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Volkswagen faces £114m fine as Tesla overtakes German car giant

Tom Belger
Finance and policy reporter
Volkswagen is facing a fine in Canada. Photo: Yichuan Cao/Sipa USA

Volkswagen was hit with a £114m ($149.7m) fine over the diesel emissions scandal in Canada on Wednesday, just as it was leapfrogged by Tesla (TSLA) as the world’s second most valuable carmaker.

The German car giant (VOW.DE) was charged in Canada last month with importing almost 128,000 vehicles that breached emissions standards.

It pleaded guilty to breaching Canadian environmental protection rules and providing misleading information, according to Reuters.

The C$196.5m ($149.7m, £114m) environmental penalty was approved by a judge on Wednesday.

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It is the biggest environmental fine on record in Canada, with prosecutors saying it was 26 times higher than any previous penalty by the federal government.

“This resolution serves the public interest. It reflects the gravity of the conduct, and is consistent with Canadian sentencing principles, said prosecutor Tom Lemon in a statement shared with Reuters.

It marks a continued fallout from the diesel emissions scandal that emerged in 2015, when Volkswagen admitted to cheating in US emissions tests.

The carmaker also faced the embarrassment of being overtaken by Tesla on the stock market on Wednesday. Tesla broke through the $100bn mark to become the world’s second largest car giant by market capitalisation.

Volkswagen shares were trading 0.4% lower in early trading on Thursday.

A Volkswagen spokesperson told Yahoo Finance UK: “Volkswagen AG cooperated fully with the investigation by Environment and Climate Change Canada and this plea resolution resolves all of the charges.

“The resolution acknowledges the extensive measures by Volkswagen to make things right in Canada and strengthen its global compliance policies. The payment from the company will be used to support environmental projects nationally and in the provinces across the country.”