After Mercedes-Benz CFO Harald Wilhelm said widespread cuts were planned on the company’s latest earnings call, Reuters released a report that said Mercedes-Benz China plans to cut 25% of its workforce by 2027. Reuters said Mercedes aims to cut 10-15% of its workforce in finance and sales within the region specifically. Mercedes-Benz China has denied that the figure is accurate.
On the earnings call, Wilhelm emphasized that the Chinese market remains competitive and that Mercedes-Benz could continue to navigate tariffs and other external economic factors through strategies such as supply chain optimization and production location flexibility.
Harald Wilhelm
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Wilhelm also highlighted the company’s ability to implement workforce reductions, which he credited for a significant portion of the company’s current cost savings. “Look at the workforce reduction, 11%, 15,000 people,” Wilhelm said. “[Out of] 10,000 [of those were] white-collar [jobs], which we [have] reduced since 2019. That is obviously a key support to the fixed cost achievement of [dropping] 19% compared to 2019.”
The report also coincides with recent comments from CEO Ola Källenius, who told reporters after the earnings call that the company “feels American” and wants to “grow their footprint in the U.S.”
“The point is we’re also an American company,” Källenius said. “Yes, we have our headquarters in Germany and our European origins, but we feel American.”
He said the company hopes to shift more operations toward the U.S., primarily to avoid tariffs implemented by President Donald Trump, but added that U.S. operations support Mercedes-Benz’s global business in ways that have been largely underreported.
“We are prepared to continue to invest billions and we want to grow our footprint in the United States, we are committed,” Källenius said. “A little-known fact — we are one of the major industrial exporters out of the United States. Two-thirds of the vehicles that we make in our Tuscaloosa plant actually go out into the world, a significant part of them obviously to Europe.”
The Chinese car industry has become a major disruptor among manufacturers and the cause of many tariff-related discussions in Washington. The recent cuts and quotes by Mercedes-Benz and their leadership hints at a growing trend of large companies nearshoring production towards the U.S. as a result of tariffs.
EV failures
In their annual report released last week, Mercedes-Benz detailed a restructuring effort for 2025 focused on combustion vehicle production. The company announced plans to launch 19 new combustion engine models and 17 battery-electric vehicles, the latter being an area where the company, like its competitors, has allocated massive amounts of capital towards EVs, all of whom have taken massive losses on vehicle sales. However, recent reports suggest that some companies have begun to turn this trend around.
Zach Shefska
Permission granted by Zach Shefska
The push for electric vehicles, which were largely subsidized by the former administration and shifted many legacy automakers’ financial structures to operate like startups, is likely declining, according to experts. “I think Mercedes-Benz is realizing they went too far upmarket too fast,” said Zach Shefska, CEO of CarEdge. “We recently just crunched the latest car price inflation numbers and Mercedes-Benz increased their prices the most of all the luxury brands over the last five years.”
He said the company’s EV push, much like that of many competitors, was a sales flop. “We know Mercedes went all in on EVs and those have not sold nearly as well as they forecasted,” Shefska said. “Brands like Lexus are on much better footing because they did not increase their prices as much or push into EVs more aggressively.”
Legacy automakers, facing growing competition and the cost of failed EV initiatives, are struggling to sustain their businesses. “We are seeing a similar story play out at both Nissan and Stellantis,” Shefska added. “These companies are losing money.”
In 2024, Mercedes-Benz experienced a 23% decline in battery electric vehicle sales, delivering only 185,100 units worldwide. This downturn has prompted Mercedes-Benz to revise its electrification goals, aiming for EVs to constitute up to 50% of total sales by 2030, a target initially set for 2025.
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