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Mercedes-Benz has agreed to pay $149.6 million to settle allegations brought by U.S. states over the use of illegal software in diesel-powered vehicles that allegedly concealed excessive emissions during regulatory testing.
The agreement, announced Monday by New York Attorney General Letitia James, resolves claims made by 48 states, Puerto Rico, and the District of Columbia following a multiyear investigation into the German automaker's diesel practices. State officials said certain Mercedes diesel models were equipped with undisclosed software designed to limit emissions only during laboratory testing, while releasing significantly higher pollution levels under real-world driving conditions.
According to the states, affected vehicles were capable of emitting nitrogen oxide pollutants at levels as much as 30 to 40 times above legal limits when driven normally. Regulators described the software as unlawful and misleading, arguing it undermined emissions standards meant to protect public health and the environment.
Under the settlement terms, Mercedes-Benz will make an immediate payment of $120 million. An additional $29.6 million has been suspended and may be reduced depending on the number of vehicles the company repairs, removes from service, or repurchases. For each qualifying vehicle addressed, the suspended amount will decrease by $750.
The automaker also agreed to provide $2,000 payments to eligible owners and lessees whose vehicles receive approved emissions fixes. In addition, Mercedes must install updated emissions modification software at no cost, extend vehicle warranties, and comply with ongoing oversight measures designed to prevent similar violations in the future.
Virginia Attorney General Jason Miyares said the settlement covers an estimated 39,565 diesel vehicles that had not been repaired or permanently removed from U.S. roads as of August 2023.
Mercedes-Benz said the agreement effectively closes its remaining diesel emissions-related legal matters in the United States. In a statement, the company added that it had already set aside sufficient financial provisions and does not expect the settlement to impact its bottom-line earnings. The deal remains subject to final court approval.
This latest agreement follows a separate $2.2 billion resolution reached in 2020 with U.S. federal authorities and vehicle owners over similar allegations involving approximately 250,000 vehicles.
The investigation into Mercedes was launched in the aftermath of Volkswagen's diesel emissions scandal, which erupted in 2015 and ultimately cost the automaker more than $20 billion in penalties and settlements. Diesel-related litigation continues to affect several global automakers worldwide.
