Swedish truck manufacturer Volvo Group reached a $197 million agreement Monday with California’s Air Resources Board to resolve claims the company violated state regulations for heavy-duty truck engines.
The deal addresses accusations that Volvo improperly reported auxiliary emission control systems in more than 10,000 heavy-duty engines manufactured between 2010 and 2016 in California, leading to pollution levels that surpassed state limits, according to CARB.
Under the agreement, Volvo will pay $13 million in civil fines, contribute $71 million to CARB’s Air Pollution Control Fund, invest $108 million in California emissions-reduction initiatives, and cover $5 million of CARB’s investigation expenses, the company announced.
The settlement includes software updates and extended warranty coverage for approximately 7,200 engines currently operating in California.
California regulators praised Volvo’s cooperation, stating the company “acted transparently and in good faith in explaining and improving emissions control devices and fully cooperated with the state investigation.”
Volvo emphasized the agreement includes no acknowledgment of wrongdoing and said an internal investigation “found no evidence of bad faith.”
The truck manufacturer will record a $197 million charge against its second-quarter operating results, though this amount will be excluded from adjusted operating income calculations. The company expects an $89 million cash flow impact in the current quarter, with remaining payments distributed over five years.
Volvo Group plans to release its second-quarter financial results on July 17.
