Mercedes-Benz boosts investment in hybrid engines amid strategy shift

German automaker Mercedes-Benz is ramping up its investment in combustion engine technology, CEO Ola Källenius revealed in a recent interview with German business magazine Wirtschaftswoche. The company plans to significantly rework its hybridised combustion engines to ensure their longevity well into the 2030s. This move comes as Mercedes adjusts its strategy, continuing to develop both electric and combustion engines due to lagging electric vehicle (EV) sales and challenging economic conditions.

Mercedes aims to make all relevant engine and transmission combinations compliant with upcoming regulations, such as Euro 7 and China 7, ensuring they meet the highest technological standards. Despite this renewed focus on combustion engines, the company remains committed to its electric vehicle plans. Källenius confirmed that the next electric S-Class is still in development, and the construction of battery cell factories is ongoing, though delayed.

This strategic shift follows earlier announcements that Mercedes would only sell electric vehicles by 2030 where market conditions allow. Now, the company expects electric and hybrid vehicles to constitute up to 50% of total sales by the end of the decade. This includes both battery electric vehicles (BEVs) and plug-in hybrids (PHEVs), referred to collectively as xEVs.