(Photo: Jeff Chiu/AP)

A buyback of hundreds of thousands of cars and a cash payout to VW customers are two possible solutions that could be announced Thursday, if Volkswagen and the U.S. government unveil a deal that they’ve reportedly reached over the company’s cheating on diesel emissions tests.

The carmaker could pay each American customer $5,000 in compensation, according to German newspaper Die Welt. An additional option could also be available to owners of nearly 500,000 cars with 2.0-liter engines, with VW potentially offering to buy back those Jettas, Beetles and other vehicles, according to Reuters.

The money would presumably come out of the $7 billion emergency fund that Volkswagen created to cope with fallout from the scandal.

Terms of the deal are expected to be discussed during a hearing today in a federal district court in California. We’ll update this post with news from the hearing. So far today, the court has been summoning dozens of car owners who have sued Volkswagen.

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Nearly 600,000 VW-made vehicles sold in the U.S. have “defeat devices” that circumvent emission control systems during driving conditions – and activate the controls only during emissions tests, the government says. Found in both 2.0-liter and 3.0-liter versions of VW and Audi diesel cars, the device is also in millions of cars worldwide.

Frustrated by the lack of progress on a recall and restitution, the Environmental Protection Agency filed a lawsuit against Volkswagen back in January.

If the agreement takes hold, it would be an important step in resolving a scandal that erupted last fall, when the EPA said VW had manipulated its diesel engines so they would pass would pass emissions test, despite producing up to 40 times the pollution allowed under U.S. standards.

The court has been issuing summons related to dozens of lawsuits that have been filed against Volkswagen since last fall.

As an example, one suit was filed by a couple who live in Big Bear, Calif., and who say they bought a 2010 Jetta “because they thought it was environmentally safe and provided good fuel efficiency” and because Volkswagen had advertised the car’s use of “clean diesel.”

“In reality, the Vehicle did not meet the applicable EPA and ARB emissions standards,” the suit states.

Saying that the carmaker won’t be able to fix the car without compromising its performance and/or fuel efficiency, the lawsuit seeks damages in the form of either the original purchase price or the overpayment amount, along with attorney’s fees and “a civil penalty of two times Plaintiffs’ actual damages,” citing state law.

As we reported when the scandal exploded back in September:

“The U.S. government also has reason to feel duped: Volkswagen’s “clean diesel” TDI engines earned a $1,300 federal tax credit for people who purchased a Jetta sedan or wagon back in 2009, the first year affected by the recall.

“When applied to a base price of around $22,000, the hefty tax credit helped explain why the TDI vehicles were hard to keep in stock.”

News of an agreement emerged more than a month after Volkswagen’s top U.S. executive, Michael Horn, resigned from the company. It was Horn who endured a grilling about the emissions scandal on Capitol Hill last October, in a candid appearance that included an apology and the statement about the cheating software, “It was installed for this purpose.”

Since the scandal began, it has also widened to include more Volkswagen and Audi vehicles, as well as one produced by Porsche. Here’s the most current list of vehicles, via the EPA:

Affected 2.0 liter diesel models and model years

• Jetta (2009-2015)
• Jetta Sportwagen (2009-2014)
• Beetle (2013-2015)
• Beetle Convertible (2013-2015)
• Audi A3 (2010-2015)
• Golf (2010-2015)
• Golf Sportwagen (2015)
• Passat (2012-2015)

Affected 3.0 liter diesel vehicle models and model years

• Volkswagen Touareg (2009-2016)
• Porsche Cayenne (2013-2016)
• Audi A6 Quattro (2014-2016)
• Audi A7 Quattro (2014-2016)
• Audi A8 (2014-2016)
• Audi A8L (2014-2016)
• Audi Q5 (2014-2016)
• Audi Q7 (2009-2016)

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