Volkswagen invests $2 billion into subsidiary

Date: 7 FEB 2017posted by Car Rentaledited by WinX

Volkswagen AG has launched a brand new subsidiary to manage the $2 billion investment into boosting the use of zero-emission and electric vehicles. Dubbed Electrify America, the new company is part of the $14.7 billion agreed settlement between Volkswagen and US regulators for the repercussion of the diesel scandal. The standalone organisation will manage the funding to oversee the promotion of zero-emission and electric vehicles. The $2 billion will go towards development, construction and maintenance of infrastructure which includes charging stations. Electrify America will be led by Mark McNabb as CEO and will report directly to Volkswagen Board of Management member Francisco Javier Garcia Sanz. McNabb previously was the Chief Operation Officer of Volkswagen of America Inc.

The diesel scandal broke out last year when Volkswagen admitted to programming its diesel engines to trick emissions testers that they were emitting far less pollution than they actually were. It was revealed the engines were emitting 40 times more smog-causing nitrogen oxide than the legal limit. In the settlement, approved by a federal judge in October, the company was to pay out $14.7 billion in reparations. $1.2 billion was designated to be spent on zero-emission vehicle research and $800 million to help fund similar efforts in California, which caught the the German manufacturer in the act of cheating. $10 billion of the settlement is designated to either buy back or repair almost half a million units of the 2-liter diesel vehicles that were sold between 2009 - 2015 and had the programming device that cheated testers. Another $1.2 billion was also agreed to be spent on buying back or repairing 78,000 units of 3-liter diesel vehicles that cheated emissions.

The US government also indicted six present and former Volkswagen AG executives. Aside from the settlement, Volkswagen is also fined #2.8 billion in criminal fines and $1.5 billion in civil penalties related to fraud. Critics have accused regulators of forcing Volkswagen to invest into the US electric car market at a time when sales figures show that consumers are turning towards larger vehicles like trucks and SUVs. Ever since the diesel scandal, diesel engine vehicle sales have plummeted world wide. In a survey conducted among auto executives and officers, it was widely accepted and agreed upon that diesel engine vehicles will be gone within the next decade, replaced by electric cars.

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