Mercedes warns: Combustion Engine Ban Could Cause Market Collapse

The sharp criticism from the Mercedes CEO puts the European climate goal to the test.

Mercedes-Benz recorded a significant drop in profits in the first half of 2025: The group's earnings fell by over 55 percent compared to the previous year, to around 2.7 billion euros. CEO Ola Källenius spoke openly about the current situation in an interview with the "Handelsblatt" and identified three key challenges for the group.

Trade Conflicts, China Pressure, and E-Mobility Problems

Källenius described the economic environment as extremely complex. One of the main reasons for the difficulties is the realignment of trade relations, particularly the increased US tariffs on EU imports. Added to this is massive competitive pressure in China, where over 100 manufacturers dominate the market. Demand in the high-price segment has been declining there for years.

Additionally, the transformation to electromobility has proven to be significantly slower than originally expected. Therefore, Mercedes continues to invest in various drive technologies in parallel – contrary to earlier strategic announcements.

Criticism of the EU Combustion Engine Ban from 2035

Källenius particularly criticized the EU's decision to ban new combustion engines from 2035. This only foresees battery-electric and hydrogen vehicles. The CEO considers this a strategic mistake: "This does nothing for the climate," he said. He cites China as a positive example, which, although heavily focused on e-mobility, still allows various drive systems – including classic combustion engines.

Consumer Preference Instead of Bans

The European regulations are too rigid, according to Källenius. In the years leading up to the ban, a large portion of customers will consciously choose a combustion engine once again. Instead of coercion, China relies on tax incentives and affordable charging infrastructure – with greater success. Europe, on the other hand, risks a market collapse.

Future Strategy with Technological Openness

According to Källenius, Mercedes continues to work on the electric offensive: models like the electric CLA and a new GLC are expected to drive the transformation forward. However, the current margins are still significantly higher for combustion engines. The company does not expect a noticeable success of the electric models before 2027.

Questions and Answers on the Combustion Engine Ban

What is the planned EU combustion engine ban?

The European Union plans to no longer allow new passenger cars and light commercial vehicles with combustion engines from the year 2035. This is part of the EU's climate goals to drastically reduce CO2 emissions in the transport sector.

Why does the automotive industry criticize the combustion engine ban?

Representatives of the automotive industry, such as Mercedes CEO Ola Källenius, warn of a possible collapse of the European car market. They fear an insufficient charging infrastructure, high costs for consumers, and a rush on combustion engines before the deadline, which does not serve the climate goals. They demand more time and better conditions for e-mobility.

Are electric cars practical and affordable for everyone?

Opinions differ on this. While proponents highlight the environmental friendliness and long-term cost savings, critics point out the high purchase costs, the lack of personal charging options (e.g., in rental apartments or without photovoltaic systems), and the insufficient public charging infrastructure as hurdles that make e-cars impractical and too expensive for large segments of the population.

This article has been automatically translated, read the original article here.