Cash Isn’t The Only Way That Volkswagen Has Paid For Dieselgate

When you stop to think about it, Dieselgate has been an expensive proposition to Volkswagen. It seems to be an expense that, in hindsight, the automaker never should have had to pay. However, the hubris of a few mid-level engineers and later senior managers meant that from the start in 2006, it would end up the way it has.

If the automaker had had the foresight to admit that an engine it was developing in 2006 could not meet the emissions goals for 2008, when it was rolled out, it would have saved billions.

Here’s a list of the costs that, to date, Dieselgate has cost VW:

• $10.03 billion to buy back and compensate the owners of 475,000 2.0-liter turbodiesel four-cylinder Volkswagen models. Wherever you found the initials TDI from 2006 to 2015, owners of those vehicles will be receiving the value of their vehicles on September 30, 2015, as well as a compensation payment ranging from $5,100 to $10,100.
• $2 billion to fund improvements and additions to zero emissions infrastructure across the country. Already, many firms are jostling for a cut of the money and are even trying to cut VW out of the picture, entirely. The only thing they want VW doing is signing their checks. The Environmental Protection Agency (EPA) has said “wait a minute, VW can earn a bit off their investments if they follow the rules. You can’t keep them from it as they do deserve a return on investment.” The competition has tried to make this a non-starter, and when they failed with lobbying regulators and filing court documents, they lined up their cheerleaders in Congress who are mimicking their language and perhaps their thinking as the lawmakers want to skew the playing field from VW and into their supporters’ arenas.
• $2.7 billion to mitigate the damage caused by the years that VW’s cheating diesels spewed extra pollutants into the atmosphere. The funds are to replace items like aging diesel bus fleets. This figure was just upped by $200 million as part of the 3.0-liter V-6 settlement that is still is awaiting final approval.
• $1.2 billion to compensate dealers for things like unsold inventory; dealership improvements, and other items.
• $400 million to the states in settling a suit brought by 44 state attorneys general. The money is for mitigation, in addition to other payments.
• $800 million to California, where the bulk of the 2.0-liter engines have been sold, in mitigation payments.
• Unknown amount to dealers who cannot sell any turbodiesels still in their inventories.
• $1.6 billion to Canada to settle the Dieselgate scandal there.
• $1 billion to pay costs relating to the 3.0-liter V-6 turbodiesel engine portion of Dieselgate.
• Up to $46 billion if the Justice Department wins its civil suit on racketeering charges relating to the entire Dieselgate scandal. It is part of the agency’s criminal investigation and would likely settle the matter if Justice agrees.
• Still up in the air are fines and penalties from the Federal Trade Commission (FTC) which has charged the automaker with false advertising.

All of these penalties are in addition to more fleeting things that can’t be gauged. For example, what is the cost of a company’s lost reputation? And, what’s the cost to a firm that has prided itself on its racing efforts as it watches successful racing teams shuttered to save money so it can pay other bills?

Another story tomorrow will explore how VW ended up where it is and how it got there.