Volkswagen will repair or buy back hundreds of thousands of diesel vehicles in the U.S. that were equipped with emissions-cheating software, a federal judge said this week.
U.S. District Judge Charles Breyer said that the embattled German automaker reached an agreement with the Environmental Protection Agency, California regulators and affected VW owners ahead of a Thursday deadline set by the court.
Breyer, according to reports, said that VW will either fix the affected vehicles or purchase them outright. The settlement also includes "substantial" compensation, as well as requirements to promote "green" auto industry initiatives and environmental remediation.
Final details, including the deal's financial impact, are due to the court on June 21. Breyer issued a gag order on the parties, but reports suggested that the company could pay $5,000 to owners, or about $1 billion in total.
Volkswagen originally set aside $7 billion to deal with the crisis, but observers long expected the final tally to be larger.
The EPA first disclosed the violations, in which VW installed software to manipulate emissions tests, last fall. The scandal affected more than 500,000 U.S. vehicles and some 11 million worldwide, with the bulk in Europe.
German regulators approved a fix for the European Union late last year, but repairs in the U.S. — where the vehicles exceeded EPA pollution limits by up to 40 times — will be much more expensive.
The settlement would resolve months of negotiations with the EPA and the California Air Resources Board. Reports also said that the Federal Trade Commission, which sued VW over alleged false advertising, is likely to agree to its terms.
"Volkswagen is committed to earning back the trust of its customers, dealers, regulators and the American public," the company said in a statement. "These agreements in principle are an important step on the road to making things right."
VW is scheduled to present a full earnings report next week after the scandal wreaked havoc on its sales numbers. In addition, ongoing criminal investigations could result in billions more in penalties.