Mercedes-Benz has reached a USD 149.6 million settlement with US states to resolve a long-running investigation into allegations of diesel emissions cheating, New York Attorney General Letitia James said on Monday.
The agreement, which Mercedes said would effectively close its diesel emissions-related legal issues in the United States, follows investigations into whether the company used unlawful software to manipulate emissions performance in diesel vehicles. The scandal, widely known as “dieselgate”, first came to light in 2015 with revelations involving Volkswagen.
Under the settlement with 48 US states, Puerto Rico and the District of Columbia, Mercedes will pay USD 149.6 million and offer USD 2,000 payments to eligible vehicle owners and lessees whose cars underwent required emissions repairs. The automaker has also committed to a series of compliance measures aimed at preventing future misconduct and meeting oversight requirements.
State authorities alleged that Mercedes installed undisclosed software in certain diesel vehicles that reduced emissions during regulatory testing while allowing significantly higher pollution levels during normal driving. According to the states, emissions in real-world conditions could reach up to 30 or 40 times the legal limit.
Virginia Attorney General Jason Miyares said the settlement covers an estimated 39,565 vehicles in the US that had not been repaired or permanently removed from the road as of August 2023. Mercedes will bear the cost of installing approved emissions modification software, provide extended warranties, and pay USD 2,000 per vehicle to participating consumers.
A spokesperson for Mercedes said the settlement would not affect the group’s bottom-line earnings, adding that sufficient provisions had already been made to cover the associated costs. The agreement remains subject to final court approval.
The automaker has previously faced substantial penalties related to diesel emissions. In 2020, Mercedes agreed to pay USD 2.2 billion to settle a US government investigation and claims from around 250,000 vehicle owners.
Under the terms announced on Monday, Mercedes must immediately pay USD 120 million to the states. A further USD 29.6 million is suspended and may be reduced by USD 750 for each affected vehicle that the company repairs, removes from circulation, or buys back.
The state-level investigations into Mercedes began in 2020, in the wake of Volkswagen’s diesel emissions scandal, which ultimately cost the German carmaker more than USD 20 billion in fines, penalties and settlements worldwide after it admitted to installing so-called “defeat devices” in nearly 11 million vehicles.
Several major automakers continue to face legal action linked to diesel emissions practices. Mercedes is also among a group of manufacturers — including Ford, Nissan and Renault — facing a mass lawsuit in England launched in October.
