How are they spending so much, or why are owners getting so little?

I think the government gets the rest.

VW will need to engineer a solution. To do that, they'll need to build a new "Michael Horn Engineering and Technology Center". Obviously, the new MHETC will need to be equipped with the latest and greatest engineering and testing labs. This new MHETC will cost 5 billion.

VW will distribute 5 billion in bonuses to the upper echelon executives for a job well done.

The remaining 200 million will be used to distribute a software update to the effected cars.

Another example of government taking advantage of their citizens misfortune.

And AFAIK the details haven't been make public. VW will have to buy back some of the cars. It's not clear if the $1K to $7K to owners includes that, I suspect it doesn't, ie whatever cars they buyback is on top of that.

don't they always : )

Lawyers.

I think this refers to the US federal govenment. Also sued for $3.7 billion by investors around the world.

And Norway's state pension fund was a big investor ($1.2 billion) and I think they are filing their own suit.

But the one quoted above is the only one I've found for car owners, not investors.

Good point. The US is entitled to some, part as a fine for violating the law, and part to compensate everyone for the polluted air everyone had to breathe, though I'm not sure what they would do with the money, pay for research on how to treat people with lung diseases, subsidize some air cleaning projects. It doesn't seem like all of that together should be 70 to 85% of the total. but maybe Trader is right about money for buying back the cars. I don't really think that would account for the difference.

Without checking, my guess is that the cost of the "promise to fix the car free of charge" is included in the $10.2 billion, but not in the amount paid directly to owners.