Mercedes Settles Multi-State Diesel Emissions Probe for $149.6M

Mercedes-Benz has agreed to a $149.6 million settlement with 48 U.S. states, the District of Columbia, and Puerto Rico.

This agreement resolves a years-long investigation into allegations that the German automaker used illegal software to cheat on diesel emissions tests.

New York Attorney General Letitia James announced the deal on Monday, December 22, 2025. The settlement effectively ends the company’s major legal battles in the United States regarding the “dieselgate” scandal.

Compensation for Owners and Repair Requirements

As part of the settlement, Mercedes-Benz will compensate consumers affected by the emissions software. Specifically, eligible owners and lessees will receive $2,000 payments if their vehicles undergo the necessary emissions repairs.

The terms of the agreement require Mercedes to:

• Pay $120 Million: An immediate payment to the participating states.
• Cover Repair Costs: Provide free installation of approved emissions modification software.
• Extended Warranties: Offer extended warranties to consumers who participate in the repair program.
• Prevent Misconduct: Adopt new internal actions to ensure future compliance with environmental laws.

Allegations of “Defeat Devices”

State investigators alleged that Mercedes installed undisclosed software in its diesel vehicles to hide high pollution levels. While the cars appeared clean during government testing, they emitted 30 to 40 times the legal limit of pollutants during normal driving conditions.

Despite the large payout, Mercedes-Benz stated that its bottom-line earnings will not be impacted. The automaker confirmed it had already made “sufficient provisions” to cover the total costs of the settlement. This latest deal follows a $2.2 billion resolution in 2020 that addressed claims from 250,000 U.S. vehicle owners.

The Global Context of Dieselgate

The states launched their investigation in 2020, following the massive Volkswagen scandal that cost VW over $20 billion. While this settlement resolves issues in the U.S., Mercedes still faces legal pressure elsewhere.

For instance, the company is currently involved in a mass lawsuit in England alongside other major brands like Ford and Nissan. The U.S. settlement is now pending final court approval.

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