Mercedes-Benz to Pay $1.5 Billion in Emissions Cheating Settlement

Mercedes-Benz and its parent, Daimler, have agreed to a landmark settlement with US and California  regulators.

Daimler AG and its subsidiary, Mercedes-Benz, have agreed to pay $1.5 billion to US government and California state regulators to settle accusations that they cheated on diesel emissions tests, according to a statement from the US Department of Justice (DOJ) on Monday.

The scandal, dubbed “Dieselgate”, relates to claims that the German carmaker fitted its vehicles with defeat devices to fraudulently pass emissions tests. Around 250,000 diesel cars and vans equipped with such devices are believed to have been sold in the US, violating environmental laws.

Daimler will be expected to repair at least 85% of affected cars within two years and 85% of affected vans within three years, in addition to offering drivers extended warranties on certain vehicle parts and conducting annual emissions tests on the repaired vehicles for five years.

The $1.5 billion settlement will cover civil penalties to the government as well as the cost of repairing affected vehicles and funding for government projects to reduce nitrous oxide pollution. Around $300 million of this settlement will be paid to California, according to state Attorney General Xavier Becerra. A separate settlement of $700 million will compensate vehicle owners for their losses.

“Cheating isn’t the smartest way to market your product,” Becerra said in remarks on Monday. “Daimler is finding that out today. But they’re not the first — nor likely the last — to try.”

The settlement is similar to the $1.47 billion sum paid out by Volkswagen in another emissions cheating case in 2015, which involved the automaker buying its affected cars back from owners.

It is estimated that 59 premature deaths were caused in the US due to the excess pollution produced between 2008 and 2015 by vehicles equipped with defeat devices.

The settlement awaits court approval.

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