Attendees inspect a 4 cylinder diesel engine for a Mercedes-Benz B-Class automobile during the … [+]
Daimler has agreed to settle charges brought by U.S. regulators that it cheated on diesel emission tests.
The settlement and related charges are expected to cost the German automaker $1.5 billion, which it said it will spread the cost of the settlement over the next three years. Most of that amount will be accounted for over the next 12 months.
The settlement addresses civil lawsuits and environmental claims rooted in misleading emission labeling on 250,000 diesel passenger cars and vans in the U.S. The regulatory charges were made by the U.S. Environmental Protection Agency, the Department of Justice, the California Air Resources Board and California Attorney General Xavier Becerra
“With the proposed settlement, the company takes an important next step towards legal certainty with respect to various diesel proceedings in the U.S.,” Daimler said in a statement.
The agreement between the U.S. and the manufacturer of Mercedes-Benz vehicles comes five years after Volkswagen admitted to using engine control devices to cheat on diesel emission tests for its vehicles in the U.S. So far, that case has cost Volkswagen 30 billion euros ($35.45 billion) in fines, penalties, repurchasing vehicles and other costs.
Daimler also expects to spend about $700 million to settle a class action lawsuit in U.S. District Court for New Jersey brought by owners of diesel-engine models.
Investors in Germany are also suing Daimler for $1 billion, accusing it of concealing the use of emissions cheating software. The company denies the allegations.
The settlements are subject to approval of the relevant agencies and courts. The class action case must be approved by the U.S. District Court for New Jersey.
Fiat Chrysler Automobiles in 2019 settled similar charges by regulators and diesel owners for about $800 million. But FCA still faces an ongoing criminal investigation regarding its diesel emission testing.
Together, these emission cheating scandals has severely damaged demand in the U.S. for diesel powertrains in passenger cars and light trucks, including vans and SUVs.
Diesels are still popular in Europe, partially because most European countries don’t tax diesel fuel as aggressively as the U.S. federal government does.
U.S. emission standards are stricter on nitrous oxide than corresponding regulations in Europe and Asia.
In the U.S., diesels are still common in large commercial trucks and heavy-duty vehicles.
