Volkswagen shares rose in early Wednesday trading as investors welcomed news the carmaker is on the cusp of a criminal and civil settlement with the U.S. Justice Department over its emissions test cheating scandal.
Volkswagen (vlkay) said after the market close on Tuesday it was in advanced talks over a $4.3 billion settlement, and it planned to plead guilty to criminal misconduct.
VW shares were up 2.1% at 149.10 euros by 8:40 a.m. GMT.
“The good news is that VW makes another important step to solve the dieselgate issue in the U.S. but the financial impact seems higher than so far expected by capital markets,” DZ Bank analyst Michael Punzet wrote in a note published on Wednesday.
The German group said the financial implications of the U.S. deal exceed the 18.2 billion euros ($19.2 billion) it has set aside to cover the costs of its wrongdoing, adding it has yet to quantify the impact of the deal on 2016 group results.
Most analysts had expected the U.S. deal, which VW had raced to conclude before the Obama administration bows out on Jan. 20, to cost the carmaker around 3 billion euros.
VW admitted in September 2015 to installing secret software in hundreds of thousands of U.S. diesel cars to cheat exhaust emissions tests and make them appear cleaner than they were on the road, and that as many as 11 million vehicles could have similar software installed worldwide.
The carmaker’s supervisory board is set to meet on Wednesday to approve the deal.