15 September, 2020

Daimler to pay $2.2 billion in US Dieselgate settlements

Daimler

Daimler is set to pay out a total of $2.2 billion (€1.8 billion) to resolve a diesel emissions cheating investigation, as well as claims from some 250,000 US vehicle owners, court documents have revealed.

The manufacturing group previously confirmed it expected settlement costs with US authorities to climb to approximately $1.5 billion. Meanwhile, the estimated cost of the class-action settlement looks to be around $700 million. Daimler also estimates additional expenses of a mid-three-digit-million Euro amount to fulfil requirements of the settlements.

Binding consent decrees

The settlements follow a nearly five-year-long investigation, and the binding consent decrees can be broken down into four parts. Firstly, Daimler will pay a civil penalty totalling $875 million, which roughly equates to $3,500 for each vehicle sold in the US. The court remarks reveal that this is ‘the largest per-vehicle civil penalty judgment ever imposed for a mobile emissions violation under the Clean Air Act.’

Secondly, the carmaker will fix each affected vehicle without any cost to the consumer. The cost of recalling and bringing these vehicles into line with US emissions regulations is estimated to be close to $400 million. At least 85% of the affected passenger cars must be repaired within two years and the same amount of vans within three years. However, Daimler will not be required to buy back vehicles unless it is unable to offer an emissions fix within a specific timetable.

Thirdly, the manufacturer will replace no less than 15 old locomotive engines with new, low nitrogen oxide-emitting ones, which the court remarks claim should offset the ‘illegal emissions from its vehicles.’ Finally, the manufacturer's US arm is required to strengthen its internal corporate compliance procedures to prevent future violations. This will mean hiring a third party to review active compliance measures regularly to ensure they are strong enough. 

Deterrent

These requirements will total some $1.5 billion, while further class-action settlements will likely bring the amount up to $2.2 billion. ‘We expect that this relief will also serve to deter any others who may be tempted to violate our nation’s pollution laws in the future,’ said Deputy Attorney General Jeff Rosen.

‘The message we are sending today is clear. We will enforce the law. We will protect the environment and public health. And if you try to cheat the system and mislead the public, you will be caught,’ said EPA Administrator Andrew Wheeler. ‘Those that violate public trust in pursuit of profits will forfeit both.’

The Justice Department said Daimler did not disclose 16 auxiliary emission-control devices. The government alleges this ‘allowed the vehicles to perform in a variety of consumer-desirable ways, including allowing for fewer diesel exhaust fluid (DEF) tank refills, better fuel mileage, and fewer malfunction indicator lamps (MILs).’

‘As stated in the consent decrees and the class-action settlement, the company denies the authorities’ allegations as well as the class-action plaintiffs’ claims and does not admit any liability to the United States, California, plaintiffs, or otherwise,’ the carmaker said. ‘The settlement resolves the company’s pending civil proceedings with the US authorities without reaching any determinations as to whether functionalities in Daimler’s vehicles are defeat devices.’

The carmaker still faces an ongoing criminal investigation, with the potential for additional US financial penalties.