Daimler AG, Mercedes-Benz to Pay $1.5 Billion to Settle Emissions Case

Automaker Daimler AG and subsidiary Mercedes-Benz USA have agreed to pay $1.5 billion to the U.S. government and California state regulators to resolve emissions cheating allegations, officials said Monday.

The U.S. Department of Justice, Environmental Protection Agency and the California attorney general's office say Daimler violated environmental laws by using so-called "defeat device software" to circumvent emissions testing and sold about 250,000 cars and vans in the U.S. with diesel engines that didn't comply with state and federal laws.

"Daimler did not disclose all of their software and when the EPA engineers tested Daimler's vehicles they discovered Daimler vehicles included devices that were designed to defeat emission controls," EPA Administrator Andrew Wheeler said Monday.

The settlement, which includes civil penalties, will also require Daimler to fix the vehicles.

The Stuttgart, Germany-based automaker said on Aug. 13 that it had agreements with the Justice Department, Environmental Protection Agency, Customs and Border Protection, the California Air Resources Board and others over civil and environmental claims involving about 250,000 diesel cars and vans.

Daimler AG said the settlement would bring costs of about $1.5 billion, while the civil settlement will bring a one-off charge of about $700 million. It estimated that "further expenses of a mid three-digit-million" euros would be required to fulfill conditions of the settlements.

But the company didn't make it clear just how the vehicles would be cleaned up or whether it was accused of any wrongdoing in the U.S. like Volkswagen, which paid $2.8 billion to settle a criminal case due to cheating. Fiat Chrysler also is being investigated for allegedly cheating on emissions.

VW admitted that it turned on pollution controls when vehicles were being tested in EPA labs, and turning them off when the diesel vehicles were on real roads. The company duped the EPA for years before being discovered by a nonprofit climate group and researchers at West Virginia University.

Daimler's pollution practices also are under investigation in Germany, and civil lawsuits claim the vehicles emitted more pollutants than advertised.

In April 2016, the Justice Department asked Daimler to conduct an internal probe into its exhaust emissions certification process. The request came as the EPA began checking all diesel engines after the Volkswagen cheating was revealed.

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