Volkswagen just announced a second emissions scandal that 'could be much bigger'

A second act in Volkswagen’s massive emissions scandal just began.

Late on Tuesday night VW Group announced that the company had identified “irregularities in CO2 levels” which had emerged as part of internal investigations.

As many as 800,000 vehicles could be affected across the entire group, according to the release.

Shares are getting crushed in early European trading, down by as much as 10%, pushing the price below €100.

The previous finding, revealed by the US Environmental Protection Agency in September, related to NOx, a different emission which can be extremely harmful to humans, but is less of a driver of climate change.

The announcement late on Tuesday relates to CO2, the main pollutant associated with global warming. It’s not clear if it relates to precisely the same issue — the use of illegal cheating software designed to game environmental emission tests required for all carmakers.

Here’s what Volkswagen say in their own words:

Under the ongoing review of all processes and workflows in connection with diesel engines it was established that the CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process. The majority of the vehicles concerned have diesel engines.

The total financial cost to the company isn’t clear yet.

Volkswagen says that “An initial estimate puts the economic risks at approximately two billion euros.” Analysts at Credit Suisse show how far implies a cost of “€2,500 per car vs. c.€609 per car provisioned for Diesel so far.”

The note from CS goes on (emphasis ours):

At this point the financial impact from today’s release is unclear, as only limited details have been provided. However, given that that provisions per vehicle are 4.1x higher versus the NOx issue, the magnitude could be much bigger in scale. In our view, today’s announcement could concern those who believe that the economic impact is manageable and more than priced in post the drop in share price.

And here’s how the share price looks:

In the third quarter, the company made its first loss in 15 years, and it seems like things could still get worse for Volkswagen.

Volkswagen shares dropped by 1.51% in trading on Tuesday after earlier bad news from the EPA — the regulators found another 10,000 vehicles on cars with larger diesel engines which had contained the same cheating software.

The share price had tumbled by more than half since earlier this year, even before Tuesday’s news

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