VW Diesel Emissions Scandal Will Cost Company $30 Billion

Volkswagen has announced that the diesel emissions scandal will cost the company an extra $3 billion (€2.5 billion), because engines are proving “far more technically complex and time consuming”.

The additional cost, for fixing engines in the US, takes the total bill to $30 billion.

Two years after the diesel emission cheating scandal first emerged, VW is still struggling to put the crisis behind it.

Separately Munich prosecutors made an arrest in connection with the scandal.

German media reports have named the person taken into custody as Wolfgang Hatz, former board member at VW unit Porsche. But there has been no official confirmation of his identity.

Wolfgang Hatz was head of Research and Development at VW-owned Porsche and had held other roles in the VW group, including in engine development at Audi. He was suspended after the diesel emissions test-cheating was exposed. He then left the company.

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In 2016, Porsche said no evidence had been found against Wolfgang Hatz.

Wolfgang Hatz was reportedly close to former VW chief executive, Martin Winterkorn, who has denied any knowledge of the “defeat devices” which allowed vehicles to artificially reduce emissions during tests before their existence was exposed publicly.

Another former Audi executive, Giovanni Pamio, was taken into custody earlier this year, at the request of the US Department of Justice. One man has so far been jailed in connection with the scandal: Volkswagen engineer James Liang received a 40 month sentence in a US court last month.

News of the additional financial burden from dealing with vehicles in the US underlines the difficulty VW is having extricating itself from the scandal.

VW shares initially fell sharply on September 29 although they later recovered most of the lost ground.

The automaker first admitted in September 2015 that it had used illegal software to cheat US emissions tests.

Since then VW has been adapting its cars to meet legal requirements. However,  the process in the US is proving tougher than expected.

It is also amending cars in Europe, but the process there is more straightforward, VW said.

The additional costs will be reflected in Volkswagen’s third quarter results, which will be reported next month.