Shares in German automaker Volkswagen fell off a cliff after the US Environmental Protection Agency claimed the company was using software to cheat emissions tests. According to the agency, the cars would exceed caps on nitrous oxide by 15 to 35 times during normal driving.
Faced with billions of dollars in fines in numerous jurisdictions, billions in subsidy repayments, and the need to recall and fix millions of cars, shares in Volkswagen fell by more than 30% in a single day.
The biggest one day plunge in years.
Shares in Volkswagen on the Frankfurt Stock Exchange eventually hit a low of $US 86.36, down from a 52 week high of $US 262.45. Since then, the share price has slowly started to recover.
Since the scandal, the carmaker has largely experienced a run of good news — apart from a drop in orders in both South Korea and the United Kingdom.
It is unlikely the company will pay anything close to the potential $US 18 billion fine for bypassing the US Clean Air Act. More likely, the company will pay in the order of $US 1 billion, according to experts.
The company has also developed a relatively cheap “fix” for many of the affected cars, a device that works so well, it may become an aftermarket accessory.
Volkswagen’s earnings have also not been hit as hard as many imagined. Revenue grew 5% in the last quarter, which included the emissions scandal, and the company has set aside just €6.7 billion to deal with the repairs for affected cars.
Recently the company announced that the total number of cars affected by abnormally high carbon dioxide emissions was about 36,000, far lower than the 800,000 that was originally expected.
The company has also readjusted plans to become the world’s biggest carmarker by 2018, pledging instead to unveil 20 new electric and hybrid cars by 2020.
Follow Business Insider Australia on Facebook, Twitter, and LinkedIn