Volkswagen and the Justice Department reached a deal in principle to address excess diesel emissions in nearly 600,000 polluting vehicles that will include buyback offers and a possible fix, a federal judge said Thursday.
U.S. Judge Charles Breyer said the settlement is expected to include a buyback offer for nearly 500,000 2.0-liter vehicles and a possible fix if regulators agree on it. The settlement will include an environmental remediation fund and additional compensation to owners to sell back or have vehicles fixed.
The government and Volkswagen have until late June to complete a final “consent decree” that will face public comment before taking effect.
The compromise struck reflects VW’s failure to propose any solution that would bring 2-liter vehicles back into line with U.S. regulations using currently available technology. According to German media reports, the broad outlines of the deal foresee VW giving drivers up to two years to decide whether to trade in their car or wait for a technological fix to become available. The newspaper Die Welt also reported Wednesday that the company would offer up to $5,000 in cash compensation out a fund specially set up.
Volkswagen’s shares had rallied hard in Frankfurt Thursday in anticipation of the agreement, which removes at least some of the uncertainties over the final costs of the affair for Europe’s largest automaker. They had closed up over 5% at their highest level since the start of the year just before the news broke. Bloomberg reported that the company had agreed to set aside “at least $10 billion” to settle civil claims by the U.S. government and lawsuits by U.S. car owners. There was no immediate confirmation from either VW or the DoJ.
This story is developing. Fortune will continue to update it.
