Mercedes-Benz Weighs Plant Closures as Solid-State EQS Logs 1,205 km

Mercedes-Benz is running two races at once. One is a cost fight with its own workforce that could yet decide the fate of German factories; the other is a technology push meant to prove the electric car still has a future. Neither has reached the finish line.

On the factory question, the company confirmed it is examining possible site closures more closely after talks with the works council and unions over lower labour costs failed to produce a deal. HR chief Britta Seeger said Mercedes wants to avoid closures but must investigate the scenario in greater depth. Production director Michael Schiebe had already warned in September that two German plants would be at risk if no progress were made — a passenger-car assembly site and a powertrain plant. No specific locations have been named.

Nothing has been decided. Any closure would hinge on missed cost-reduction and productivity targets, and a review is not a shutdown order. Talks with IG Metall are continuing.

Margin Pressure Sets the Stakes

The backdrop is a sharp deterioration in profitability. In the third quarter of 2026, the adjusted margin at Mercedes-Benz Cars came in at just 2.5%, down from 4.8% a year earlier. Adjusted operating profit for the car division fell 50.8% to EUR 560 million over the same period.

Global passenger-car sales slipped 7.2% in the first nine months of 2026. China was the weakest link, with deliveries down 29% year on year. Electric vehicles provided the counterweight: EV sales jumped 61% in the third quarter, though that growth was not enough to offset the broader earnings decline.

For shareholders, the message is that announced savings matter less than whether Mercedes can deliver them with the workforce onside. Resistance to longer hours without matching pay makes that task harder, and the weak margin is the economic engine behind the standoff.

A Battery Breakthrough in Testing

Against that unsettled backdrop, the group is pressing ahead with electric drivetrain development. A test EQS fitted with a lithium-metal solid-state battery developed with Factorial Energy covered the 1,205 kilometres from Stuttgart to Malmö on a single charge.

Mercedes is also evaluating cells from ProLogium for performance, safety and thermal behaviour. Both programmes concern possible future production vehicles; neither amounts to a confirmed series launch.

The company is working on chemistries designed to cut weight and reliance on critical raw materials, including manganese-rich cells and LNMO. With LNMO, cobalt would be eliminated and less nickel required than in today's NMC cells. According to Mercedes, that chemistry could deliver up to 30% more range than LFP at similar weight and installation space — a technical target, not a promised feature of any announced model.

Combustion Engines Stay in the Line-Up

Chief executive Ola Källenius, in an interview with the Augsburger Allgemeine published today, reaffirmed that Mercedes is sticking with electric mobility as its leading technology while letting customers choose their drivetrain. He pointed to differing market conditions: demand, charging infrastructure, energy prices and regulation do not develop at the same pace everywhere. CO2-neutral mobility remains the goal, but the route to it will not rest on a single powertrain.

Speaking at a media meeting in Pune on 4 November, Källenius said combustion engines would survive for at least another ten years and that the shift to electric mobility could stretch over a considerably longer period. Mercedes is therefore preparing new engines, including a Euro-7-compliant V8, and continuing to develop diesel units. By the end of the decade it aims to offer an electric alternative in every key model segment. No end date for combustion-engine production has been set.

One item on the technology roadmap does carry a firm date: the MB.DRIVE ASSIST PRO assistance system is due to launch in Germany in the first half of 2027, with responsibility remaining with the driver.

The timelines behind the multi-powertrain strategy therefore differ widely. The assistance system has an announced German start; the new battery concepts remain in development and testing. What counts for investors is which of these steps actually reach series offerings — and whether the cost conflict is settled before any German plant is asked to build them.