Two federal agencies and the California attorney general’s office charged the German automaker with using a “defeat device” to make it appear that its diesel engines were in compliance with emissions standards when they were not.

Another German carmaker, Volkswagen, was the first to face these charges when it was revealed the car employed software that reduced emissions only when the vehicle was being tested. As it turned out, the engines could not meet emissions requirements and deliver the promised fuel economy.

In early 2017, Volkswagen agreed to pay $4.3 billion in penalties to the U.S. government and spent billions more buying back affected vehicles from consumers.

According to the Daimler settlement, the company sold close to 250,000 diesel-powered vehicles in the United States with engines that failed to comply with state and federal laws.

Officials say the settlement, which includes civil penalties, will also require the automaker to modify vehicles so that they meet emissions requirements.

Payment to California

The agreement will pay around $700 million to settle numerous lawsuits filed by consumers. It will also compensate the state of California with a $300 million payment that includes $17.5 million to the California Department of Justice for future environmental enforcement, monitoring, and investigation.

“Longterm, if you cheat, you're going to get caught,” said California Attorney General Xavier Becerra. “Daimler is finding that out today. But they’re not the first — nor likely the last — to try.” 

In a statement issued to news outlets, Daimler said it disputes allegations that it cheated and said the settlement does not reflect any admission of guilt on its part. It said the settlement resolves the civil proceedings without making any determination that Daimler vehicles used “cheat” devices.

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