Mercedes-Benz

In February 2024, Mercedes-Benz reversed its 2021 commitment to sell only electric vehicles by decade's end. Revenue fell 4.5% to €145.6 billion, EBIT collapsed 31% to €13.6 billion, and automotive margins compressed to 8.1% from 12.6%. The reversal wasn't strategic pivot—it was credibility collapse following evolutionary trap. Mercedes had publicly signaled full electrification, invested billions in EQ platform architecture, then encountered market reality: customers weren't ready, infrastructure wasn't built, and continuing to produce internal combustion engines "well into the 2030s" became survival requirement not choice. The metabolic cost of the reversal exceeds any quarterly earnings decline. When premium brands signal commitment then retreat, they teach customers to ignore future commitments.

The numbers expose the trap's mechanics. Q2 2025 revenue dropped 10% to €33.2 billion, earnings per share collapsed 68% to €0.95, and adjusted EBIT fell 68% year-over-year to €1.3 billion. Yet EV sales rose to 94,000 units (21% of volume) from 90,000 units (18% of volume) the prior year. The problem isn't EV demand—it's margin compression from operating dual architectures without platform economies BMW achieved. Mercedes builds dedicated EV platforms (EQS, EQE) alongside combustion variants, doubling engineering costs and fragmenting production economies. The CLA launching in 2025, all-electric GLC and C-Class coming later, and S-Class upgrade in 2026 represent sequential product refreshes, not coordinated radiation from shared architecture.

Mercedes still commands costly signals that justify premium positioning: G-Class sales surged 18%, Mercedes-AMG climbed 17%, demonstrating customers will pay for authentic performance credentials. But the EV reversal poisoned the signaling mechanism for electrification. When the brand that invented the automobile in 1886 can't commit to its powertrain future, it signals uncertainty to customers who expect definitive luxury. The proposed €4.30 dividend (down from €5.30) and "Next Level Performance" cost-cutting program (10% production cost reduction by 2027) reveal a brand in metabolic suppression, not adaptive radiation. China deliveries fell 10%, Europe declined 7%—Mercedes isn't expanding, it's defending installed base through strategic retreat.