Mercedes increases investment in combustion engines

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In an interview with a German newspaper, Ola Kallenius, Mercedes CEO, announced that Mercedes will increase its investment in combustion engines to include 14 billion euros ($15 billion) this year on its passenger cars.

Sales of Mercedes electric models are well below expectations: only 222,600 electric models out of a total of 2,043,800 units in 2023, or about 11%. This percentage is well below the target of 50% of sales to be electric by 2025.

As the economic climate and new regulations have led to a decline in electric car sales, Mercedes revised its strategy earlier this year and scrapped its plan to sell only electric cars from 2030.
So, Mercedes will continue to develop both electric and combustion-engined models in parallel.

“Our engines will always be at the very highest technological level. Otherwise, we would suddenly stall our combustion engine business in 2027/28,” Mercedes-Benz chief executive said. Kallenius said all “relevant combustion engines and transmission combinations” will comply with new regulations such as EU7 or China 7 to ensure the engines are always at the highest technological level.

At the same time, Kallenius said that Mercedes is not giving up on plans to invest in electric models and that they are only delayed. “Only later than previously planned,” the Mercedes boss said. Mercedes estimates it needs eight gigafactories with an installed capacity of 200 GWh. But Mercedes recently announced the postponement of its investment in the construction of two battery plants in Kaiserslautern, Germany, and Termoli, Italy, after buying a 1/3 stake in Automotive Cells Company (ACC), partnering with Stellantis and TotalEnergies.

Mercedes initially started with the “Electric First” strategy, later transformed into “Electric Only”. Kallenius announces that Mercedes wants to sell from 2030 only electric models, where market conditions will allow.

However, news has recently emerged that Mercedes has abandoned the MB.EA Large platform for the upcoming EQS EQS, which was due to appear in 2028. The future EQS will use the current EVA II platform with 400V technology, which will convert to 800V.
Kallenius said that the news about the scrapping of the upcoming electric S-Class is false but did not give more details. However, the press did not say that Mercedes has given up on the future EQS but that it has opted for a modernized existing platform instead of a completely new architecture to cut costs.

Mercedes now estimates that in 2030, it will sell 50% electric models and 50 % models with thermal engines with a high degree of hybridization. This trend is clear, with all new Mercedes models, including the new E-Class having multiple PHEV versions.As for the Mercedes S-Class, the world’s best-selling luxury limousine will undergo a facelift in mid-2026, when the thermal engines and PHEV versions will also be improved.

At the same time, Mercedes will continue investing in the new MB.EA Medium electric platform, on which the Mercedes C-Class EV will debut in 2026 and the Mercedes GLC EV in 2027. Mercedes is pinning its hopes on these two models that will operate in a very important market segment where Tesla has sold over one million Model Y units annually.