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Mercedes reaches $150 million settlement with US states over diesel scandal
Published by Global Banking & Finance Review®
Posted on December 22, 2025
3 min readLast updated: January 20, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on December 22, 2025
3 min readLast updated: January 20, 2026
Mercedes-Benz settles with US states for $149.6M over diesel emissions cheating, affecting over 39,000 vehicles and providing $2,000 to eligible owners.
By David Shepardson and Rachel More
WASHINGTON, Dec 22 (Reuters) - Mercedes-Benz has reached a $149.6 million settlement with U.S. states to resolve a long-running investigation into allegations of diesel emissions cheating by the German automaker, New York Attorney General Letitia James said Monday.
The automaker said the deal effectively ends its legal issues in the United States over dieselgate - the emissions scandal first uncovered at Volkswagen in September 2015.
Under the settlement with 48 U.S. states, Puerto Rico and the District of Columbia, Mercedes will pay $149.6 million and provide $2,000 payments to eligible owners and lessees whose vehicles received required emissions repairs. Mercedes also agreed to adopt a series of actions to prevent future misconduct and comply with oversight requirements, the states said.
The states said Mercedes installed undisclosed unlawful software in diesel vehicles that hid the true levels of pollution and improperly lowered emissions during government testing, but in normal driving conditions, the vehicles emitted up to 30 or 40 times the legal limit.
MERCEDES SAYS GROUP'S BOTTOM-LINE WILL NOT BE AFFECTED
Virginia Attorney General Jason Miyares said the settlement extends to the estimated 39,565 U.S. vehicles that had not been repaired or permanently removed from the road by August 2023.
Mercedes must pay the costs for installing approved emission modification software on each of the affected vehicles and provide participating consumers with an extended warranty and pay consumers $2,000 per vehicle.
A Mercedes spokesperson said the group's bottom-line earnings would not be affected and that "a sufficient provision has been made for the costs of the overall settlement".
The settlements are subject to final court approval, the company said in a statement.
In 2020, Mercedes-Benz agreed to pay $2.2 billion to resolve a U.S. government diesel emissions cheating investigation and claims from 250,000 U.S. vehicle owners.
As part of the settlement with the states announced on Monday, the automaker must immediately pay $120 million to the states. A further $29.6 million is suspended and will be reduced by $750 for each affected vehicle Mercedes repairs, takes off the market, or buys back.
The states launched an investigation into Mercedes-Benz in 2020 following Volkswagen's diesel emissions scandal that cost VW more than $20 billion in fines, penalties and settlements after it admitted in 2015 it had cheated emissions tests by installing "defeat devices" and sophisticated software in nearly 11 million vehicles worldwide.
Some of the world's biggest automakers continue to face legal action over the scandal.
Mercedes faces further potential payouts, for example in England, where it is one of several companies alongside Ford, Nissan and Renault facing a mass lawsuit launched in October.
(Reporting by David Shepardson and Valerie Volcovici in Washington, and Rachel More in Berlin; editing by Barbara Lewis)
Emissions cheating refers to the practice of using illegal software or devices in vehicles to manipulate emissions tests, resulting in vehicles appearing to meet environmental standards when they do not.
Emissions repairs are modifications made to vehicles to ensure they comply with environmental regulations, often involving the installation of new software or hardware to reduce harmful emissions.
Compliance in the automotive industry refers to adhering to laws and regulations governing vehicle emissions, safety standards, and environmental impact.
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