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Mercedes Pumping New Life Into its Gas Engines

by | July 1, 2024

With the EV market taking longer to charge up than many have expected, Mercedes-Benz is putting money back into the development of internal combustion technology, as well as hybrids, CEO Ola Kallenius said. But the automaker isn’t scrapping plans for a new EV architecture, despite recent reports, the executive said.

Mercedes-Benz CEO Ola Kallenius has upped the company’s product development budget.

Mercedes-Benz has rolled out a procession of all-electric models, such as the EQS, EQE and EQB, with still more on the way. But like many of its competitors, the luxury brand is trying to adapt to the slowdown in EV sales growth.

One key step sees the German automaker ramp up spending on the internal combustion technology that’s likely to remain part of the market for a longer time than had been anticipated just a year or two ago.

So far this year, Mercedes has invested about $14 billion euros — $15 billion U.S. at current exchange rates – in both ICE and EV powertrains, as well as digital and connected car technologies, revealed CEO Ola Kallenius during an interview with the German newspaper Wirtschaftswoche.

Upping the budget

2025 Mercedes-Benz EQS Sedan 2_European model shown

A European version of the 2025 Mercedes-Benz EQS.

Mercedes is spending “more money than previously planned” as it shifts focus, Kallenius told the newspaper. One reason is a revitalization of its ICE program which had largely been put on the backburner over the last several years, the company emphasizing electric drive technology.

The CEO wouldn’t give a breakout but said it is working on a new generation of “high-tech combustion technology.”

What’s unclear is how future internal combustion engines will be used. Earlier this year Mercedes said it will roll out more hybrids going forward, with the emphasis widely expected to be on plug-in versions. That would be in line with recent regulatory changes in several key markets. In the U.S., for example, the Biden administration revised emissions targets to permit more PHEVs going forward, while slowing the ramp-up of pure EVs.

S-Class update

Kallenius says Mercedes remains on path to go carbon neutral by 2040.

The automotive world could get a look at what’s coming when a mid-cycle update of the Mercedes-Benz S-Class makes its debut next year.

“We have invested a lot more in the model update of the new combustion engine S-Class than we normally spend on a facelift,” Kallenius told the German newspaper.

Spy shots have already appeared in several publications and the 2025 S-Class appears to have the classic mid-cycle updates, starting with tweaks to its front fascia and headlights. There’ve been rumors Mercedes also will address a few consumer complaints in the cabin. But the biggest changes are rumored to be coming under the hood.

More Mercedes News

On target for 2040

The S-Class is likely to bring just the first sign of change in Mercedes’ electrification strategy.

There’ve been reports that the automaker has scrapped some EV projects, but Kallenius refuted claims that an entirely new all-electric architecture, known internally as the MB.EA Large, has been scrapped. It’s moving ahead and will continue to serve as the underpinnings for large all-electric models such as the EQS and EQE.

Industry sources continue to assert that Mercedes is planning to radically redesign those two models in light of the mixed consumer reaction to their “one-bow” designs. The new platform, meanwhile, is expected to allow the automaker to go ahead with critical updates to its electrical architecture, among other things moving to a centralized computer processing layout.

One thing clearly not changed, said the Swedish-born CEO. Even though it may change the way it gets there, Mercedes remains committed to going carbon neutral by 2040.


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