Mercedes-Benz Settles US Diesel Emissions Dispute for $149.6 Million

Mercedes-Benz has consented to a $149.6 million settlement to resolve ongoing accusations from US states regarding illegal software that manipulated diesel emissions tests, thereby concluding its remaining legal disputes related to diesel in the United States.

The settlement was revealed on Monday by Letitia James, who indicated that this agreement addresses claims made by 48 US states, Puerto Rico, and the District of Columbia. Authorities contended that the automaker had installed unreported software in specific diesel models, which minimized emissions during tests but allowed significantly higher pollution levels in actual driving conditions.

Regulators stated that the affected vehicles were engineered to comply with emissions standards solely in controlled testing environments. During everyday use, some models reportedly emitted pollutants at rates 30 to 40 times higher than allowable limits, breaching state environmental and consumer protection regulations.

According to the agreement, Mercedes-Benz will directly compensate participating states and provide financial restitution to qualifying consumers. Owners and lessees of vehicles that received accepted emissions modifications will get $2,000 each. The company will also finance the total cost of emissions update software installation, extend warranties, and implement further compliance measures to avert future breaches.

The settlement covers approximately 39,565 diesel vehicles in the US that were yet to be repaired or permanently taken out of service as of August 2023.

As part of the agreement, Mercedes must immediately transfer $120 million to the participating states. An additional $29.6 million has been put on hold and may be reduced based on the company's success in repairing, removing, or repurchasing vehicles.

Mercedes-Benz confirmed that this agreement effectively concludes all outstanding diesel-related legal issues in the United States. A company representative noted that the settlement would not affect its financial performance, saying adequate provisions were already in place to cover the costs.

This state-level settlement follows a previous $2.2 billion agreement made in 2020 between Mercedes-Benz and US federal authorities, which addressed criminal and civil inquiries and provided compensation to around 250,000 vehicle owners.

The investigation into Mercedes was initiated in the wake of the 2015 Volkswagen diesel emissions scandal, which ultimately cost Volkswagen over $20 billion globally. Although this US settlement brings closure for Mercedes stateside, the company still faces diesel-related legal challenges in other territories, notably a significant lawsuit in the United Kingdom.