The Luxury Car Brand is Pouring Billions Into Gas Engines Once More

Mercedes Gas Engines (Mercedes)

In a surprising move, Mercedes is investing heavily in combustion engine technology, despite its previous commitment to electrification.

CEO Ola Källenius revealed that the company is spending a staggering €14 billion on its passenger car division this year alone, with a particular portion allocated to “high-tech combustion technology.” This investment is a remarkable increase from previous plans, indicating a shift in priorities.

Mercedes combustion engine technology (Mercedes)

Källenius acknowledged that the company’s electrification goals were overly ambitious and that combustion engines will remain relevant well into the 2030s.

To meet increasingly stringent regulations, Mercedes is pouring resources into developing advanced combustion technology. The goal is to achieve the “very highest technological level” for conventional powertrains, avoiding massive fines for non-compliance with Euro 7 and China 7 regulations.

While the company still aims to become carbon neutral by 2040, its intermediate targets have been adjusted. Mercedes now expects hybrids and electric cars to account for half of deliveries by the end of the decade, a more realistic goal than its previous target of 50% by 2025.

The development of a platform for the next-generation EQS and plans for eight gigafactories to build batteries are still underway, albeit with a slightly delayed timeline.

Interestingly, Mercedes has been exploring range-extending combustion engines for its electric vehicles, including a reported trial with a tiny two-cylinder engine in the EQS. Although the project was allegedly halted, the company is still working on hybrid engines with Geely, which will be used in Volvo models.

Mercedes’ Horse division is also focused on combustion engine development, including range extenders. This shift in strategy indicates that Mercedes is adapting to the challenges of the transition to EVs, recognizing that combustion engines will remain a crucial part of its lineup for years to come.