Even as its sales start to slide, Tesla is coming under increasing fire from competitors who hope to chip away at its market share which still dominates the EV market. And Mercedes-Benz is taking aim at Tesla’s best-seller with an all-new, battery-powered version of its compact CLA model set to debut next year.
The Mercedes-Benz Concept CLA Class shown at the Munich Auto Show last year was heavily influenced by the Vision EQXX concept.
Tesla has long dominated the EV market – but its suffering some setbacks this year as sales unexpectedly decline even while competing brands chip away at its market share.
And Mercedes-Benz is getting ready to challenge the Texas-based Tesla’s biggest seller, the Model Y, with a compact 4-door coupe model set to begin production in October 2025, according to a new report by Automotive News that has been confirmed by several industry analysts.
Essentially an all-electric version of the gas-powered CLA, it will serve as an entry point into the German manufacturer’s growing line-up of battery-electric vehicles.
What is it?
The Mercedes-Benz Concept CLA Class interior.
Mercedes offered a broad hint of what it had in mind at the 2023 Munich Motor Show in the form of the electric CLA Class concept. The show car was notable in using the highly efficient powertrain first developed for Mercedes EQXX, an experimental program that, two years ago, achieved a record-setting run from Stuttgart, Germany to the French Cote d’Azur. It not only met its goal of 1,000 kilometers, or 625 miles on a single charge, but still had substantial energy left over.
In production it will get a more coupe/crossover body style than the Vision concept but, if claims made in Munich last year carry over, the CLA Class EV could yield as much as 466 miles per charge using the global WLTP standard. That likely still would approach 400 miles based on the EPA test cycle.
The prototype was said to achieve about 5.2 miles per kilowatt-hour, putting it on a par with the most efficient production EV today, a version of the Lucid Air sedan – and about 1 mile per kWh better than the best version of today’s Tesla Model Y.
Mercedes also claimed the concept CLA would be capable of adding another 248 miles of range in 15 minutes thanks to its 800-volt architecture and more advanced power semiconductors.
A change in direction
The Mercedes EQXX concept achieved a record 1,000-mile run without recharging in 2022.
Mercedes already plays in several EV segments with products like the flagship EQS sedan and compact GLB crossover. But they’ve failed to make a significant dent, especially in the American marketplace.
The electric CLA will mark a shift in direction. EQ models have been based on unique skateboard-like platforms developed specifically for use in EVs only. The production version codenamed X174, the new model will ride on entirely new underpinnings, dubbed the Mercedes-Benz Modular Architecture.
It’s designed primarily for compact and midsize EVs — but will have the ability to also squeeze in an internal combustion engine and could be offered in gas and various hybrid configurations, as well.
More Mercedes-Benz News
- Review: Mercedes-Benz EQE
- A Week with the Mercedes-Benz CLE
- Mercedes Pumping New Life Into its Gas Engines
More options, lower costs
The Tesla Model Y is due for a makeover in the coming year, according to CEO Elon Musk.
That approach, one source told Headlight.News, would give Mercedes more flexibility to meet shifting market demands, especially at a time when the growth of EV sales has slowed down. And by driving up potential volume it could achieve greater economies of scale which, in turn, could help Mercedes lower retail pricing.
Mercedes is expected to not only redesign the current, gas-powered CLA model in 2026 but also migrate it to the MMA architecture. It’s expected to be slightly larger than the existing coupe/sedan. What hasn’t been confirmed is whether hybrid versions will be added to the mix – though that’s likely, one well-placed source said. At the very least, a mild-hybrid drivetrain seems all but certain. The base gas package is expected to offer a 1.5-liter 4-cylinder engine, according to AutoForecast Solutions.
The German automaker isn’t the only one taking this approach. The 2025 Dodge Charger introduced earlier this year will be based off an all-new “multi-energy” platform dubbed STLA Large. It will be sold in all-electric form as the Charger Daytona but also will be offered in gas-powered form. Sibling Stellantis brands will also make use of the flexibility of the STLA Large and other platforms to offer buyers multiple powertrain options. Jeep eventually will offer six different powertrain technologies, as many as three at a time for some products, such as the Wagoneer and Wrangler.
While most manufacturers are opting for unique EV architectures, others are signaling they will go with more flexible platforms, as well, at least in the near-term as EV sales growth slows and buyers look for partially electrified options or simply prefer to stick with internal combustion power.
Taking on Tesla
Mercedes and Tesla have already had their battles. The Texas-based automaker’s original Model S sedan hammered the German company’s familiar S-Class flagship when it debuted a decade ago, as well as other conventional premium luxury products such as the BMW 7-Series, Lexus LS and Audi A8.
Now, Mercedes is aiming for payback and having a product like the CLA could give it a leg up on the Model Y.
“Providing more choices in sporty and lower-priced crossovers gives younger buyers more of a reason to shift to the brand where the more family-friendly utilities will keep them engaged for years to follow,” Sam Fiorani, lead analyst with AutoForecast Solutions, told Automotive News.
Tesla isn’t rolling over
But Tesla, despite letting the current Model Y grow old, doesn’t appear ready to cede its lead in the critical compact crossover market. CEO Elon Musk has promised to debut a major update in the coming months.
The question is whether it will be more distinctive than the recent makeover of the Model 3 sedan which has generated little market buzz.
The fact that Tesla products have been growing old is complicated by the flood of competing models from dozens of other manufacturers, both legacy and EV start-ups. The automaker’s production dropped 14.4% during the second quarter of this year, deliveries down by 4.8%, according to U.S. registration data. Market share has also declined as other manufacturers, including Ford, General Motors, Toyota, Kia and Hyundai, have posted solid sales growth.
Well, I think there’s a little mixing and matching of product types here. No one who is looking at a Model Y is going to be looking at a sleek and impractical four-door coupe, which means the CLA is really targeting the Model 3. Mercedes’ competitor to the Model Y is not due for another year after that, and will likely wear the GLA or GLB moniker.
Coupe/crossover, as noted in the story.
One question is, how do Elon Musk’s current politics impact Tesla’s sales? Hi biggest market in the US is California. His support of Trump can’t be doing him any favors. On a larger scale, has it been a mistake to make buying a Tesla, in effect, an endorsement of Musk. No other car maker has that issue. If I buy a Ford, I don’t think about Bill (or Henry) Ford. It’s not that way with Tesla.
That’s a question yet to be firmly answered but by attacking the very core of his buyer base there’s growing evidence that’s a factor in Tesla’s continuing sales decline.