Struggling EV sales have pushed Mercedes to refocus on combustion engines and adopt a uniform design across its lineup
Mercedes Shifts Strategy, Balancing EVs and Combustion Cars Amid Cost-Cutting Push
Mercedes is set to slash production costs over the next two years while introducing nearly 40 new or heavily updated models in an effort to regain momentum. The automaker anticipates a steep earnings drop in 2025 and hopes that a renewed focus on combustion engines will help stabilize its position.
Not long ago, Mercedes aimed to go fully electric in key markets by 2030, but sluggish EV sales have forced a rethink. While the brand isn’t abandoning EVs—17 of its upcoming models will be battery-powered—it is also committing to 19 new combustion-powered vehicles that will remain in production well into the 2030s.
A Unified Design Language for ICE and EV Models
One of the biggest changes will be a shift toward uniform design across both electric and combustion models. The egg-shaped EQS was a commercial flop, prompting Mercedes to align future EV styling more closely with its gasoline-powered counterparts. Even high-end models on dedicated EV platforms will share design cues with their ICE siblings, while smaller models will use a common architecture for both powertrains.
Among the new releases hitting showrooms this year is the CLA sedan, available in both EV and ICE versions with similar pricing. This model will spawn an entire lineup, including an SUV and wagon. Mercedes is also preparing all-electric versions of the GLC and C-Class, as well as an E-Class EV to compete with BMW’s i5.
Mercedes Sticks With Combustion, Including V12 Power
On the combustion side, the company is set to reveal a refreshed S-Class and will continue offering four- to eight-cylinder engines across its lineup, all compliant with Euro 7 emissions regulations. Additionally, the brand remains committed to its flagship V12-powered sedans.
Amid financial struggles, Mercedes’ car division saw earnings plummet 39% to €8.7 billion ($9.1 billion) in 2024, with expectations for an even tougher 2025. In response, the company plans to cut costs by 10% by 2027, with further reductions targeted by 2030.
Despite the cuts, Mercedes won’t shut down its German factories but will shift production of at least one model line to Hungary, where manufacturing costs are significantly lower. The company is also increasing local production efforts in the U.S. and China to mitigate the impact of potential tariffs.
With a more balanced approach between EVs and combustion cars, a cost-cutting strategy, and a fresh design direction, Mercedes is positioning itself for a challenging but adaptive future.
