Although not as precarious as for other car manufacturers, 2025 has been a complicated year for Mercedes-Benz. The German premium car manufacturer has een its net benefit almost halve while turnover decreased by 9%.
Meanwhile, battery issues affecting the EQA and EQB have prompted global recalls. Mercedes-Benz has already begun replacing battery packs in North America and China, while customers in Germany have so far only received a software update. However, German and other European owners are now likely to receive entirely new batteries as well.
Fierce competition
All in all, Mercedes-Benz sold about 200,000 fewer cars last year than in 2024. The company has launched a cost-cutting program to reduce global capacity by 10%. However, in Mercedes-Benz’s German factories, jobs are still guaranteed, and the company will have to rely on natural departures (retirement, people leaving the company to pursue other interests, …) to save money.
“The volume drop is mainly due to the fierce competition in China,” explained CEO Ola Källenius, indicating that Mercedes-Benz isn’t pursuing volume just to have volume. The volume regression is affecting all German manufacturers in the world’s largest car market.
“In China, we expect lower sales in 2026. Globally, we foresee a stabilization of sales,” said CFO Harald Wilhelm. “Nevertheless, China will remain the most important market for Mercedes,” Oliver Turner, Mercedes’s boss for China, insisted. Turner relies on at least seven new products for the Chinese market and new technology to stay relevant in a very difficult market.
Mercedes-Benz has also suffered from the heightened import tariffs in the U.S., despite having a large plant in Alabama. All in all, Mercedes-Benz deliverd 19% fewer cars in China and 12% fewer cars in the U.S. in 2025.
New EV investments, new CLA variant
What is worrying the company also is that BEV sales have dropped 9% in 2025. Slower sales that have been partially offset by the sales of PHEVs. “Flexibility and agility are key to mastering the transformation of our society,” insists Källenius. “We have focused on innovation and on product, and launched a model that will be the first of no less than forty,” he stressed, referring to the successful CLA launch last year, elected European Car of the Year.
So far, Mercedes has offered two battery variants for its CLA, with the larger battery also optionally available as an all-wheel-drive version. Now, the German automaker added a fourth variant, at least in Germany. It features the familiar rear-wheel drive but with a new, mid-sized battery.
Model designations will require closer attention in the future: with the new CLA 250, Mercedes is filling the gap between the CLA 200 and the CLA 250+. The 200 is the entry-level model in the range and features a 58 kWh LFP battery. The 250+, as the longest-range model in the lineup, combines a 200 kW rear-wheel-drive system with an 85 kWh NMC battery.
The new CLA 250 also uses an NMC battery, but with a usable energy content of 71 kWh, and with a WLTP range of up to 674 kilometres, it sits between the 200 (542 km) and the 250+ (792 km).
In Germany, Mercedes has also positioned the CLA 250’s starting price midway between the two existing rear-wheel-drive variants, €3,500 more expensive than the CLA 200 but around €2,900 cheaper than the CLA 250+. The technical differences between the CLA 250 and 250+ lie solely in the battery; the powertrain specifications are identical.
Currently, the new powertrain variant is only available for the CLA saloon in the Mercedes configurator. However, it is likely that the CLA Shooting Brake will also be offered with the new 71 kWh battery in the future.
Recall of EQA and EQB in China
Battery issues with the EQA and EQB are now affecting Mercedes in China as well. The local joint venture, Beijing Benz, is recalling 19,481 locally produced electric vehicles in the EQA and EQB series in China due to a fire risk posed by the high-voltage batteries. However, China is implementing a different measure in response compared to Europe.
The issue, known for about a year, affects the EQA 250+ and EQB 250+, which feature a 70.5 kWh battery pack with cells from the Chinese supplier Farasis Energy mounted in the underbody.
Under certain conditions, these cells can develop an internal short circuit, which may lead to a vehicle fire. Mercedes had previously addressed this issue with a software update to the battery management system, but it significantly reduced usable energy content and charging performance. As a result, a consumer law firm filed a lawsuit, arguing that the vehicles no longer met the originally advertised specifications after the update.
As Chinese media now report, nearly 20,000 units of the EQA and EQB models, produced locally in China by Beijing Benz, are also subject to the recall due to the fire risk. Specifically, vehicles manufactured between 1 April 2021 and 12 March 2024 are affected.
While different markets may use various battery variants from different cell suppliers, meaning not all markets are necessarily affected by battery issues, the announcement by China’s State Administration for Market Regulation (SAMR) confirms that the locally built models are indeed affected in this case.
The recall in China is scheduled to begin on 25 June 2026. However, as CnEVPost reports, “Beijing Benz will replace the high-voltage batteries in affected vehicles through authorised dealers.” In other markets, Mercedes has so far only implemented a software update; no battery replacements have been offered.
And in Europe?
According to the Mercedes-focused, usually well-informed blog mb.passion, “the previous measures were internally regarded solely as a temporary solution, not as a technical final fix.” The definitive solution is a complete battery replacement, during which the problematic Farasis cells are exchanged.
At this stage, the information remains internal and is shared by Mercedes with its dealerships. A recall by the German Federal Motor Transport Authority (Kraftfahrt-Bundesamt or KBA) is expected ‘shortly’, followed by the usual communication with affected customers.
Once the battery is replaced with a new, technically sound unit, customers will not only regain the vehicle’s originally promised specifications, rather than the software-limited version, but may also see an improvement in the vehicle’s residual value.
Undoubtedly, other countries throughout Europe will also follow suit. There was some frustration with the approach and communication among affected customers who were advised not to load the battery above 80% and to park the car outside where possible, but the decision to replace the battery in full will address this issue as well.
