Mercedes-Benz has moved quickly to shut down speculation that it plans to source engines from longtime rival BMW. Speaking at the IAA Mobility show in Munich, Markus Schaefer, Chief Technology Officer and member of the Board of Management at Mercedes-Benz Group, dismissed the claims outright.
“There is no truth to this,” Schaefer told Motor1. “We have developed our own new family of modular engines, FAME (Family of Modular Engines), which covers all displacements, and are already compliant with EU7, China 7, and U.S. regulations.”
His comments directly addressed a recent Autocar report suggesting that Mercedes might adopt BMW’s four-cylinder B48 engine in future models. The publication claimed discussions between the two German giants were at an advanced stage, with a potential announcement expected before the end of 2025.
The Alleged Collaboration
According to the original report, Mercedes was weighing the possibility of equipping everything from compact SUVs like the GLA and GLB to sedans such as the CLA and C-Class with BMW’s 2.0-liter turbocharged B48. Even larger models like the E-Class, GLC, and the upcoming “baby G-Wagen” were said to be under review.
The deal would have provided Mercedes with engines already designed to meet stringent Euro 7 emissions standards and optimized for plug-in hybrid applications—saving Mercedes the cost of additional development.
What’s at Stake
If such a collaboration had materialized, it would have been historic. Mercedes and BMW have been locked in competition for more than a century, battling fiercely for premium market dominance across Europe, the U.S., and China. A joint engine program would have marked a rare moment of cooperation in an industry where brand identity is tied closely to engineering independence.
Still, the appeal of BMW’s B48 engine is clear. It’s a proven unit powering much of BMW’s and Mini’s lineup, and it is built at the company’s plant in Steyr, Austria. The Autocar report even hinted at a possible shared facility in the U.S.
Pressure from Emissions and EV Shortfalls
Mercedes’ denial comes at a challenging time. While the automaker has invested heavily in its electric vehicle lineup, demand has faltered. In 2024, sales of all six of Mercedes’ EV passenger models in the U.S. dropped sharply. The company is even preparing to temporarily close order books for the EQE sedan, EQE SUV, EQS sedan, and EQS SUV.
The slowdown highlights the tension between ambitious electrification targets and market reality. Customers have been slow to adopt high-priced EVs, and competition from Tesla, BYD, and other emerging brands has intensified. That leaves Mercedes in a delicate position: it must balance its EV push with ensuring its combustion and hybrid offerings remain attractive and compliant with upcoming regulations.
Looking Ahead
For now, Mercedes insists it is sticking with its in-house FAME modular engine family, engineered to meet global emissions standards while supporting hybridization. Whether that strategy holds or circumstances eventually force a rethink, the speculation shows how even the most storied automakers are feeling the pressure of shifting technologies, regulations, and consumer demand.
One thing is certain: when two rivals as entrenched as Mercedes and BMW are rumored to collaborate, the industry pays close attention—even if the companies themselves say it’s nothing but smoke.
