Mercedes said to move EQS SUV output to Germany from U.S.

Mercedes-Benz is expected to replace U.S. production of its flagship electric crossover with a higher-volume model.

According to supplier sources, Mercedes will build the next-generation of its full-size EQS SUV from its Bremen, Germany factory in the second half of the decade.

The EQS SUV will continue to be built in Vance, Alabama, until the current generation ends late this decade, according to AutoForecast Solutions.

A Mercedes spokesperson on Wednesday declined to comment on speculation regarding the company's future production footprint but said there were no plans to shift production of the EQS SUV outside of Alabama.

The EQS SUV is currently built in Vance for global markets as well as the U.S.

The product shuffle is intended to make room at the Alabama factory for the higher-volume GLC EV, which a source described as a "cash cow."

GLC EV production in the U.S. should begin in the first quarter of 2026, according to AutoForecast Solutions. The research firm estimates that GLC EV volumes will hit 50,000 vehicles in the first year of manufacturing — more than double the EQS SUV's current production volume.

The EQS SUV production move will add about 20,000 vehicles annually to the Mercedes factory in Bremen, which builds several models, including the C- and E-Class sedans, the GLC and EQE crossovers.

The GLC EV is a successor to the EQC electric crossover, which was to be Mercedes' first mass-volume EV in the U.S. But the automaker nixed those plans because the crossover's limited range was deemed inadequate for this market.

According to retailers briefed on the new model last May, the GLC EV will have about 300 miles of range and an all-new design.

Dealers described the new crossover as having a rounded front and rear rather than the boxy styling of the combustion engine variant. The GLC EV has a pair of power domes on the hood and a light signature across the front.

AutoForecast Vice President Sam Fiorani said U.S. production of the GLC EV will help make it eligible for tax credits under the Inflation Reduction Act. The law, passed last summer, incentivizes North American EV and battery production.

Swapping the relatively low-volume EQS SUV for the smaller EV will better fill the capacity at Vance and support the plant's EV transition, Fiorani said. Mercedes sold 7,086 EQS SUVs in the U.S. in the January-to-September period.

The EQS SUV accounts for about 7 percent of the U.S. factory's 305,000-vehicle annual capacity, Fiorani said.

Production of a higher-volume GLC EV will also drive profitability by creating economies of scale, especially for batteries.

"Getting U.S. battery volume up boosts the profitability of battery production as the company chases the EV break-even point," Fiorani said.

Mercedes' U.S. factory is a global production hub and one of seven EV assembly plants on three continents. In Alabama, Mercedes builds the gasoline-powered GLS and GLE utility vehicles and most of the global output of their electric equivalents.

Mercedes is betting bold on EVs, committing to going all-electric in markets that allow it by early next decade.

At a meeting with North American dealers in Vancouver, British Columbia, in mid-May, Mercedes-Benz global sales and marketing chief Britta Seeger said the company expected EVs to account for 40 percent of new-car sales in the U.S. by 2026 and 70 percent by 2030, according to retailers.

The U.S. is Mercedes' No. 1 EV market globally, Seeger said. The brand delivered about 12,000 electric vehicles in the U.S. through April, nearly as many as it sold in 2022.

But slumping demand for electric vehicles in the U.S. could require Mercedes to recalibrate its sales targets.

For the first nine months of 2023, Mercedes said EVs accounted for 14.1 percent of its U.S. sales.