German auto supplier to plead guilty, pay $35 million fine in VW emissions case

WASHINGTON (Reuters) – German auto supplier IAV Gmbh has agreed to plead guilty and pay a $35 million fine for conspiring to assist Volkswagen AG (VOWG_p.DE) in its effort to evade U.S. diesel emissions standards, the U.S. Justice Department said on Tuesday.

IAV, which is 50 percent owned by Volkswagen, will serve two years of probation and be under the oversight of an independent monitor, the Justice Department said. Volkswagen has previously agreed to pay more than $25 billion in the United States, owing to claims from vehicle owners, environmental regulators, states and auto dealers, and has offered to buy back about 500,000 polluting U.S. vehicles.

Susan Bodine, assistant administrator of the U.S. Environmental Protection Agency, said in a statement that “IAV designed the software that allowed VW to cheat U.S. air emissions standards.”

The Justice Department said it would have sought a higher fine but it could have jeopardized IAV’s viability.

“We take these matters very seriously and see this resolution as an important step forward for our company,” said Kai-Stefan Linnenkohl, president and member of the IAV management board. “The misconduct identified does not reflect who we are as a company today. We are committed to a culture of compliance and accountability.”

Volkswagen pleaded guilty in May 2017 as part of a $4.3 billion Justice Department settlement. In total, nine people have been charged in the diesel emissions scandal and two former VW executives have pleaded guilty and been sentenced to prison terms.

Justice Department official John Cronan said Tuesday in a statement the government’s “investigation into emissions cheating is ongoing and we will follow the evidence wherever it leads.”

IAV is set to plead guilty on Jan. 18 in Detroit.

Separately, the Justice Department has an ongoing investigation into alleged excess emissions from 104,000 Fiat Chrysler Automobiles (FCHA.MI) diesel vehicles.

The company has denied any wrongdoing and said there was never an attempt to cheat emissions rules.

U.S. and California regulators stepped up scrutiny of diesel vehicles after Volkswagen admitted in 2015 to illegally installing software in U.S. vehicles for years to evade emissions standards.

Daimler AG (DAIGn.DE) said in 2016 it has received requests for information about its diesel emissions levels from U.S. regulators and that the Justice Department had asked it to investigate its emissions certification process.

Daimler has said it faced ongoing investigations by U.S. and German authorities into excess diesel emissions that could lead to significant penalties and recalls.

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VW plans to sell electric Tesla rival for less than $23,000: source

FRANKFURT (Reuters) – Volkswagen (VOWG_p.DE) intends to sell electric cars for less than 20,000 euros ($22,836) and protect German jobs by converting three factories to make Tesla (TSLA.O) rivals, a source familiar with the plans said.

VW and other carmakers are struggling to adapt quickly enough to stringent rules introduced after the carmaker was found to have cheated diesel emissions tests, with its chief executive Herbert Diess warning last month that Germany’s auto industry faces extinction.

Plans for VW’s electric car, known as “MEB entry” and with a production volume of 200,000 vehicles, are due to be discussed at a supervisory board meeting on Nov. 16, the source said.

Another vehicle, the I.D. Aero, will be built in a plant currently making the VW Passat, a mid-sized sedan, the source said.

The Wolfsburg-based carmaker, which declined to comment on the plans, is also expected to discuss far-reaching alliances with battery cell manufacturer SK Innovation (096770.KS) and rival Ford (F.N), the source said.

The November 16 strategy meeting will discuss Volkswagen’s transformation plan to shift from being Europe’s largest maker of combustion engine vehicles into a mass producer of electric cars, another source familiar with the deliberations said.

VW’s strategy shift comes as cities start to ban diesel engine vehicles, forcing carmakers to think of new ways to safeguard 600,000 German industrial jobs, of which 436,000 are at car companies and their suppliers.

An electric van, the ID Buzz, is due to be built at VW’s plant in Hannover, where its T6 Van is made, the source said.

To free up production capacity for electric cars in Hannover, VW’s transporter vans could be produced at a Ford (F.N) plant in Turkey, if German labor unions, who hold half the seats on VW’s board of directors, agree, the source added.


VW and Ford are in “exploratory talks” about an alliance to develop self-driving and electric vehicles and to complement each other’s global production and sales footprints, Reuters reported last month.

Ford has strong sales and profits in the United States thanks to its exposure to the lucrative pickup truck segment, while Volkswagen dominates the market for passenger cars in Europe.

The companies are considering cooperation deals in the areas of commercial, electric and autonomous vehicles, although a final agreement will unlikely be announced at the November 16 strategy meeting at Volkswagen, the second source said.

The details of a cooperation deal with Ford may take until the end of the year to be finalised, the second source said. The German carmaker will mainly focus on debating the merits of converting its VW factories in Emden, Zwickau and Hanover, which all build combustion-engined cars, to electric ones under the plans being discussed by the board of directors, the source said.

Carmakers in Germany agreed on Thursday to spend up to 3,000 euros ($3,430) per vehicle to add more efficient exhaust filtering systems to cut diesel emissions, but failed to prevent bans on diesel vehicles by Cologne and Bonn.

EU lawmakers have agreed to seek a 35 percent cut in car emissions by 2030 after a U.N. report called for dramatic steps to slow global warming. Diess said to cut average fleet emissions of carbon dioxide in Europe by 30 percent by 2030, VW needs to raise its share offully electric vehicles to 30 percent of new car sales.

The shift from combustion engines to electric cars would also cost 14,000 jobs at VW by 2020 as it takes less time to build an electric car than a conventional one and because jobs will shift overseas to battery manufacturers. In Europe there are about 126 plants making combustion engines, employing 112,000 people. The largest such plant inEurope is VW’s in Kassel.

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VW plans Tesla rival electric car for less than 20,000 euros: source

FRANKFURT (Reuters) – Volkswagen (VOWG_p.DE) will offer a Tesla-rivalling electric car costing below 20,000 euros ($22,836) and convert three of its factories into electric car plants as part of a far-reaching overhaul, a source familiar with the deliberations told Reuters.

The electric car, known as “MEB entry” is being readied for a production volume of 200,000 vehicles, while a mid sized sedan, the I.D. Aero, will have a production volume of 100,000 units, the person said.

The plans are due to be discussed at a supervisory board meeting held on November 16, when the Wolfsburg, Germany-based carmaker is also expected to discuss far-reaching alliances with battery cell manufacturer SK Innovation (096770.KS) and with rival Ford (F.N), the source further said.

Volkswagen’s German factories in Emden, Zwickau and Hanover will build electric cars as part of the overhaul, the source said.

Volkswagen declined to comment.

($1 = 0.8758 euros)

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