Mercedes-Benz has temporarily stopped deliveries of its electric EQ models to the United States as high dealer inventories and reduced consumer appetite pressure automakers already facing policy headwinds.
The decision follows a significant shift in the US electric vehicle (EV) landscape after President Donald Trump’s recent spending bill accelerated the phaseout of tax credits for EV buyers.
The German carmaker is adjusting its supply strategy in response to a cooling US EV market that may now underperform earlier growth expectations.
Trump-era bill accelerates end of EV incentives
The slowdown comes on the heels of a spending bill signed by President Trump earlier this month, which brought forward the expiration timeline for EV tax credits.
This change has eroded a key financial incentive for US buyers, hitting automakers like Mercedes-Benz that depend on these subsidies to make premium electric vehicles more attractive.
Analysts have since revised their projections for US EV adoption, warning that 2025 may fall short of electrification targets initially expected for the year.
Mercedes reshapes US strategy amid EV glut
Mercedes confirmed on Wednesday that it would “pause order banks” for its EQ electric lineup in the US.
The EQ range includes battery-electric vehicles (BEVs) that are assembled at the automaker’s Tuscaloosa plant in Alabama and distributed across its US dealer network.
The carmaker cited “current market demand” and dealership stock levels as the basis for its decision.
Despite the temporary halt, the group is not pulling out of the US EV market altogether.
CEO Ola Kaellenius, during the company’s second-quarter earnings presentation, said that he still sees room for long-term growth in BEV adoption across the country.
While the current pace is slower than expected, he projected a gradual rise in consumer interest over the medium to long term.
Production focus shifts to combustion engines
In a broader strategy shift disclosed earlier this year, Mercedes-Benz announced it would prioritise combustion engine vehicles over EVs in its upcoming product range.
The company revealed plans to launch 19 new petrol and diesel models alongside 17 new BEVs by the end of 2027.
The rebalancing follows a steep decline in battery-electric sales last year, which fell by 25%—forcing a rethink of the company’s electrification roadmap.
This latest pause in EQ deliveries suggests that Mercedes is recalibrating not just product development but also logistics and inventory management to cope with an evolving market.
As consumer incentives diminish and dealership lots fill up, carmakers are finding it increasingly difficult to maintain the EV sales momentum that defined earlier years of policy-driven growth.
Short-term reset, gradual recovery expected
Mercedes-Benz’s move may serve as an early signal for other manufacturers, especially those operating in the premium EV space.
For now, the pause is temporary, and the company maintains that it remains committed to growing its US EV footprint—albeit more cautiously.
The impact of policy shifts, especially around subsidies and tax credits, is likely to be a decisive factor in shaping that expansion.
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