EPA may ask Volkswagen to make electric cars in America

A report in German newspaper Welt am Sonntag quotes unnamed sources as saying the Environmental Protection Agency may forego imposing fines on Volkswagen for selling diesel cars that did not meet emissions standards. Instead, the report claims, Volkswagen would by required to build more electric cars in the US at its factory in Chattanooga, Tennessee.

The news did not specify whether the EPA wants VW to manufacture its existing electric cars, like the e-Golf, or new electric cars like the BUDD-e concept it displayed at the Consumer Electronics Show in early January.

It has been five months since  the emissions scandal broke in the United States. So far, Volkswagen and US regulators have not agreed on a plan to fix the nearly 600,000 diesel powered cars with faulty emissions software the company sold in America. There have been a lot of negotiations in private, however.

A few weeks ago, Elon Musk and 44 other business leaders suggested that fining Volkswagen would be counterproductive. They pointed out that every dollar the company is forced to pay in fines is a dollar if cannot invest in making better electric cars. A number of environmental groups oppose the Musk led proposal, claiming that the company’s actions were so brazen and outrageous that massive fines are the only appropriate response.

It appears the EPA is leaning toward the approach suggested by Musk and his colleagues. Getting Volkswagen to build more electric cars domestically would not only benefit the environment, it would give an important boost to the local and national economy. Economists say that for every job in automobile manufacturing created, another 5 to 7 jobs are created in industries that support the manufacturing process, such as parts suppliers, transportation, sales, and finance.

“Talks with the EPA are ongoing and we are not commenting on the contents and state of the negotiations,” a VW spokesman said. The EPA declined to comment.

Meanwhile, weekly tabloid Bild am Sonntag said Hans Dieter Poetsch, the chairman of Volkswagen’s supervisory board, was summoned by German transport minister Alexander Dobrindt on Feb. 16 to give an update on the carmaker’s progress in tackling the crisis. According to the article, Poetsch pledged Volkswagen would do everything to solve the crisis regardless of how that might impact individuals and positions at the company.

A spokesman for Volkswagen confirmed that Poetsch and Thomas Steg, head of group government relations at VW, updated Dobrindt on Feb. 16 on the status quo of its internal investigation, but declined to give details about the nature of discussions.

VW will present its final report on the crisis to law firm Jones Day in April, Bild am Sonntag said.