Daimler to pay £1.17bn to settle emissions cheating probes in US

Car maker Daimler and subsidiary Mercedes-Benz USA have agreed to pay 1.5 billion dollars (£1.17 billion) to the US government and California state regulators to resolve emissions cheating allegations, officials said.

The US Department of Justice, the Environmental Protection Agency (EPA) and the California attorney general’s office said Daimler violated environmental laws by using so-called defeat device software to circumvent emissions testing, and sold about 250,000 cars and vans in the US with diesel engines that did not comply with state and federal laws.

The settlement, which includes civil penalties, will also require Daimler to fix the vehicles, officials said.

The German car maker said on August 13 that it had agreements with the Justice Department, the EPA, Customs and Border Protection, the California Air Resources Board and others over civil and environmental claims involving about 250,000 diesel cars and vans.

EPA administrator Andrew Wheeler said Daimler did not disclose all of its software, which included “devices designed to defeat emissions controls”.

In a statement, Daimler denied the allegations that it cheated and did not admit to any liability in the US.

The settlements resolve civil proceedings without any determination that Mercedes and Daimler vehicles used defeat devices, the company said. Plus, Daimler said it did not receive a notice of violation of the Clean Air Act from the EPA or California regulators, which is common when defeat devices are used.

The company said it is not obliged to buy back the vehicles, as Volkswagen was, nor will it have an independent monitor to track its progress on the settlement.

“By resolving these proceedings, Daimler avoids lengthy court actions with respective legal and financial risks,” the firm said.

Daimler also said the emissions control system in US vehicles is different to models sold in Europe because of varied regulatory and legal requirements.

Daimler said the settlement would bring costs of about 1.5 billion dollars, while the civil settlement will bring a one-off charge of about 700 million dollars (£544 million). It estimated that “further expenses of a mid three-digit-million” euros would be required to fulfil conditions of the settlements.

The company did not make it clear how the vehicles would be cleaned up or whether it was accused of any wrongdoing in the US like Volkswagen, which paid 2.8 billion dollars to settle a criminal case due to cheating. Fiat Chrysler is also being investigated for allegedly cheating on emissions.

VW admitted it turned on pollution controls when vehicles were being tested in EPA labs, and turning them off when the diesel vehicles were on real roads. The company duped the EPA for years before being discovered by a non-profit climate group and researchers at West Virginia University.

As part of the settlement, officials in California will receive 17.5 million dollars (£13.6 million) for environmental enforcement and to support environmentally beneficial projects, officials said.

California attorney general Xavier Becerra said: “Long term, cheating isn’t the smartest way to market your product. Daimler is finding that out today. But they’re not the first — nor likely the last — to try.

“Installing defeat device software on your vehicles to deceive emissions regulators doesn’t qualify as doing more. It just means you’ll pay more in penalties once we catch you. And we will, because cheaters really aren’t as smart as they think.”

Daimler’s pollution practices also are under investigation in Germany, and civil lawsuits claim the vehicles emitted more pollutants than advertised.

In April 2016, the Justice Department asked Daimler to conduct an internal probe into its exhaust emissions certification process. The request came as the EPA began checking all diesel engines after the VW cheating was revealed.

Steve Berman, a Seattle lawyer who sued Daimler over Mercedes diesel pollution, said in 2016 that his firm hired a company to test Mercedes diesels on real roads, finding that they spewed out too much nitrogen oxide almost all the time. He accused Mercedes of having software called a “defeat device” that was similar to VW’s.

In September 2019, federal prosecutors charged a Fiat Chrysler engineer with rigging pollution tests on more than 100,000 diesel pick-up trucks and SUVs sold in the US, the first indictment since a wave of similar cases against VW and its managers.

The alleged scheme is not as large as the VW scandal, which involved nearly 600,000 vehicles, but the charges showed that investigators are still on the case, months after Fiat Chrysler agreed to a 650 million dollar civil settlement and said it would fix Jeep Grand Cherokees and Ram 1500 trucks with EcoDiesel engines made between 2014 and 2016.

Prosecutors alleged the engineer manipulated software to make the pollution control system perform differently under government testing than during regular driving.