In a California court on April 21, 2016, the United States government and Volkswagen announced a concrete plan to address the approximately 600,000 diesel-powered vehicles affected by VW Group's emissions defeat device.

Those vehicles were equipped with an emissions cheating "defeat device," which allowed cars powered by VW's 2.0-liter TDI engine to emit up to 40 times the legal amount of nitrogen oxide (NOx) in real-world use. In lab testing, the car would detect that it was being evaluated and perform in compliance with emissions standards.  

According to the preliminary "agreement in principle," Volkswagen will give owners the option to sell affected TDI vehicles back to VW, or to have the vehicle modified to meet emissions standards. Consumers who have leased an affected vehicle will be allowed to cancel their lease agreements. 
 
The settlement also provides for payment of "substantial compensation" to affected owners in conjunction with the aforementioned buybacks and vehicle modifications, though a specific dollar amount per consumer was not announced in the recent hearing. Thirdly, the court stated that Volkswagen will establish a fund for "appropriate remediation efforts" to address the excess NOx emissions created by the affected vehicles. In addition, VW will be required to commit funding to promote "green automotive technology." No dollar amounts were mentioned here, either.

The judge has set the following deadlines: Final paperwork on the settlement will be filed on or before June 21st, 2016. Once that's done, the court will hold a preliminary hearing on July 26th. These filings will be available for review by the public before they are acted upon by the court. The preliminary agreement announced today tracks closely with reports from yesterday, which indicated that Volkswagen could pay as much as $5000 per consumer in compensation money in addition to a potential buyback agreement.

In a report filed before today's court update, The New York Times estimated that a buyback could cost Volkswagen as much as $7 billion. The automaker also faces potential U.S. regulatory fines of up to $18 billion, though the actual fine is likely to be much, much lower. 

The largest comparable fine levied against an automaker was $100 million, which the Hyundai-Kia group paid in 2014 for mislabeling the fuel efficiency ratings on several models.

And this is only the beginning for Volkswagen. The earlier agreement only affects roughly 600,000 U.S. vehicles; the automaker previously admitted that the emissions cheating software is found in as many as 11 million vehicles worldwide.

A majority of those vehicles are in the European market, where governments have not yet reached an agreed settlement with Volkswagen and a suitable fix has not yet been found.

The next status conference is set for May 19th, 2016.