Mercedes-Benz's Latest Decision Signals Trouble Ahead for EVs

Gizmodo

2 days ago

We are likely to see this story repeat itself, with only the names at the top changing. Mercedes-Benz's latest announcement does not bode well for the future of electric vehicles in the United States, especially as federal tax breaks are set to expire.
On September 30, the federal incentives introduced under the Biden administration to support EV adoption will officially disappear. These tax credits were designed to offset the higher cost of EVs compared to gas-powered vehicles. But with the clock ticking, automakers are beginning to react.
One of the most significant moves comes from Mercedes-Benz, which will temporarily suspend production of its EQE and EQS electric models—across all variants, including SUVs and sedans—starting September 1. The company has also closed order banks for these vehicles and notified U.S. dealers accordingly.
'Vehicles scheduled for production prior to September 1 will continue to be produced,' a spokesperson told Insideevs.com. 'This announcement applies only [to] U.S. vehicle orders of these models.'
The company didn't immediately respond to a request for comment from Gizmodo.
Industry observers say the move isn't a one-off. This decision is likely to be repeated, with the difference that the name at the top will be different, one expert noted. As the tax break expiration nears, Mercedes' decision is being seen as a canary in the coal mine.
The EQS SUV and EQE SUV have been manufactured in Tuscaloosa, Alabama, since 2022. Their sedan counterparts are produced in Germany and exported to the U.S. None of the sedan models qualified for the $7,500 EV tax credit—unless leased—due to the U.S. sourcing requirements in the Inflation Reduction Act. Pricing ranges from $78,000 to $135,000 depending on the variant and model year. The 2025 EQS 450 SUV starts at $105,250.
Mercedes' announcement closely follows the passage of 'One Big Beautiful Bill,' a sweeping law signed by President Trump on July 4. The bill eliminates the $7,500 federal tax credit for new EV purchases and also removes the $4,000 credit for used EVs.
Experts warn the rollback of these incentives could significantly dampen demand for electric vehicles, especially luxury models with high price tags. EV sales already fell 6.3% in Q2 compared to the same period in 2024. Some analysts expect a brief rebound in Q3 as consumers rush to buy before the September 30 deadline. But beyond that, the outlook remains cloudy.
EV supporters on social media were quick to express concern over Mercedes' decision.
'Major pause signals deeper EV headwinds,' commented one user on X (formerly Twitter). 'Benz electric cars are already uncompetitive and losing money, and a $7500 tax credit would make it even worse, so I think that's why they made that decision,' another user added. For a third, 'Another sign of where EVs are headed in the US thanks to the current administration. It's unfortunately going to be downhill from here for American EV enthusiasts.'
Another sign of where EVs are headed in the US thanks to the current administration. It's unfortunately going to be downhill from here for American EV enthusiasts.
— Watts (@Dabb_mt) July 18, 2025Others predicted this is just the beginning. 'Wonder how many other companies will make similar announcements soon before EV incentives are gone. @grok have other auto makers paused EV production and how will that affect Tesla?'
Wonder how many other companies will make similar announcements soon before ev incentives are gone. @grok have other auto makers paused ev production and how will that affect Tesla ?
— MrRandom (@MrRandumizer) July 18, 2025Closing the order books and suspending production signals more than just a pause. It suggests a recalibration. Whether driven by strategic repositioning, supply chain issues, or shrinking demand, Mercedes-Benz's retreat from the U.S. EV market may reflect broader industry fears about what happens when the subsidies stop and reality kicks in.
This is a warning shot for the entire EV industry. Mercedes-Benz pulling the plug on key electric models ahead of the September 30 tax credit expiration shows what happens when the $7,500 cliff gets too close. EVs are still too expensive for the average buyer, and without federal support, demand could crater. If Washington doesn't step in with a new plan, we're not looking at a slowdown. We're looking at a stall.