Volkswagen AG has formed a new subsidiary to manage the US$2 billion it is required to spend over the next decade in support of zero-emission vehicles in the U.S.

The company, Electrify America LLC, will invest in the construction and maintenance of electric vehicle charging stations, including a “high-speed, cross-country” network of more than 200 fast-charging stations for electric cars. It will also install more than 300 chargers in 15 U.S. metropolitan areas and fund “brand-neutral” advertising campaigns to promote awareness about electric cars, among other activities, the company announced Tuesday.

VW agreed to spend the money on infrastructure and other projects to promote the adoption of zero-emission vehicles as part of a legal settlement with the U.S. Environmental Protection Agency stemming from the company’s cheating on emissions tests for its diesel cars.

Volkswagen Group of America Chief Operating Officer Mark McNabb will serve as Electrify America’s chief executive officer, according to a company statement. The subsidiary will be based in Reston, Virginia. 

As part of the move, McNabb will formally cede his role as COO of the VW brand in the U.S., though he will continue to manage VW’s diesel settlement affairs here, VW spokeswoman Jeannine Ginivan said. 

McNabb will report to Francisco Javier Garcia Sanz, VW AG’s management board member responsible for purchasing.

McNabb “has done tremendous work over the past 18 months to help make things right for our customers and dealers,” Sanz said in a statement.

A US$14.7 billion settlement was announced last June after the automaker sold nearly 500,000 2.0-litre diesel vehicles rigged with software to cheat on U.S. emissions tests. The deal requires VW to spend US$800 million in California and the remaining US$1.2 billion in other U.S. states. It allows VW to manage the spending, subject to EPA and California Air Resources Board approval of its investment plans.

The company said it will “develop, operate and maintain” the projects, which will be rolled out in four 30-month cycles.

Some lawmakers have criticized the required zero-emission spending component, saying what should be a punishment could hand VW an edge in the burgeoning electric vehicle charging market.

VW markets one model of electric car in the U.S. — the e-Golf — and has set a target of selling 3 million electric vehicles worldwide by 2025. The strategy is backed by the planned introduction of 20 new electric models by 2020.

Bloomberg News