Volkswagen AG's settlement with nearly 500,000 U.S. diesel owners and government regulators over polluting vehicles is valued at more than $15 billion, a source briefed on the matter said on Monday.
The settlement, to be announced on Tuesday, includes just over $10 billion to offer buybacks to owners of polluting vehicles and nearly $5 billion in funds to offset excess diesel emissions and boost zero emission vehicles, the source said.
A separate settlement with nearly all U.S. state attorneys general over excess diesel emissions will be announced on Tuesday and will push the total to over $15 billion, the source said.
Spokeswomen for U.S. Environmental Protection Agency and Volkswagen declined to comment.
Speaking on condition of anonymity, due to court-imposed gag rules, a source said owners will receive an average of $5,000 in compensation along with the estimated value of the vehicles as of September 2015, before the scandal erupted.
Owners would also receive the compensation if they choose to have the vehicles repaired, assuming U.S. regulators approve a fix at a later date.
The settlement, the largest ever automotive buyback offer in U.S. history and most expensive auto industry scandal, stems from the German automaker's admission in September 2015 that it intentionally misled regulators by installing secret software that allowed U.S. vehicles to emit up to 40 times legally allowable pollution.
VW still must reach agreement with regulators on whether it will offer to buy back 85,000 larger 3.0 liter Porsche, Audi and VW cars and SUVs that emitted up to nine times legally allowable pollution and how much it may face in civil fines for admitting to violating the Clean Air Act.
Reuters reported earlier the initial VW settlement would not include civil penalties under the U.S. Clean Air Act or address about 80,000 larger 3.0 liter Audi, Porsche and VW vehicles that emitted less pollution than 2.0 liter vehicles. A deal covering the 3.0 liter vehicles may still be months away.
The settlement also does not address lawsuits filed by U.S. states or investors or a criminal investigation by the Justice Department.
Regulators will not immediately approve fixes for the 2.0 liter vehicles — and may not approve fixes for all three generations of the polluting 2009-2015 vehicles, sources previously told Reuters.