The automaker is being ordered by the Germany government to recall 774,000 diesel vehicles in Europe over concerns stemming from "prohibited shutoff devices".
The move mostly affects Vito vans and diesel-powered versions of GLC 4x4s and C-class sedans, Scheuer added.
Daimler has previously clashed with the KBA's findings regarding diesel emissions, and has maintained it has done nothing wrong.
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However, despite backing down, pro-Remain Tories signalled they would not be easily consoled by a compromise offered by ministers. It is thought that both the government and the Remainer group of Tory MPs consider the outcome to be a success.
Vehicles kept to legal emissions limits for harmful substances like nitrogen oxides (NOx) during lab tests, only to exceed them as much as 40 times in on-road driving. However, the KBA had taken issue with the emissions control features amid suspicion they allowed vehicles to emit excess pollution without detection.
In January 2017, USA regulators ordered a stop-sale of several Fiat Chrysler Automobiles' diesel-powered models, including its Jeep Grand Cherokee, after regulators said it emitted more nitrogen oxide than allowed by law.
Daimler hasn't denied the existence of the functions, but have refuted the suggestion that they are illegal.
Daimler Chief Executive Dieter Zetsche said on Monday that the carmaker had found a technical solution for updating the software on its vehicles, and he therefore expected the company would avoid a fine.
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"We are cooperating to a full extent and transparently with the KBA and the federal transport ministry.""Those functions are part of a complex emission control system created to ensure robust emission control in different driving conditions and over the lifetime of a vehicle".
Evercore ISI analyst Arndt Ellinghorst predicted the costs for the required software update for Daimler would be less than 100million euros (£88million).
In a separate statement, Daimler confirmed the recall and said the question over the legality of the software would still need to be clarified. "Overall, this outcome should de-risk the stock".
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The CEO wrote that those Tesla employees working in Home Depot locations would be offered the chance to work at its own stores. To those who are departing, thank you for everything you've done for Tesla and we wish you well in your future opportunities.