Twenty-seven billion seemed like an odd number, so Volkswagen upped the financial cost of its diesel emissions scandal to an even $30B. Actually, the extra expense comes entirely from the repair of older U.S.-market vehicles, which are proving less easy to fix than anticipated.
Because of this, VW has to rustle up some extra cash. The automaker set aside $26.7 billion to put the scandal behind it, and this latest price jump has the company pole vaulting over that marker.
This isn’t the only new grief facing VW, however. German media and The New York Times is reporting the arrest of the highest-ranking official so far — VW Group’s former powertrain chief.
A man identified by numerous sources as Wolfgang Hatz was arrested by German authorities Thursday. A former head of powertrain development, Hatz was a close confidante of group CEO Matthias Müller when the two men sat on the management board at Porsche. Hatz, who also served as head of R&D at Porsche, is being held in Munich without bail. Authorities claim the former executive poses a flight risk.
Hatz’s time at VW covers the leadup to the emissions-cheating era — he started as Audi powertrain chief in 2001 before becoming top engine boss at VW Group in 2007. That role lasted until 2012, though he stated with the company though his role at Porsche.
There’s no doubt investigators will press Hatz for his knowledge of what other top executives knew. That’s been the case in previous arrests.
Now, back to the engines Hatz played a role in sending to all corners of the world. According to Reuters, VW will set aside an extra 2.5 billion euros ($3 billion) to cover the repair-related costs. While the software changes to the 2.0-liter engines aren’t giving the company any trouble, the hardware changes (or the second step of the two-part fix) certainly are.
“We have to do more with the hardware” to bring the engines to compliance, a VW spokesman told Reuters. Evercore ISI analyst Arndt Ellinghorst said that, given the number of vehicles affected, the cost could be as high as $6,100 per car. This is leading to worry over what unforeseen costs might stalk the company’s 3.0-liter diesel vehicles.
Back in July, after giving VW the green light for a full fix, the Environmental Protection Agency described the repair as such:
“The approved modification involves both software and hardware changes. VW will remove the defeat device software that reduced emission control effectiveness in all but emissions testing circumstances, and replace it with software that directs the emission controls to function effectively in all typical vehicle operations. VW will also replace the NOx catalyst and, for 2009 models, certain other emission control system hardware.”