Economy, Auto

VW Shares Slide After US Lawsuit

VW Shares Slide After US LawsuitVW Shares Slide After US Lawsuit

Shares in Volkswagen are sliding after the US Justice Department sued the German automaker over emissions-cheating software fitted to diesel vehicles.

Volkswagen’s shares were 3.1% lower at €122.45 in Frankfurt trading on Tuesday morning—easily the worst performer on the DAX index, which was 0.4% higher overall.

The Justice Department’s move on Monday potentially exposes the company to billions in fines for clean air violations, The Guardian reported.

Volkswagen set aside €6.7 billion (£4.9 billion) to deal with the costs of recalling and fixing cars after the scandal erupted in September, but the ultimate costs to the company are expected to be considerably higher. A raft of private class-action lawsuits filed by angry VW owners also is pending.

After being caught by the regulator in September, VW admitted installing the software, which was designed to trick regulators into believing its cars are less polluting than they really are by producing low emissions only when undergoing official tests, in more than 11 million vehicles across the world.

The allegations in the lawsuit, brought on behalf of the Environmental Protection Agency carry penalties that could cost Volkswagen more than $30,000 (£20,400) per vehicle, which could total as much as $18 billion.

The emissions scandal has already wiped tens of billions of euros off VW’s share price and analysts have warned that the total cost of the scandal could be as high as €78 billion, which would be 60% more than the Deepwater Horizon disaster cost BP.