Volkswagen to buy back 500,000 defeat-device enabled cars—Reuters [Updated]

It is official. US District Judge Charles Breyer announced that that were equipped with emissions-cheating software.

Original story: On Wednesday, Reuters reported that two anonymous sources briefed on the matter agreed that Volkswagen Group would buy back nearly 500,000 2.0L engine diesel vehicles equipped with illegal defeat devices as part of an agreement with the US Environmental Protection Agency (EPA). A third person briefed on the matter added that VW Group would set up a compensation fund for people who had purchased the Volkswagen and Audi diesels, although that source did not specify how much each diesel purchaser would get from the fund. Reuters reports that the compensation fund represents more than $1 billion.

The diesels were discovered in September to be equipped with illegal defeat devices, sending the German automaker’s stock in a tailspin and setting off a ripple effect of scandal throughout the company. The EPA discovered that the 500,000 US diesels were cheating its emissions tests, using software to keep the car within permissible emissions ranges during laboratory tests, but then switching off that emissions control system when the car was being driven in real-world conditions.

The EPA estimated that VW Group’s 2.0L engines were emitting up to 40 times the amount of nitrogen oxide (NOx) as was allowable by federal regulations.

After that news broke, Volkswagen worldwide were equipped with defeat device software. VW Group’s CEO, Martin Winterkorn, stepped down. Then an assortment of VW Group’s 3.0L diesel engines, including those on Porsches and other Audi lines, were found to come with the same offending software.

In January, California's Air Resources Board (CARB) rejected VW Group's proposed fix for the 2.0L engines. The automaker has a little more time to make whole its 3.0L diesel customers, as that group of defeat devices was discovered later.

Volkswagen has maintained that its executives knew nothing about the defeat devices installed on the company's purported "clean diesel" vehicles, instead asserting that the devices were the product of some rogue engineers.

Volkswagen has been hit with over 600 lawsuits in the US, all being overseen by US District Judge Charles Breyer. In March, Breyer gave Volkswagen until April 21 to come to an agreement with the EPA about how it would correct the situation and bring the defeat device-enabled vehicles into compliance with EPA regulations.

Although the company was able to issue a recall in Europe which involved a short software update, and in some cases a quick addition of a filter under the hood, US regulations are much stricter and there were doubts that the company could adequately fix the faulty cars to meet US standards.

Wednesday’s rumor of a complete buyback of 500,000 cars would confirm that suspicion for the time being.

Ars reached out to Volkswagen Group, but a spokesperson replied that the company had no comment.

Reuters' sources also said that if VW Group were able to offer a repair for the affected 2.0 L diesels that US regulators approved of, the company would be able to issue that fix at a future date.

"VW will pay cash compensation to owners who either sell their vehicles back or get them fixed,” Reuters reported. "Owners selling back their vehicles will get an additional cash payment on top of receiving the estimated value of the vehicles from before the emissions scandal became public in September 2015."

One major concern is that VW Group will buy back the vehicles from consumers in the US and sell the cars in markets where emissions laws are more relaxed. Reuters’ sources could not say whether that type of resale would be allowed.

Volkswagen is also involved in a lawsuit involving the Department of Justice on behalf of the EPA, which is asking for tens of billions in fines for breaking Clean Air Act laws.

Reuters’ sources said that certain details of the deal were still being ironed out and would not be announced at tomorrow's April 21 hearing in front of Judge Breyer.

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