Volkswagen Sets Aside $7.3 Billion For Emissions Cheating Scandal

VW stock plunges after countries join U.S. calls for Volkswagen to come clean about clean diesel.

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— Volkswagen's clean green image is being wiped away as the automaker continues its nosedive toward hell after admitting it has been cheating emissions standards on its "clean" diesel vehicles.

It took a university test program and investigations by the Environmental Protection Agency (EPA) and the California Air Resources Board to finally convince VW to admit the scheme. Even then it took the automaker over a year to admit it had been using special software to fool official emissions tests.

That admission only came because the EPA refused to allow Volkswagen to sell any model year 2016 diesel vehicle until the automaker explained the emissions discrepancies.

What started with VW admitting 500,000 diesel vehicles in the U.S. had the sneaky software installed has now grown to a possible 11 million vehicles affected worldwide.

Investigations are popping up across the globe to learn what damage has been done by VW, and the automaker says it has set aside over $7.3 billion to handle the crisis. However, Volkswagen says that might not be enough due to the massive number of vehicles potentially involved.

The 11 million estimate is based on vehicles equipped with Type EA 189 engines, and those engines have shown problems with emissions levels in all the vehicles.

Volkswagen CEO Martin Winterkorn has repeated that he is "endlessly sorry," but that won't go far with the clean energy public who has purchased VW vehicles for years because of its "clean diesel" advertising. Days after saying he was sorry, Winterkorn jumped overboard and resigned as CEO of Volkswagen.

News of the cheating scandal rocked VW's stock as the automaker lost more than $30 billion from its market value. Shares dropped over 36 percent as Europe and Asia joined the bandwagon and class-action lawsuits sprang to attention.

Even Germany, home of Volkswagen, has opened an investigation into its homegrown automaker. Transport Minister Alexander Dobrindt will lead a special commission to investigate VW's actions and German Chancellor Angela Merkel said she is encouraging VW leadership to lay the facts on the table as quickly as possible.

In Canada, Volkswagen stopped sales of many of the diesel vehicles targeted by the U.S. EPA. Those vehicles include the following:

  • 2009-15 VW Jetta
  • 2010-15 VW Golf
  • 2013-15 VW Beetle
  • 2012-15 VW Passat
  • 2009-15 VW Golf Wagon/Sportwagon

And in the U.S., the EPA is continuing its investigation which could lead to a maximum fine against VW of $18 billion dollars. In addition, the U.S. Justice Department has opened a criminal probe and the National Highway Traffic Safety Administration is working with VW on how the automaker plans on fixing nearly 500,000 diesel vehicles on American roads.

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