Mercedes wants to put big chunks of its budget into combustion engines

After realizing that their electrification goals may be too ambitious, Mercedes is now allocating a significant portion of their budget to internal combustion engines.

According to an interview with the German media Wirtschaftswoche, Mercedes CEO Ola Källenius stated that ICE (internal combustion engine) technology “will persist until after 2030”. Significant investments are needed to ensure that these engines continue to comply with increasingly stringent standards.

Källenius mentioned that the S-Class and its facelift are expected in 2026, stating, “We have invested significantly more in updating the S-Class model with combustion engines than we typically do for a facelift.”

Mercedes’ goal is to ensure that their conventional engines are at the “highest level of technology”. Without significant investment in petrol and diesel engines, the luxury brand “will abruptly halt combustion engine sales around 2027 or 2028”.

Mercedes realized the need to acknowledge that the transition to EVs was not progressing as planned. Three years ago, they mentioned that PHEV and EV vehicles would represent approximately 50 percent of annual sales by 2025.

However, it seems unlikely. At one point, Mercedes stated they would be fully electric by 2030 in some countries “if market conditions allow”.

Now, their new goal is for PHEV and EV to represent half of sales by the end of this decade (2030). However, according to Källenius, the objective for carbon neutrality by 2040 remains unchanged.