The U.S. Justice Department plans a criminal investigation into charges that the German-based carmaker Volkswagen deliberately cheated on U.S. emissions testing for nearly half-a-million diesel-powered cars.
Shares of Volkswagen plunged close 20 percent on world markets Monday.
Volkswagen chief executive Martin Winterkorn apologized for deceiving customers and regulators and promised to cooperate with all investigators.
Along with having to pay to fix the rigged cars, Volkswagen could face as much as $18 billion in fines.
According to the U.S. Environmental Protection Agency, Volkswagen secretly installed software in several popular models which could detect when an emissions test was being carried out. The software switched on pollution controls during the tests and switched them off when the car was being driven.
The cars spewed 40 percent more emissions into the air without the controls. Cars that drive without pollution controls generally perform better and are more fuel efficient.
Volkswagen advertised the affected models as being better for the environment.