Last year, Mercedes-Benz parent company Daimler had to pay almost $1 billion for supervisory negligence. This comes after German authorities found that the automaker did not immediately recall approximately 684,000 vehicles with shady emission controls. In addition, Mercedes-Benz also had several defeat devices fitted on diesel models of the C-Class, E-Class, and the GLK.

Now, the automaker will be paying another hefty fine, this time with U.S. authorities. Recently, Daimler AG and its subsidiary Mercedes-Benz USA, have reached an agreement in principle with various U.S. authorities to settle civil and environmental claims caused by their diesel-powered cars. The issue itself covers around 250,000 diesel-powered passenger cars and vans in the U.S. that were found to be emitting more harmful exhaust gases than normal.

Under the settlement, Daimler expects to pay a fine amounting to USD 1.5 billion (about PhP 73.25 billion). These include the class action settlement that is approximately priced at USD 700 million, the court’s anticipated award of attorneys’ fees and costs, and further three-digit million expenses to fulfill other settlement requirements.

With the huge fine looming, Daimler expects that its free cash flow in the next 3 years will be greatly affected. The settlement is now subject to the final approval of the concerned authorities and courts which include the Environmental Protection Agency (EPA), Department of Justice (DOJ), California Air Resources Board (CARB), California Attorney General’s Office, and U.S. Customs Border and Protection.

Despite the heavy fine over the diesel emission issue, Daimler still believes in further refining diesel powertrains. Instead of banning them outright, Daimler has committed to further developing them while also reducing harmful CO2 and NOx emissions. But given the heavy fines the company has to pay up, we won’t be surprised if further development of the diesel engine could be slowed down in favor of electrification and hybrid powertrains.