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VW cuts $1.6bn as United States of America diesel scandal widens

Mueller said VW’s internal enquiry into the scandal was “very complex” and would take many months to complete, though he promised a report on its progress in mid-December. VW said it is cooperating with regulators. In contrast, the 482,000 two-liter diesels also involved in the emissions cheating scandal will require hardware changes along with software replacement.

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On November 2, the EPA said that a few of the larger-engine models from VW, Audi and Porsche from 2014 to 2016 were found to have equipment that counted as a “defeat device”, which altered emissions-control systems in a way that violated clean-air laws. For Audi, the expansion affects only the 2009 to 2012 Q7 SUV, with other marques expected to reveal their affected models soon. VW provided its draft plan to the EPA and CARB for review on Friday, the EPA said.

In fact, in a meeting with EPA officials, representatives from VW and Audi said that none of their 3.0-liter diesel engines have complied with US emissions regulations since 2009. One possible fix, a larger trap to catch harmful nitrogen oxide, could hurt the cars’ acceleration and fuel mileage.

According to a statement just released by Audi’s American arm, latest violation notice relates to “AECDs (Auxiliary Emission Control Devices) [which] were not sufficiently described and declared in the application for USA type approval”. “We agreed with the EPA that there is a defeat device”, she said.

Starting the European recall would be a step forward in resolving the crisis that has engulfed Volkswagen since becoming public on September 18.

VW has set aside €6.7-billion to help cover the costs of the diesel recalls and another 2 billion for compensation payments related to its manipulations of carbon dioxide emission levels.

At the same time, Mueller said Volkswagen would boost its spending on alternative drivetrain vehicles by $107 million per year, with an emphasis on electric vehicles for the Volkswagen, Audi and Porsche brands.

The cuts mean the company must hold off on construction of a new design center in Volkswagen’s hometown of Wolfsburg, Germany. It is under pressure to shore up its finances as it faces potential costs of tens of billions of euros in fines and litigation.

The company is close to tapping 13 worldwide banks for a planned EUR20 billion bridge loan aimed at restoring confidence in its creditworthiness, people familiar with the matter said on Friday.

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Friedrich Geiger, Sarah Sloat and Eyk Henning contributed to this article.

3.0-litre diesel model included in the cheating scandal image