Mercedes-Benz to pay $150 million in nationwide emissions cheating scandal

(CN) — Mercedes-Benz and a bipartisan coalition of 50 attorneys general have agreed to a nearly $150 million settlement to resolve claims over the use of illegal emissions-cheating software.

Under the terms of the settlement with 48 U.S. states, Puerto Rico and the District of Columbia, Mercedes will pay $120 million to the states to support efforts to prevent, abate, and mitigate air pollution.

The German automaker must also provide $2,000 payments to eligible owners and lessees whose vehicles receive required emissions repairs. To obtain this payment, owners and lessees of affected vehicles must submit a valid claim by Sept. 30, 2026. Mercedes must mail notices to eligible owners and lessees explaining how to participate and will also provide an extended emissions warranty for vehicles that receive the modification.

Under the settlement, Mercedes cannot sell or lease any more vehicles equipped with the BlueTEC diesel engines and must also undertake broad corrective actions to prevent future misconduct and comply with strict oversight requirements.

“For nearly a decade, Mercedes sold vehicles that were marketed as clean and environmentally responsible while secretly polluting far beyond legal limits,” Delaware Attorney General Kathy Jennings said in a statement.

“This settlement holds Mercedes accountable for deceiving consumers, evading emissions laws, and putting public health at risk. We expect honesty in the marketplace and clean air in our communities. Today’s agreement delivers both meaningful penalties and real relief for affected drivers," Jennings added.

A multistate investigation led by New York Attorney General Letitia James and eight other attorneys general found that from 2008 to 2016, Mercedes equipped hundreds of thousands of diesel vehicles with undisclosed software designed to circumvent emissions standards so that emissions would appear to be within legal limits, while reducing control of emissions during normal operations.

This was reportedly done to achieve design and performance goals, such as increased fuel efficiency and reduced maintenance, that the vehicles were unable to meet while complying with applicable emission standards.

The states sued the company for unfair trade practices, claiming it mislead state and federal regulators, as well as consumers by marketing the vehicles as “environmentally-friendly," when they actually caused thousands of tons of excess air pollution.

They argued the software defeat devices enabled vehicles to far exceed legal limits of nitrogen oxides emissions, a harmful pollutant that causes respiratory illness and contributes to the formation of smog.

“Mercedes promised New Yorkers clean, green cars, but instead sold vehicles that polluted our air and put public health at risk,” James said in a statement. “For nearly a decade, Mercedes misled regulators and consumers while its vehicles spewed toxic emissions into our communities. Today’s settlement holds Mercedes accountable, delivers millions of dollars to protect New York’s environment, and ensures that this company never again deceives the public about its emissions.”

According to the agreement, Mercedes denies the material factual accusations and legal claims asserted in the complaints. It states that nothing in the judgment shall constitute an admission of any wrongdoing or violations of law by any party.

In a statement, Mercedes said the settlements are subject to final approval by the relevant courts.

“With the settlements, Mercedes-Benz is taking another important step toward resolution of various diesel proceedings. The company is thus resolving all material remaining legal proceedings related to diesel emissions in the U.S.,” the company said.

“Through these settlements, Mercedes-Benz avoids lengthy and cost-intensive court actions. While the company has cooperated fully with the state attorneys general, Mercedes-Benz continues to regard the accusations made as unfounded and denies any liability to the U.S. states or otherwise.”

As part of a 2020 nationwide settlement concerning emission control systems, Mercedes said it has undertook an “Approved Emission Modification Installation Incentive Program” and has already updated more than 85% of its passenger cars and Sprinter vans.

Monday’s settlement follows similar settlements between the states and Volkswagen, Fiat Chrysler, and German engineering company Robert Bosch GmbH over its development of the cheat software. The scandal cost Volkswagen more than $20 billion in penalties and settlements after it was revealed in 2015 that it had cheated emissions tests by installing the devices in nearly 11 million vehicles around the globe.

In 2019, Automaker Fiat Chrysler and its subsidiaries paid $72.5 million to the states while Bosch paid $98.7 million.

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