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Volkswagen shares pop after reaching $15 billion emissions settlement

Volkswagen
Ashlee Espinal | CNBC
Volkswagen

Volkswagen's U.S.-listed shares jumped 5 percent Tuesday after the company reached a $15 billion settlement for a diesel engine scandal.

The company claimed that Volkswagen cars were using "clean diesel," but the vehicles only passed emissions tests by using emission-limiting software. While on the road, the cars pumped out pollutants that were well above allowable levels.

Volkswagen also announced Tuesday that it agreed to resolve existing and potential state consumer protection claims in 44 American states, the District of Columbia and Puerto Rico.

The proposed settlement includes Volkswagen buying back and terminating the leases of about 475,000 TDI diesel cars in the U.S., providing cash payments to owners and lessees, paying for environmental remediation and promoting zero emissions vehicle technology.

The settlements are awaiting approval from Judge Charles R. Breyer.

"Settlements of this magnitude are clearly a very significant burden for our business," Volkswagen CFO Frank Witter said. "We will now focus on implementing our Together-Strategy 2025 and improving operational excellence across the Volkswagen Group."

Volkswagen's shares have dropped more than 42 percent in the past 12 months.

Volkswagen 12-month performance: