German carmaker Daimler has been ordered to recall 774,000 autos from across Europe, it was reported Monday, after earlier news that the company’s cars contained defeat devices sent shares plunging Monday morning.
After falling as much as nearly 2.6%, shares were trading down less than 1.0% as of 2 pm EDT.
The recall was announced after meetings on Monday between Daimler executives and Germany’s top regulator failed to resolve the issue, which related to unapproved software functions found in the carmaker’s Euro 6 diesel engines, according to a report in Bloomberg.
Daimler has agreed to upgrade engine software in several models sold in Europe, Transport Minister Andreas Scheuer said, though they will not face fines or requirements for hardware fixes.
In contrast to the Volkswagon emission scandal of 2015 – which led to VW admitting to intentionally designing engines to circumvent emissions testing – Daimler has not admitted to any wrongdoing.
“We don’t see any evidence that Daimler was designing software to deliberately cheat on emission testing,” Arndt Ellinghorst, an analyst with Evercore ISI in London, was quoted as saying in the Bloomberg article
Ellinghorst estimated the cost to Daimler to be less than 100 million euros. “With this recall, fines are off the table.”