Daimler to pay more than $2.2 billion to settle US diesel emission claims
14 August 2020
Daimler AG and its subsidiary Mercedes-Benz USA LLC (MBUSA) have reached an agreement in principle with various US authorities to settle civil and environmental claims regarding emission control systems of approx. 250,000 diesel passenger cars and vans in the United States. The involved US authorities are the Environmental Protection Agency (EPA), the California Air Resources Board (CARB), the Environment and Natural Resources Division of the US Department of Justice (DOJ), the California Attorney General’s Office, and the US Customs and Border Protection.
Daimler AG and MBUSA have also reached an agreement in principle with plaintiffs’ counsel to settle the consumer class action “In re Mercedes-Benz Emissions Litigation”, which is pending before the US District Court for the District of New Jersey.
The total amount of the settlements is in excess of $2.2 billion:
- For the settlements with the US authorities, Daimler expects costs of approx. USD 1.5 billion (approx. EUR 1.27 billion).
- The estimated cost of the class action settlement is approx. USD 700 million (approx. EUR 592 million) including the court’s anticipated award of attorneys’ fees and costs.
- In addition, Daimler estimates further expenses of a mid three-digit-million EUR amount to fulfill requirements of the settlements.
Daimler said it expects an impact on the free cash flow of the industrial business over the next 3 years, with the main impact within the next 12 months.
Daimler was previously the subject of a criminal investigation by the DOJ, which alleged that Mercedes diesel cars were equipped with illegal, cycle beating software (emission ‘defeat devices’), but the status of that probe was not addressed in the settlement with the US authorities.
The agreement in principle with the US government authorities will be memorialized in binding consent decrees. The settlements are subject to the final approval of the relevant authorities and courts.
Source: Daimler