Daimler will 'upgrade' 3 million Mercedes-Benz diesels in Europe (and maybe some in the U.S.)

July 25, 2017

The past couple of years haven't been kind to diesels or the companies that make them. Among the hardest hit have been German manufacturers like Volkswagen, which has coughed up over $22 billion in fines and fixes so far, with many more opportunities for payouts down the road. (That said, U.S. automakers haven't gotten off scot-free: Fiat Chrysler is facing a Dieselgate crisis of its own.) 

Now, it may be Daimler's turn on the hot seat. Late last week, we learned that Mercedes-Benz's parent company is one of several firms targeted by a European Union investigation into illegal business practices related to diesel vehicles.

And that's not all. Daimler may have also sold more than 1 million illegally rigged diesels in the U.S. and Europe. The vehicles in question include Mercedes-Benz models sold between 2008 and 2016, which may have been designed to cheat on emissions tests, much as Volkswagen's 11 million were. 

Daimler has said that it's cooperating with that investigation. Though it's possible that the EU could ban the illegal vehicles, a Daimler spokesperson dismissed such a possibility as unlikely. 

More recently, Daimler announced plans to upgrade the software on some 3 million diesels across Europe. According to Dr. Dieter Zetsche, the chair of Daimler's board and the head of Mercedes-Benz Cars, the upgrade is meant "to reassure drivers of diesel cars and to strengthen confidence in diesel technology." The new software will help keep the cars' emissions controls working at maximum efficiency under a broader range of conditions. (Legal loopholes allow diesels in Europe to turn off emissions controls when the outside temperature falls below about 68 degrees Fahrenheit.) 

Daimler has refused to label the diesel upgrade a "recall". The improvements will cost Daimler some 220 million Euros ($257 million U.S.), though that figure could grow significantly if the automaker decides to offer the software upgrade outside Europe. The company is currently in talks with U.S. regulators about doing just that. (It's worth noting that Daimler isn't selling diesels in the U.S. at the moment, and it has no plans to do so anytime soon.)

Will Daimler avoid the same, expensive fate as Volkswagen? That remains to be seen. If Daimler vehicles are found equipped with defeat devices, and if Daimler actively deceived regulators as Volkswagen did--either by installing the devices itself or by colluding with other manufacturers of diesel vehicles--then things could go rapidly downhill.

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