Mercedes-Benz to invest $22.5 billion to keep combustion engines alive

Mercedes-Benz will invest an incredible €14 billion ($A22.5b) to keep the internal combustion engine (ICE) alive for as long as possible, prompted by declining growth in EV sales.

Speaking to German publication WirtschaftsWoche, Mercedes-Benz Group CEO Ola Källenius said he now expected ICE-powered technology to “last well into the 2030s” and that substantial investments were required to ensure they remain relevant.

He said most of the money will be spent developing “high-tech combustion technology”, suggesting the German brand will develop a new ICE family fit for the future.

It’s likely the engines will be electrified, while Källenius confirmed Mercedes would continue to invest in both petrol and diesel powerplants.

Admitting that the investment was “more money than previously planned”, Källenius didn’t disclose how much the car-maker originally hoped to spend.

The German luxury car-maker was planning to become an all-EV brand by 2030, but those plans are thought to have been shelved.

During the interview, Källenius said the new investment would introduce a big update for its flagship Mercedes-Benz S-Class.

“We have invested a lot more in the model update of the new combustion engine S-Class than we normally spend on a facelift,” he said, adding that the upgrades will elevate the limo to the “very highest technological level”.

Without the investment, Källenius said Mercedes’ ICE business would stall in 2027 or 2028 as a direct result of incoming Euro 7 and China 7 emissions regulations, which will effectively ban the current family of engines.

Despite rolling back transition to a full EV line-up, Mercedes’ boss said the car-maker would still become carbon neutral by 2040, keeping to its original self-imposed target.

Addressing rumours that the EV sales decline had seen the car-maker cancel its plans to roll-out a next-gen architecture for large EVs, including a replacement for the EQS, Källenius said Mercedes is still pushing ahead with plans to produce its state-of-the-art platform and that the project is “running at high speed”.

The car-maker will also still build eight gigafactories to supply batteries for its next-gen EVs, however Källenius admitted that they would now arrive a “little later” than originally planned.

Mercedes-Benz has already announced it will team up with Chinese car-making giant Geely to co-develop hybrids that could end up powering Volvo models.

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