German automaker Daimler has agreed to pay the fine to US authorities over claims the company designed its diesel vehicles to cheat air pollution tests.
Regulators said the Stuttgart-based firm installed "defeat device software'' on at least 250,000 cars to get around tough emissions testing and sidestep local environmental laws.
Daimler has denied the allegations but said it had settled on the $1.5 billion (€1.2 billion) payout to avoid a drawn-out legal battle.
"By resolving these proceedings, Daimler avoids lengthy court actions with respective legal and financial risks," the company said.
The automaker will also pay out $700 million dollars as part of a class-action lawsuit brought by the owners of the polluting vehicles.
Daimler's settlement concludes a four-year investigation by regulators, who said it was the second-highest civil penalty imposed under the United States' Clean Air Act.
Deputy Attorney General Jeffrey Rosen said he hoped the fines would act as a deterrent to other companies engaging in similar conduct.
"We expect that this relief will also serve to deter any others who may be tempted to violate our nation's pollution laws in the future," he told journalists.
Daimler said the US models affected "were not sold in the same configurations in Europe."
The case is the latest chapter in a global emissions-cheating scandal that has seen auto giants Volkswagen and Fiat Chrysler hit with huge fines.
Daimler already paid an €870-million(1 billion dollar) fine in September 2019 to German authorities for breaking diesel regulations.
It recalled more than 700,000 vehicles across Europe in 2018 over defeat device software.
jf/rc (AP, AFP)