Volkswagen's huge diesel emissions scandal: the full story

The Volkswagen Group has wrapped a multiyear internal investigation into Dieselgate, and it says it will try to pry compensation from former CEO Martin Winterkorn and former Audi CEO Rupert Stadler to make up for some of the massive financial damages that resulted from the emissions cheating scandal.

The law firm Volkswagen hired to perform the investigation covered more than 65 petabytes of data, including some 480 million documents. About 1.6 million of those files were “identified as relevant, screened and reviewed,” the German automaker says. The law firm also performed 1,550 interviews and reviewed files from prosecutorial and judicial proceedings around the world that came as a result of the company’s actions. The internal probe was “by far the most comprehensive and complex investigation carried out in a company in German economic history,” Volkswagen writes.

Daimler, the parent company of Mercedes-Benz, is paying over $2 billion to make its own diesel emissions cheating scandal go away in the United States.

The company announced on Thursday that it has reached a $1.5 billion settlement with US authorities, including the Environmental Protection Agency, the California Air Resources Board, the Justice Department’s Environment and Natural Resources Division, the California Attorney General’s Office, and the US Customs and Border Protection, winding up a four-year probe that kicked off following Volkswagen’s Dieselgate scandal. Daimler has also settled a separate class action lawsuit from vehicle owners to the tune of $700 million, including attorneys’ fees.

Four and a half years after the Volkswagen Dieselgate broke, the company is still facing scrutiny on two continents. In its home country Germany on Friday, the Volkswagen Group agreed to pay a settlement of nearly $1 billion to hundreds of thousands of owners who argued their cars lost value after the scandal. The same day, Porsche’s offices were raided again by German police in an effort to uncover new evidence about Dieselgate.

On top of that, in America, Volkswagen has spent the last week defending itself in court against owners who declined to be a part of the automaker’s multibillion-dollar Dieselgate settlement.

Former Audi CEO Rupert Stadler has been charged by German prosecutors over his alleged role in the Volkswagen Dieselgate scandal, along with three other defendants who were not named. Stadler is accused of helping the automaker cheat emissions tests to make Audi’s cars appear cleaner than they really were as well as covering up that fraud.

Stadler is the second high-profile Volkswagen Group executive to be hit with criminal charges in Germany; former Volkswagen CEO Martin Winterkorn was charged in April. (Winterkorn was also indicted in the United States in 2018.) Four top Audi managers were indicted by a grand jury in the United States in January, and two employees are in prison here as well.

German prosecutors have charged VW’s ex-CEO Martin Winterkorn over his role in the Dieselgate scandal. Winterkorn is accused of knowing about the conspiracy as early as 2014 but failing to inform regulators or consumers. Along with four others, he’s also accused of unfair competition, embezzlement, tax evasion, and giving false witness. The New York Times notes that these are the first criminal charges to be filed against an individual in Germany over the scheme.

The former VW CEO is thought to have played a substantial role in the scandal, which saw millions of diesel vehicles sold worldwide that produced illegal levels of pollution despite appearing to pass emissions tests. In the US, the SEC has also charged the ex-CEO for defrauding investors due to the scandal, but he is unlikely to be extradited by German authorities. If convicted, he faces up to 10 years in prison, as well as substantial fines and the return of nearly €11 million ($12 million) in salary and bonuses.

A federal grand jury in Detroit has indicted four former Audi managers for their alleged role in the German automaker’s scheme to cheat US emissions testing on diesel-powered cars, according to a new court document published Thursday. Audi’s malfeasance was part of a larger effort from parent company Volkswagen Group to sell millions of cars with engines that were dirtier than regulations allowed, a scandal that was uncovered in 2015 and has since been dubbed “Dieselgate.”

Richard Bauder, Axel Eiser, Stefan Knirsch, and Carsten Nagel were charged with multiple counts of violating the Clean Air Act, committing wire fraud, and conspiracy to defraud the United States. All of them ran different parts of Audi’s engine development and testing divisions, and worked on the diesel engines that used “defeat devices” to cheat EPA emissions tests. None of the four are in custody, and all are believed to be in Germany, according to Reuters.

Audi executive Rupert Stadler has been forced out of the company as a result of his alleged role in the Dieselgate scandal. Stadler was fully removed from his post as CEO on Tuesday, as well as his position on the boards of Audi and Volkswagen Group, according to the German automakers. Stadler was suspended from the CEO role earlier this summer after he was arrested by German authorities on suspicion that he knew about the company-wide effort to cheat emissions tests.

Stadler was CEO of Audi when the emissions cheating scandal broke in 2015. That September, the EPA accused Audi’s parent company Volkswagen of intentionally installing software on a variety of its diesel-powered cars that lowered emissions during testing, which made them appear compliant. In truth, when the cars were back on the road, some polluted upward of 40 times more than the allowed limit.

Martin Winterkorn, the former CEO of Volkswagen, was charged with conspiracy to defraud the US related to the massive diesel emissions cheating scandal that has ensnared the German automaker for almost three years. According to Bloomberg, Winterkorn’s indictment was unsealed in federal court in Michigan on Thursday. The former CEO was also charged with violations of the Clean Air Act.

Winterkorn is the latest former VW executive to face charges in the Dieselgate investigation, which has cost the automaker billions of dollars in fines and settlement money and severely damaged its reputation on a global scale. Last December, Oliver Schmidt, the former head of Volkswagen’s US environmental and engineering office, was sentenced to seven years in prison. Former engineer James Liang was sentenced in August to 40 months in prison and a $200,000 fine.

Volkswagen settled a major diesel emissions class action lawsuit brought by hundreds of vehicle owners right before the case was set to go to trial. The German auto giant’s US division settled the lawsuit brought by a North Carolina man and over 300 other owners of diesel cars who allege fraud and unfair trade practices.

The trial could have featured testimony from current and former VW executives and would likely have caused a spate of bad press for the automaker regarding the Dieselgate scandal. Since it first broke in 2015, the controversy has led to the resignation of VW’s CEO, seen a handful of executives sentenced to jail, and resulted in billions of dollars in fines and settlements.

The man who was in charge of Volkswagen’s US environmental and engineering office before the Dieselgate scandal has been sentenced to seven years in prison. Oliver Schmidt had previously pleaded guilty to violating the Clean Air Act and conspiracy to defraud the US government in August for his role in Dieselgate, where VW was found to have used hidden software to hide the fact that many of its cars weren’t meeting emissions standards.

The prison term and an accompanying $400,000 fine were announced at a sentencing hearing today in a US District Court in Detroit. They represent the maximum penalties for those charges.

Volkswagen has reached a final deal with US regulators over its 2015 diesel emissions scandals. The German automaker said it expects to plead guilty to criminal charges and pay the government some $4.3 billion as a settlement. In September last year, the company admitted installing secret software in more than half a million vehicles sold in the US that it used to fool exhaust emissions tests. Investment firm Evercore ISI said in a research note it expects the settlement would “draw a line under all remaining US-related legal risk.”

“Volkswagen deeply regrets the behavior that gave rise to the diesel crisis. Since all of this came to light, we have worked tirelessly to make things right for our affected customers and have already achieved some progress on this path,” Volkswagen Group CEO Matthias Müller said in a statement. “The agreements that we have reached with the U.S. government reflect our determination to address misconduct that went against all of the values Volkswagen holds so dear. They are an important step forward for our company and all our employees.”

US-based owners of Volkswagen vehicles affected by the manufacturer's infamous emissions scandal will now be able to sell their cars back to dealerships, after the company was granted final approval on its proposed $14.7 billion compensation deal. US district judge Charles Breyer approved the plan, which was first hammered out in June this year, and sets aside just over $10 billion for customers who want to trade their vehicles in for pre-scandal prices or who are waiting for repairs.

In addition to buyback fees, owners of the 475,000 cars implicated in the scandal — including Beetles, Passats, and Audi A3s released since 2009 — will also get between $5,100 and $10,000 as an apology. People can also choose to hang on to their cars in anticipation that Volkswagen will fix the problems at its own expense, and have until September 2018 to make their minds up about what they want to do. If the company doesn't repair or fix at least 85 percent of affected cars by June 2019, it's on the hook for further penalties.

This weekend at the Paris Motor Show, Volkswagen unveiled its new all-electric, fully autonomous concept car, the I.D. (The Verge’s man in Paris, Amar Toor, got an early look last week.) The car will become the first Volkswagen built off the carmaker’s custom-built Modularer Elektrifizierungsbaukasten, aka Modular Electric Drive kit. It is due to go on sale in 2020, with a range of up to 373 miles — or about 158 miles further than Tesla says its soon-to-be-release Model 3 can travel on a single charge.

Volkswagen says the sleek silver-and-blue car is meant to harken back to the iconic Beetle and Golf, but most consumers and car enthusiasts will likely make a different association: this is Volkswagen’s high-stakes effort to put the emissions cheating scandal behind it, once and for all.

James Liang, a veteran Volkswagen engineer, pled guilty Friday to conspiring to defraud the American public about its vehicle emissions, Bloomberg reports. It is the first criminal charge in the ongoing Dieselgate scandal that has loomed over the German company since last September.

Liang entered his plea in Detroit federal court on Friday and is cooperating with the investigation, Bloomberg notes. This could mean more resignations for a company that has already seen its CEO and chief US executive step down in the wake of the scandal.

Volkswagen announced a major partnership with an Illinois-based trucking company called Navistar, a sign that the automaker is eager to move passed its emissions scandal and focus on expanding its operations. Navistar also owns International Trucks, which encompasses a variety of medium-duty trucks.

VW said it has forged a technology and purchasing deal with Navistar, which in addition to trucks also manufacturers school buses and large-scale engines. The deal, which was first reported by Reuters, gives VW a 16.6 percent stake, or $256 million, in the company and a much-needed foothold in the US for its trucking business.

Volkswagen will face federal criminal charges in the US for its diesel emissions scandal, possibly resulting in "significant financial penalties," according to a report in The Wall Street Journal. Volkswagen and Department of Justice prosecutors are said to be in negotiations to settle the case before the end of the year, though that timing isn’t firm.

The prosecutors are said to be looking to decide if they should seek a guilty plea to criminal charges from Volkswagen or if the DoJ will set up a "deferred prosecution agreement" where charges could be dismissed if the company adheres to settlement terms.

The attorneys general of several US states are suing Volkswagen for violating state environmental regulations with its diesel emissions cheating scandal, even as federal regulators and many of those same states have agreed to a $14.7 billion settlement for violating consumer protection and EPA and California state environmental regulations.

Coordinated lawsuits were filed today by New York, Massachusetts, and Maryland, alleging violation of various state environmental and anti-fraud statutes. All three states say Volkswagen has violated their air quality laws, combined with some sort of anti-fraud measure for the defeat mechanisms to bypass emissions testing.

The California Air Resources Board (CARB) announced late yesterday that it has rejected Volkswagen Group's plan to fix thousands of cars with 3-liter engines that were affected by the company's global emissions cheating scandal. The plan was submitted for approval earlier this year.

CARB says there are about 16,000 Volkswagen, Porsche, and Audi cars with affected 3-liter engines in California. (Volkswagen Group sells Porsche and Audi cars around the world.) There is an estimated 85,000 on the road across the country. They are also not included in the $15 billion settlement that Volkswagen reached last month — that decision was restricted to cars with 2-liter engines that were rigged to beat emissions tests.

Widely reported by media outlets yesterday, Volkswagen's settlement for US owners of 2-liter diesel vehicles affected by the Dieselgate scandal is now official. As expected, VW will end up shelling out about $15 billion just to cover its costs in the US — never mind the rest of the world — and to get back into the good graces of the EPA and the California Air Resources Board (CARB).

Here's the top line: affected owners will get a cash payout of somewhere between $5,100 and $10,000 for their troubles, calculated by a formula that takes into account vehicle age and model. In addition, they'll be able to choose from a buyback of their vehicle at the September 2015 NADA trade-in value — before Dieselgate broke and trade-in values plummeted — or they can "wait and see" whether Volkswagen is able to develop a fix that makes the engines compliant with emissions standards and is approved by US regulators. If no such fix is developed or approved, owners can still take the buyback instead.

As expected, Volkswagen has reached a deal this week with US regulators to compensate owners of vehicles affected by its massive diesel emissions cheating scandal — a systematic global deception of customers and regulators that resulted in millions of vehicles being sold globally that produce unexpectedly high levels of pollutants. Details of the settlement were reported today by Bloomberg, AP, and the New York Times, though they won't officially be made public until submitted to a federal judge on Tuesday.

The deal, which does not affect owners outside the US, earmarks nearly $15 billion to repair or buy back affected vehicles. For owners who choose the buyback, they'll receive amounts equal to the trade-in value before the scandal broke (and that's a critical detail, because the values of those vehicles has fallen through the floor in the intervening months). In addition, owners will get anywhere from $5,100 to $10,000 in cash as an "I'm sorry" for the ordeal.

Volkswagen will pay between $1,000 and $7,000, and in some cases as much as $10,000, to owners of cars that were affected by the diesel emissions scandal, according to reports from Bloomberg and The Wall Street Journal. The reports state that the payouts will vary depending on factors like the age of each vehicle, and each attributes the information to unnamed sources close to the ongoing talks — no surprise, considering that a gag order has been issued by the US District Judge who is overseeing the case. The deadline for the settlement decision is June 28th.

The decision to compensate owners of vehicles that were affected by the company's emissions-cheating efforts came back in April, though it was unclear at the time how much the individual payouts would be. It was rumored that they would be around $5,000 each, which — based on the fact that almost 500,000 two-liter engine vehicles were affected — would account for an almost $3 billion payout. But earlier this week Bloomberg reported that the total cost of customer payouts could be as high as $6.5 billion, a number that seems more in line with today's report.

Former Volkswagen boss Martin Winterkorn ceded the throne pretty quickly after the company's diesel emissions cheating scandal broke last year, but that doesn't mean he's out of the woods. Just the opposite, in fact: prosecutors in Germany are now investigating Winterkorn at the request of BaFin, the nation's financial regulator.

The investigation isn't directly related to the cheating itself, which saw millions of diesel-equipped vehicles fitted with software designed to evade emissions testing in order to meet fuel economy claims at the environment's expense. Rather, BaFin wants to know whether Winterkorn waited too long to publicize the cheat, after internal documents revealed that he'd known about it for over a year before it was disclosed by the Environmental Protection Agency in the US. Another former VW executive is also caught up in the investigation, though the name of the second individual has not been disclosed.

Announcing the company's new official strategy today, Volkswagen CEO Matthias Müller says that he wants to "rectify shortcomings and establish a corporate culture that is open, value-driven and rooted in integrity." To do that, VW plans to launch some 30 battery-powered electric vehicles over the next ten years, which the automaker says will account for 20 to 25 percent of its sales volume — two to three million units by 2025.

The announcement is not a surprise: for months, Müller has been signaling a swift move toward electrification and so-called mobility solutions — ride-sharing, car-sharing, and so on — in an effort to reverse some of the damage done by the ongoing diesel emissions cheating scandal that threatens to tie the company up in government inquiries and lawsuits for months or years to come. To that end, in recent weeks, Volkswagen has invested some $300 million in Uber rival Gett, showed an electric Microbus revival at CES, and announced plans to explore self-driving cabs.

Volkswagen held an internal presentation in 2006 explaining how to evade US diesel emissions testing, according to a New York Times report today. The report cites two individuals who've seen the presentation — an actual PowerPoint file — which has been uncovered in the course of the ongoing investigation into the scandal. Dieselgate, as it's been called, has already felled numerous executives and threatens to cost Volkswagen tens of billions of dollars.

The presentation was reportedly prepared in response to Volkswagen's realization that it couldn't meet the US's more stringent diesel emissions standards without wearing out filtering equipment too quickly. In lieu of fitting better, cleaner systems that would've increased sticker prices, the presentation showed how VW could use embedded software to detect when an emissions test was underway and change engine parameters in response, making the cars appear cleaner than they actually were.