On December 22, 2025, Mercedes-Benz Group AG reached a $149.6 million settlement with 48 U.S. states, Puerto Rico, and the District of Columbia over allegations that it installed illegal software in diesel vehicles to cheat emissions tests. The multistate action was led by New York Attorney General Letitia James and forms part of the ongoing fallout from the broader Dieselgate scandal first uncovered in 2015.
Authorities alleged that Mercedes’ software masked true pollution levels during government testing, while the vehicles emitted 30 to 40 times the legal limit of nitrogen oxides (NOx) during normal driving. The settlement aims to resolve these claims for vehicles sold between roughly 2008 and 2016, covering about 39,565 vehicles that remain unrepaired or still on U.S. roads as of August 1, 2023.
Under the terms of the agreement, Mercedes will pay $120 million immediately, while $29.6 million is suspended and may be reduced or waived depending on the success of a consumer relief program. Owners and lessees of affected vehicles will be eligible for $2,000 payments if they install approved emissions modification software. The company will also provide extended warranties on repaired vehicles and cover costs for installing approved software on remaining unrepaired vehicles.
The settlement also requires Mercedes to comply with reporting obligations to the states and refrain from misleading or deceptive marketing of diesel vehicles. This ensures transparency in advertising and affirms that diesel vehicles meet emissions compliance in real-world conditions.
Mercedes has stated that it has already made provisions in its accounts to cover the settlement, and the company’s bottom-line earnings will not be materially affected. This settlement resolves all remaining U.S. legal actions related to Mercedes’ diesel emissions practices, providing closure to a decade-long series of investigations.
Historically, Mercedes has faced similar cases. In 2020, the company agreed to pay approximately $2.2 billion to settle U.S. government and California regulators’ investigations into comparable emissions allegations. This latest settlement underscores ongoing regulatory scrutiny over diesel emissions in the United States and highlights the long-term impact of Dieselgate on automakers.
Overall, the $149.6 million agreement marks a significant step in resolving Mercedes-Benz’s legacy diesel emissions issues, while providing consumer compensation and ensuring compliance with environmental standards.