Volkswagen is more likely to see a fine in the area of $3.2 billion than $18 billion, according to a recent analysis.
While it’s still possible that the Environmental Protection Agency (EPA) will hit Volkswagen with the maximum fine of $18 billion for cheating on diesel emissions tests, The Truth About Cars did an analysis to determine what is more likely to happen based on past violations. Last year, the EPA fined Hyundai and Kia $100 million for releasing 4.75-million metric tons more of greenhouse gases than originally reported for more than 1.1-million cars.
By using the EPA’s own penalty worksheet, a vehicle’s engine is classified for “gravity” at 250 horsepower. From there, each horsepower up to 10 hp is an additional $80 fine while between 11-100, the fine is $20. The fine is $5 for 150 to 250, meaning Volkswagen’s adjusted penalty would be $3,350 per engine.
The agency then adds a multiplier depending on the severity of the infraction and a “major” infraction incurs a 6.5 multiplier. From there, that means each Volkswagen engine would be fined $21,775 before scaling.
From there, TTAC calculated that for the first 10 engines, Volkswagen would be penalized the full amount of $21,775 for each vehicle. For the next 90 cars, it will be penalized 20 percent per engine, four percent for the next 900 cars, 0.8 percent for the following 9,000 cars, 0.16 percent for the next 90,000 cars and then 0.032 percent for the remaining 382,000 units.
That’s not all, since Volkswagen will then be fined for non-remediation, or several years of lying. That fee is up to 30 percent for each engine, calculating to be more than $3.14 billion, which is actually the bulk of the total fine. VW then gets hit for company size, which could calculate to around $105 million, based on the German automaker’s $126-billion market cap in May 2015.
In total, that adds up to $3,262,518,776 – a far cry from the maximum $18-billion penalty Volkswagen could be facing.
[Source: The Truth About Cars]
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