Mercedes-Benz has recently become another major automaker to reassess its electric vehicle (EV) strategies. The German car manufacturer has abandoned its previous goal of becoming a fully electric brand by 2030 and is now investing significantly in the development of internal combustion engines (ICE). CEO Ola Källenius stated to Wirtschaftswoche that combustion engines are projected to endure “well into the 2030s,” which necessitates substantial investments in ICE to comply with stricter carbon emissions regulations, as reported by Motor1.
This shift follows Mercedes’ admission that its aspirations for electrification may have been overly optimistic—an acknowledgment mirrored across the automotive industry as several manufacturers retract their commitments to phasing out ICE vehicles in favor of EVs. In the United States, automakers face challenges in electrification due to factors such as inadequate EV charging infrastructure and a lack of buyer interest. Companies like General Motors have also contributed to their setbacks; the launch of the widely lauded Bolt EV was marred by multiple costly recalls due to defective battery packs from LG Electronics, costing GM and its partner $1.9 billion.
As the realization sinks in that transitioning to electric vehicles involves more complexity than simply announcing plans, many major manufacturers are revising their timelines that were initially set at the beginning of the decade. Just three years ago, Daimler executives asserted that the company was shifting its focus from "EV first" to "EV only," indicating that every model would feature a fully electric version, with plans to eliminate gasoline and diesel engines by the end of the decade, according to Automotive News.
Although these intentions seemed ambitious, they were not unique, as competitors like Opel, Jaguar, Volvo, and Ford also declared their goals for a full transition to electric models within the next decade.
Daimler and Mercedes had initially set a goal to "largely eliminate internal combustion engines" within nine years. This timeline may have appeared feasible in the past, but as of 2024, Mercedes is now focusing on "high-tech combustion technology," with Källenius highlighting engines that meet increasingly stringent emission standards worldwide.
The company remains committed to achieving carbon neutrality by 2040, but it is now allocating €14 billion (approximately $15 billion) to its passenger car division to aid this endeavor. This investment will partly support advancements in hybrid and digital strategies, but "more money than previously planned" will be directed towards developing new combustion engines for models like the upcoming S-Class. Additionally, Mercedes is refining its current combustion engine and transmission combinations to minimize CO2 emissions and avoid penalties when the Euro 7 and China 7 regulations take effect. The automaker emphasizes that sometimes significant expenditures are required to avert even greater costs. Meanwhile, the timeline for the EV transition continues to shift, causing further delays.
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