Sept. 22 -- Volkswagen could be facing a criminal investigation by the U.S. Department of Justice and further probes at home and abroad after admitting to cheating on emissions tests. Bloomberg's Hans Nichols reports on "Countdown." Bloomberg
Investors crush Volkswagen shares as company sets aside $7.3 billion to address software that manipulates emissions tests.
Volkswagen's emissions scandal ballooned Tuesday as the automaker said it affects 11 million vehicles worldwide and will require the company to set aside 6.5 billion euro ($7.3 billion).
The startling admission instantly makes the crisis one of the most expensive automotive scandals in recent memory.
The crisis also threatens to upend the company on its rapid path to becoming the world’s largest automaker. Volkswagen had seized the title from Toyota for the first six months of 2015.
"This could damage the Volkswagen brand globally for years to come," said former automotive marketing executive Peter De Lorenzo, blogger at Autoextremist.com, in an interview. "Trust and belief in the brand has been broken."
Volkswagen CEO Martin Winterkorn pledged to regain the public's trust and rectify the company's mistakes, amid speculation that he could lose his job over the crisis. Winterkorn's contract, coincidentally, is up for renewal at the automaker's board meeting Friday.
In a video statement Tuesday he apologized again for the situation but gave no indication that he'll consider resigning.
"We will get to the bottom of this," he said, according to an English translation of his remarks provided by Volkswagen. "We are working very hard on the necessary technical solutions. And we will do everything we can to avert damage to our customers and employees. I give you my word: we will do all of this with the greatest possible openness and transparency.”
Investors crushed the Germans automaker's stock, driving shares down 18% as of 9:47 a.m. ET, a day after the stock plunged 19%.
The crisis began Friday when the U.S. Environmental Protection Agency accused Volkswagen of installing sophisticated software on nearly 500,000 U.S. vehicles to manipulate emissions tests.
The technology tricks regulators into believing that 4-cylinder diesel vehicles comply with emissions standards, but the cars are actually admitting harmful pollutants at rates of up to 40 times acceptable standards. Volkswagen quickly halted sales of the cars after the allegations surfaced.
The U.S. Justice Department has opened a criminal probe into the automaker's actions. The EPA's own investigation is ongoing, and foreign regulators are expected to launch their own probes.
"Volkswagen is working at full speed to clarify irregularities concerning a particular software used in diesel engines," the company said Tuesday in a statement.
The "discrepancies" affect vehicles with what it called "Type EA 189 engines," causing "a notable deviation between bench test results and actual road use."
The company added: "Volkswagen is working intensely to eliminate these deviations through technical measures."
Volkswagen said it would set aside 6.5 billion euro in its third quarter to address the matter and warned that the number could change.
In the U.S., the EPA could fine Volkswagen up to $37,500 per car, which would equal a maximum fine of some $18 billion.
"Volkswagen does not tolerate any kind of violation of laws whatsoever. It is and remains the top priority of the Board of Management to win back lost trust and to avert damage to our customers," the company said.
The scandal raises serious questions about whether high-level executives knew about the software, which had been installed on some nameplates for at least six consecutive model years.
Earlier this month a subcommittee of Volkswagen's board recommended that the full panel extend Winterkorn's contract through 2018. The official renewal at Friday's board meeting was viewed as a routine matter, but now it may be up in the air.
Winterkorn kept his job earlier this year after then-chairman Ferdinand Piech tried to displace him. Piech exited the company shortly after his failed effort.
De Lorenzo, the automotive marketing veteran, said Winterkorn will be forced to answer questions about his knowledge of the emissions scandal.
"He’s very much detailed-oriented. He’s always regaled his underlings with his depth of knowledge of detailed items that they would assume he wouldn’t bother with," De Lorenzo said. "I think heads will roll and this could bring down Winterkorn and some of his trusted lieutenants."
Winterkorn said "we do not yet have all the answers to all the questions" about the "irregularities," but said he's "asking for trust" from customers as the investigation unfolds.
Dave Sullivan, an analyst with AutoPacific, said the "chances of him coming out unscathed have got to be very small."
The EPA has said the company admitted to installing the software. The agency said the software affected the four-cylinder diesel versions of the 2009 to 2015 Jetta, Beetle, Golf, the 2014 and 2015 Passat and the 2009 to 2015 Audi A3.
The episode is likely to trigger a recall and a flurry of consumer lawsuits. It may prompt the company to compensate individual car owners or other measures.
European regulators are expected to place Volkswagen under intense scrutiny. But it scandal also could bode poorly for Volkswagen in the world's largest vehicle market, China, where Volkswagen is No. 1 by market share.
"The problem is the Chinese are starting to realize they have got to do something with their air and this could have an effect on the relationship the Chinese have with Volkswagen," Sullivan said.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
