Proposed Partnership Between BMW And Mercedes Could Be Pure Blasphemy

The new play is developing as Mercedes—and everyone else, for that matter— scrambles to reassess its internal combustion engine strategy in light of slower-than-expected demand for EVs.

Sources told Autocar that negotiations are already advanced, with a decision from Mercedes expected before the end of the year. If inked, the partnership would be positioned as a cost-cutting venture, giving Mercedes a Euro 7-compliant engine supply while scaling back its own development investment—BMW will happily accept the cash, no explanation needed.

While unconfirmed, Mercedes would reportedly gain access to BMW’s turbocharged 2.0-liter B48 engine already used across the BMW and Mini lineup. The engine is produced in Steyr, Austria, and can be used for both longitudinal and transverse applications, making it a potential fit for everything from the smaller CLA and GLA and scaling up to the C-Class and GLC, as well as the incoming “Little G.”

Mercedes currently relies on its 1.5-liter M252 engine, produced in China through a joint venture with Geely and Renault. That unit works well in mild-hybrid applications but isn’t engineered for plug-in hybrids or range-extenders—gaps that BMW’s B48 could fill.

The report even claims the proposed collab could extend to shared production facilities outside Europe, including the United States, to help both automakers avoid rising tariffs. Beyond engines, it's also being suggested that gearboxes could eventually become part of the arrangement.

Should the deal go ahead, it would mark the first time two of Germany’s luxury giants have shared engine technology—a historic step in an industry where the pressure of emissions rules and the costs of electrification are creating strange bedfellows.

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