describe the emissions-cheating algorithms. These code words, combined with outdated computer systems and large chunks of missing data, is making it extremely hard to find enough evidence to hold individuals accountable for the illegal activity.

So far, investigators say they have been working on a core team of around 20 Volkswagen employees who are believed to be at the heart of the scandal, but have actually issued 2,000 or so ‘litigation hold’ letters to Volkswagen employees designed to prevent them from deleting any data by threatening them with serious legal ramifications if they do. At the same time however, those who have been interviewed about their involvement or knowledge of the cheat switch software are choosing to remain quiet, fearful that admitting knowledge of what was going on could land them in legal trouble too.

As for Volkswagen investors? They just want the whole dirty mess to go away. And right now, Bloomberg says, most seem willing for Volkswagen to pay somewhere between $22 billion and $30 billion to make the nightmare go away.


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