It’s been nearly two years since news of Volkswagen’s diesel emissions cheating first broke, and the months since have been filled with recalls, buybacks, and lots and lots of money flying out of the company’s bank account and into the pockets of affected customers. But despite the company’s swift and appropriate response to being caught red-handed, there’s still the little matter of answering for the laws that were broken. Today, the US Justice Department revealed that Volkswagen won’t push back against the charges it’s been hit with, and has agreed to plead guilty to a trio of criminal charges.
The use of a “defeat device” — which is a fancy way of saying that VW engineered its cars to perform differently during emissions testing than they do on the open road — is an extremely serious offense. The charges that resulted from VW being caught in the act include conspiring to defraud the US, violate its customer agreement, and skirt the Clean Air act. Volkswagen’s fall guy, former head of compliance Oliver Schmidt, has agreed to also plead guilty in the case.
So what does that all mean? Well, for Volkswagen it means losing somewhere in the neighborhood of $4.3 billion, and that’s just for the penalties, fines, and fees related to the scandal. In terms of overall financial impact to the company, including the cost of repairs, buybacks, coordinating the recall effort, and other associated costs, it’s looking like the $18 billion that VW set aside early last year to deal with these issues is well spoken for.
