Mercedes-Benz has announced significant price reductions for its EQ electric vehicle (EV) lineup in the United States, in response to weakening demand and the impact of new trade tariffs introduced by former President Donald Trump. The automaker is also temporarily suspending deliveries of several EQ models, including the EQS and EQE sedans and SUVs, as dealership inventories continue to rise.
The decision follows the implementation of a recent U.S. spending bill that curtailed federal tax credits for EVs ahead of schedule. The changes, combined with higher import tariffs on auto and component imports from the European Union and other countries, have led to a softening of demand in the American EV market. Mercedes-Benz is taking steps to manage excess inventory during the delivery pause, while vehicles produced at its Vance, Alabama plant will continue to be exported to other markets.
Mercedes-Benz plans to cut prices on its EQE and EQS models in the U.S. by between 4 and 16 percent, beginning with the 2026 model year. These price reductions exclude delivery charges and are aimed at stimulating consumer interest in a segment that has become increasingly price-sensitive. Despite current market setbacks, Mercedes-Benz CEO, Ola Källenius reaffirmed the company’s long-term commitment to battery electric vehicles in the U.S.
Mercedes-Benz cuts EV prices as tariffs and tax changes bite
He stated during the company’s second-quarter results that while short-term demand is down, the company remains confident in the medium- and long-term adoption of EVs in the country. Mercedes-Benz recently updated its product roadmap to include a balanced mix of combustion and electric models, with plans to launch 17 new EVs and 19 combustion-engine vehicles by 2027.
Production of EQ models at the Vance facility will be significantly reduced in the coming months. Mercedes-Benz is expected to cut EV output by nearly 55 percent between August and December 2025, dropping from 1,179 vehicles in August to 534 by December. Currently, around 60 electric vehicles are produced daily at the plant, with 50 of those destined for export.
Analysts warn pricing tactics could harm brand equity
Mercedes-Benz benefits from tariff exemptions for exported vehicles as part of a trade arrangement between the United States and the European Union. In the domestic U.S. market, however, the EQ lineup has struggled to gain traction. Wholesale shipments of the EQS SUV declined 32 percent in the first half of the year, while EQE crossover deliveries fell 35 percent.
The company has resorted to heavy discounting to reduce stock, with the EQE sedan discounted by 18 percent and the EQS sedan by 15 percent in the second quarter, according to Edmunds. Still, it took an average of 113 days for dealers to sell an EQE sedan and 87 days for the EQS sedan.
Industry analysts have expressed concern that such discounting is unsustainable. Ivan Drury, director of insights at Edmunds, noted that persistent price cuts can hurt brand perception and reduce residual values, making long-term profitability more difficult. Mercedes-Benz is expected to shift more production focus toward internal combustion engine crossovers, which continue to see stronger demand among American buyers. – By EuroWire News Desk.