Volkswagen also announced an agreement with 44 U.S. states, the District of Columbia and Puerto Rico to resolve their consumer and environmental claims in a settlement worth $603 million.

The settlements mark a swift resolution for VW in the U.S., after the carmaker admitted last September to systematically rigging environmental tests since 2009 to hide that its diesel vehicles were emitting far more pollutants than allowed under U.S. and California law. It also starts a clock for VW to get hundreds of thousands of vehicles fixed or removed from the road.

VW shares rose 2.4% Tuesday to 108.60 euros in Frankfurt.

Energy investments

By requiring VW to spend billions over a decade to reduce pollution and advance clean energy technology, the U.S. is forcing the carmaker to make up for the environmental damage caused by its diesel engines. A major beneficiary is California, which called out VW for its emissions cheating and will receive $800 million for clean energy development.

“We can’t undo the damage VW caused to air quality, we can’t suck the NOx out of the air, but we can offset that damage by reducing pollution from other sources,” Deputy Attorney General Sally Quillian Yates said at a news conference at the Justice Department, referring to emissions of nitrogen oxides.

The record settlement raises questions about whether VW will need to devote more than the 16.2 billion euros ($17.9 billion) it has set aside to cover the cost of repairs, fines and legal fees. On Tuesday, VW said the settlement was within the scope of the provisions it has already made and repeated that its assessment of financial risk might be revised.

“It will take a long time to determine the full cost of the scandal,” said Frank Biller, a Stuttgart-based analyst at LBBW Bank. “Now it looks as if we might be able to close this chapter, and if that were to be true, it would remove some uncertainty.”

Biller estimates the total price tag will exceed 26.5 billion euros ($29.36 billion), including potential litigation costs in other countries.

The Justice Department said that VW could still be on the hook for further civil penalties, and a U.S. criminal investigation is under way.

“We’re aggressively pursuing the criminal investigation in this case, both against companies and individuals,” Yates said.

Unresolved claims

Indeed, the agreements, which advance Volkswagen’s efforts to move beyond its costly diesel-cheating scandal, still leave unresolved other lawsuits as well as criminal probes in the U.S., Germany and South Korea.

The settlement with the U.S. government requires VW to get 85% of the cars recalled by June 30, 2019. If it fails to do that, it will have to pay $85 million more into the environmental mitigation trust for each percentage point of the shortfall. It will also have to pay an additional $13.5 million into the trust for each percentage point it falls below the 85% target in California.

Related: Volkswagen's excess emissions will kill 59 Americans, according to a new study

VW owners can continue to drive their vehicles for now, even if they wouldn’t pass state emissions testing. Individual states may require approved emissions fixes on these vehicles in the future. Owners who choose the buyback option will receive their cars’ trade-in value as of last September, just before VW’s admission, plus the compensation payments.

The agreement covers a half million 2.0-liter engines but leaves claims related to about 80,000 3.0-liter engines for further negotiations. VW must scrap cars that it buys back and cannot resell them.

Volkswagen’s agreements with car owners and the U.S. must be approved by U.S. District Judge Charles Breyer, who is overseeing more than 800 lawsuits over the rigged vehicles that were consolidated in San Francisco. Breyer is scheduled on July 26 to consider approving the agreements.

Volkswagen also reached an agreement with the Federal Trade Commission over its advertising claims.

‘Step forward’

“We take our commitment to make things right very seriously and believe these agreements are a significant step forward,” said Matthias Müeller, VW’s chief executive officer.

As part of the settlement with the states, New York will receive more than $115 million for air-quality improvement projects, as well as about $30 million for the state’s coffers, according to the New York attorney general Eric Schneiderman, who led the investigation by the states. New York will also continue a investigation into the scope of VW’s environmental liability.

Leaders of the multi-state probe also included Massachusetts, Connecticut, Oregon, Tennessee and Washington.

“These partial settlements announced today exact a stiff price from Volkswagen for its deception of consumers and the environmental damage it has caused in New York and across the country,” Schneiderman said in a written statement.

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