Mercedes-Benz Group is advancing its sustainability transformation through a comprehensive strategy focused on electrification, decarbonization, and circular economy integration, aligned with its long-term “Ambition 2039” goal of achieving a net carbon-neutral new vehicle fleet across the entire value chain.
The company’s sustainability strategy emphasizes reducing CO2 emissions through a diversified technology approach that includes battery electric vehicles, plug-in hybrids, and efficient combustion engines. This technology-neutral pathway supports regulatory compliance while enabling flexibility across global markets. Sustainability is embedded across the lifecycle, from supplier decarbonization and renewable-powered production to recycling and battery recovery.
“Sustainability is the foundation of our transformation – guiding our investments in electrification, innovation, and a circular economy across the entire value chain,” Ola Kallenius, Chairman of the Board of Management, Mercedes-Benz Group, said.
Mercedes-Benz reported steady progress in electrification in 2025, with electrified vehicles accounting for 20.5 percent of total car sales, up from 18.5 percent in 2024. The company sold 368,700 electrified vehicles, including 168,823 battery electric vehicles and 199,877 plug-in hybrids. Electrification has expanded across all van segments, while its global charging ecosystem now spans approximately 2.9 million charging points across more than 37 countries, strengthening customer adoption of electric mobility.
“Creating long-term value means aligning financial strength with environmental responsibility, ensuring our products and operations contribute to a low-carbon future,” Harald Wilhelm, Member of the Board of Management, Finance & Controlling, Mercedes-Benz Group, said.
Significant investments are supporting this transition. Mercedes-Benz Cars allocated €8.6 billion to research and development in 2025, alongside €1.1 billion in the vans division and €4.1 billion in capital expenditure for production infrastructure. These investments are directed toward next-generation EV platforms, battery technologies, and software-defined vehicles powered by its MB.OS operating system, as well as improvements in energy-efficient manufacturing, according to Mercedes-Benz Group’s Sustainability Strategy 2025.
Operational sustainability remains a key strength. All Mercedes-Benz production plants have been net carbon-neutral since 2022, supported by 100 percent renewable electricity usage. The company has also achieved a 28 percent reduction in lifecycle CO2 emissions per passenger car compared to its 2018 baseline. In Europe, fleet emissions reached approximately 93 grams of CO2 per kilometer in 2025, meeting regulatory targets.
Sustainability-focused investments extend across the value chain, including renewable energy integration in production, use of recycled materials, and battery recycling initiatives. The report also emphasizes ongoing funding for decarbonization efforts, such as transitioning to renewable energy sources and enhancing circular economy practices.
Circular economy initiatives are gaining momentum as part of the sustainability strategy. Mercedes-Benz has introduced advanced battery recycling capabilities, including a facility in Germany capable of achieving recovery rates exceeding 96 percent. The company is also increasing the use of secondary raw materials and CO2-reduced steel, with the long-term goal of establishing a near-zero carbon steel supply chain by 2039.
Supply chain decarbonization is another critical pillar. By the end of 2025, around 90 percent of procurement volume was covered by suppliers committed to delivering CO2-neutral products in the future. This upstream engagement complements efforts in downstream recycling, refurbishment, and battery reuse, ensuring sustainability across the full value chain.
Overall, Mercedes-Benz Group combines rising electrification adoption, large-scale investments exceeding €9 billion, and strong operational decarbonization to drive its sustainability agenda. Its integrated approach positions sustainability as a core enabler of long-term competitiveness, regulatory alignment, and the transition to low-emission mobility.
BABURAJAN KIZHAKEDATH