Daimler's Diesel Emissions Scandal Will Cost It $2.2 Billion In The US

Daimler has agreed to pay $2.2 billion to settle its diesel emissions scandal in the United States. The automaker has reached an agreement in principle with US authorities, including the Justice Department and EPA. That agreement will cost the company $1.5 billion, or about €1.27 billion.

The company will also pay €592 million to settle class-action litigation brought by consumers. Word of the settlements sent Daimler shares falling 1.2% in European trading, overall the stock is down 15% for the year. Analysts have also warned that "other" stakeholders are likely to receive the majority of Daimler cash flow for the period of 2020 through 2023 irrespective of underlying performance.

The agreement will resolve issues Daimler has with US regulators, who increased their examination of diesel emissions after Volkswagen AG was caught cheating emissions in 2015. While the Daimler agreement is a significant amount of money, it's much less than the €30 billion Volkswagen has paid.

The agreement between authorities in the United States and Daimler covers civil and environmental claims related to emissions control systems in approximately 250,000 cars and vans. VW, on the other hand, admitted to cheating emissions regulations on 11 million diesel engines around the globe including 600,000 in the US.

The United States government is still investigating emissions with Fiat Chrysler Automobiles NV recently stating it had started discussions with the Justice Department criminal division to resolve an investigation of its own diesel admission issues. An investigation is also pending against Ford over emissions. Daimler has also warned that it expects to incur hundreds of millions of euros in additional expenses related to fulfilling the requirements of the settlement that will impact its business over the next three years.