At a Glance

  • According to a press release issued on May 18, Volvo Group North America will pay nearly $197 million to settle an emissions violation case with the California Air Resources Board (CARB).
  • CARB alleged that approximately 10,000 Volvo trucks from model years 2010 to 2016 used auxiliary emission control devices not disclosed during the emissions certification process required by California, violating the state's heavy-duty engine regulations.
  • As part of the settlement, Volvo Group will extend certain warranties and provide software updates for approximately 7,200 engines from model years 2014 to 2016 in California. The company does not admit liability.

In-Depth Analysis

The settlement between Volvo Group and CARB is one of the major emissions enforcement actions involving heavy-duty truck manufacturers in recent times, highlighting California's tough stance on diesel emissions compliance.

This case comes amid growing tensions between federal and state environmental policies.

Although the U.S. Environmental Protection Agency (EPA) has moved to roll back national emissions regulations, California continues to expand its regulatory authority and enforcement efforts under waivers granted by the Clean Air Act. California is also one of 24 states challenging the EPA's repeal of the Phase 3 greenhouse gas standards.

CARB alleged that nitrogen oxide emissions from Volvo Group's non-compliant engines exceeded certification thresholds. The settlement includes $108 million specifically for California emissions reduction projects, which must be submitted to CARB within one year.

"This case underscores the critical importance of CARB's compliance testing and strong enforcement in protecting the state's air quality and public health. Our responsibility goes beyond setting regulations—we are committed to upholding them by identifying violations and holding companies accountable," said CARB Chair Lauren Sanchez in the press release.

Volvo Group stated that it has cooperated with regulators throughout the investigation and disclosed the relevant issues nearly a decade ago. The OEM added that an internal review found no evidence of malicious conduct by employees.

Volvo Group stated that its second-quarter operating income will include a negative impact of $196.5 million, which will be excluded from adjusted operating income. The company also said that second-quarter operating cash flow will be negatively impacted by $89 million, with the remaining negative impacts from the settlement to be spread over the next five years.