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(Bloomberg) – Daimler AG will pay about $2.2 billion to address U.S. diesel emissions problems. In recent years of tighter regulatory control over vehicle pollution.
A precept agreement with governments such as the U.S. Department of Justice and the Environmental Protection Agency will charge the German manufacturer about 1.27 billion euros ($1.5 billion), according to a statement. The Stuttgart-based company will pay another 592 million euros to meet customer demands.
“While this is expected to contribute to this factor and allow the company to focus on other urgent challenges, it is a reminder that other stakeholders are very likely to get most of Daimler’s money flow during the 2020-23 period, regardless of underlying performance,” Citigroup Inc., analyst Angus Tweedie said in a note.
Daimler’s shares fell 1.2% to 41.91 euros at 9:55 a.m. in Frankfurt, in line with the Stoxx 600 Autos-Parts index. Shares fell by 15% in the year.
The pacts resolve what emerged when U.S. regulators stepped up their revision of diesel emissions after the 2015 Volkswagen AG cheating scandal. The Justice Department asked Daimler to investigate his vehicle certification procedure the following year.
Although prices add to Daimler’s anti-monetary winds caused by the Covid-19 pandemic, the amounts are small compared to the larger-scale emission violations charged VW with more than 30 billion euros. Daimler says he cooperated entirely with U.S. authorities, while VW officials lied to EPA and California regulators before admitting that the company created devices to thwart emissions testing.
Daimler’s disorders also involve fewer vehicles. Its agreement with the U.S. government covers civil and environmental claims similar to the emissions systems of approximately 250,000 cars and trucks. VW admitted in 2015 that it had installed up to 11 million diesel engines worldwide, totaling about 600,000 in the United States.
Emissions problems
The auto industry is still out of danger with U.S. regulators.
Fiat Chrysler Automobiles NV recently revealed that it has started talks with the Department of Justice’s Criminal Division for an investigation into diesel emissions issues. Ford Motor Co. also revealed last year that its emissions certification procedure may be flawed and that the Justice Department has opened an illegal investigation.
Electric automaker Tesla Inc. reported a number of consecutive quarterly gains, in component due to the sale of regulatory credits to automakers that would not otherwise be able to meet stricter contaminant standards. The market capitalization of the style 3 manufacturer exceeded $300 billion, nearly double the combined price of VW, Daimler and Ford.
Years of impact
Daimler expects to incur charges of millions of euros in additional expenses similar to meeting the needs of its regulations and has stated that prices will have an effect on its business over the next 3 years.
The company warned in its annual report published in February that the watchdog of the German automotive industry, KBA, will most likely be supplied with neutralization devices. As a result, Daimler has higher provisions for legal and regulatory costs.
In his statement, Daimler stated that he had made sufficient arrangements to control the burden of the American colonies. In the coming weeks, the government will register consent orders in a U.S. district court. For your final approval.
A spokesman for the California Air Resources Board, one of the governments involved in settlements, said the consent decree will be submitted in mid-September. Officials from the Department of Justice and the EPA declined to comment.
(Inventory updates and third-paragraph analyst comments)
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