by Thanos Pappas
- Mercedes may use BMW’s four-cylinder engines in future hybrid and plug-in hybrids.
- The potential agreement would boost BMW’s output and cut costs for Mercedes-Benz.
- A formal announcement from both automakers is expected before the end of 2025.
Mercedes and BMW have long been locked in one of the fiercest rivalries in the automotive world, yet even competitors of this scale sometimes find common ground. Reports indicate that Mercedes is exploring a plan to source four-cylinder engines from BMW, a move aimed at trimming development costs for future combustion models while the brand adopts a more gradual path toward an all-electric lineup.
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The new first surfaced in German publication Manager Magazin, which noted that the first Mercedes models powered by BMW engines could appear as early as 2027. Talks have also extended to the possibility of sharing transmissions and even entire electrified powertrains, hinting at a collaboration that could go beyond a simple engine deal.
Shifting Priorities
The tie-up would allow Mercedes to drastically reduce R&D costs for future four-cylinder models and focus on engineering six-cylinder and eight-cylinder engines. BMW, in turn, would benefit from increased revenue while making use of spare production capacity at its Steyr facility in Austria.
According to Autocar, a source inside Mercedes described the discussions as being at a “high level of planning and negotiations,” with an official announcement expected before the end of 2025.
The new CLA uses a mild-hybrid turbo 1.5-liter engineered by Mercedes and produced by Geely.
Why BMW Makes Sense
Mercedes already has an engine supply deal with Chinese automaker Geely, which produces a 1.5-liter four-cylinder turbo (M252) used in the mild-hybrid CLA. Still, a European partner like BMW would provide a better fit for markets such as North America, while also offering a solution to Mercedes’ broad and growing model range.
Among the options under consideration is BMW’s B48 turbocharged 2.0-liter engine, a unit already familiar from a wide range of BMW and Mini models. With compatibility for both longitudinal and transverse layouts, it could support plug-in hybrid setups and potentially serve as a range-extender engine in certain applications.
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If the partnership moves forward, the two companies could eventually expand joint production beyond Europe. A powertrain facility in the United States has been floated as a possibility, which would help the brands sidestep tariffs and share manufacturing costs in a key market.
Mercedes is hardly alone in rethinking its all-electric timeline. A slower-than-expected rise in EV demand has prompted several automakers to take a more flexible stance, and Mercedes has openly acknowledged the shift. CEO Ola Källenius recently described the change as a “course correction,” confirming that electrified combustion engines will remain part of the lineup longer than originally planned.
The most powerful derivative of the B85 2.0-liter engine is found in the BMW X1/ X2 M35i