To definitively close the chapter on the “Dieselgate” scandal in the United States, Mercedes-Benz has agreed to a payout of $149.6 million following an investigation led by New York Attorney General Letitia James, involving 48 states, Puerto Rico, and the District of Columbia. The agreement was announced on December 22, 2025, and aims to end the accusations regarding the illegal software present in Mercedes-Benz vehicles, which allowed the vehicles to hide actual pollution levels—exceeding permitted limits—during government tests.
In addition to state fines, the German company will have to provide payments of $2,000 to affected owners and cover necessary repairs, a measure that adds to the $2.2 billion already paid in 2020; however, the company maintains that its financial results will not be affected, as it had set aside prior provisions to cover these costs.
Automotive company deception
The origin of the legal conflict lies in the installation of illegal software programs by Mercedes-Benz in their vehicles. Through these programs, it was possible to detect when the car was undergoing an official inspection, and the system was capable of artificially reducing pollutant emissions. However, the vehicles emitted up to 30 to 40 times more than the legally allowed limit. The financial terms of the current agreement are divided into several parts:
- An immediate payment of $120 million to the state treasury.
- A sum of $29.6 million that is on hold. This amount will be reduced by $750 for each vehicle the company successfully repairs, removes from the market, or buys back.
- Direct compensation of $2,000 for users (owners or lessees) who take their vehicles for the mandatory emission corrections.
According to Virginia Attorney General Jason Miyares, this agreement covers the approximately 39,565 vehicles that were still in use without repairs or had not been permanently removed from the roads as of August 2023.
Sanctions history
This is not the first legal issue the automaker has faced, as back in 2020 it also agreed to pay $2.2 billion to settle a federal government investigation and claims from a quarter of a million drivers in the United States. Although these are very high figures, the company says its financial health is positive. According to a Mercedes spokesperson, “sufficient provisions have been made for the costs of the general settlement”. However, the company emphasized that the agreements are still “subject to final court approval”.
Frequently asked questions
What exactly did Mercedes-Benz’s deception consist of?
The company installed illegal software programs that detected when the vehicle was undergoing an official inspection. At that moment, the car artificially reduced its emissions to comply with the law, but under normal driving conditions, it could pollute 30 to 40 times more than legally allowed.
What compensation will the owners of the affected vehicles receive?
Those owners or lessees who take their vehicles in for the mandatory emissions repairs will receive a direct payment of $2,000. In addition, Mercedes-Benz is required to cover all costs of these repairs to ensure that the cars ultimately comply with the regulations.
What financial impact will this agreement have on the company?
Although the current sum of $149.6 million adds to the $2.2 billion paid in 2020, Mercedes assures that its profits will not be affected. The company stated that it has already made ‘sufficient provisions’ to cover these expenses, so the money was already set aside for this purpose.