The long-standing rivalry between Mercedes-Benz and BMW is one of the most recognized in the automotive world. For decades, the two German giants have battled fiercely across nearly every segment, from luxury sedans and sports cars to cutting-edge technology. Yet, even the fiercest competitors occasionally find common ground when business strategy and market conditions align. According to recent reports, Mercedes is now exploring the possibility of sourcing four-cylinder engines from BMW, a move designed to cut development costs and ease the transition as the brand gradually shifts toward full electrification.
The news, first reported by the German outlet Manager Magazin, suggests that the first Mercedes models powered by BMW engines could arrive as soon as 2027. The discussions reportedly go beyond engines alone. Negotiations have touched on the possibility of sharing transmissions and even entire electrified powertrains, signaling that the cooperation could evolve into something more substantial than a simple supply agreement.
For Mercedes, the potential partnership would significantly reduce research and development expenses for four-cylinder units, freeing up resources to focus on the brand’s six-cylinder and eight-cylinder engines, which remain central to its identity in the premium segment. For BMW, the deal would generate additional revenue streams while also ensuring that the company makes full use of its Steyr production plant in Austria, where spare capacity exists. According to Autocar, an insider at Mercedes described the talks as being at a “high level of planning and negotiations,” with an official confirmation expected before the end of 2025.
This wouldn’t be Mercedes’ first external engine collaboration. The brand already sources a 1.5-liter four-cylinder turbocharged engine (M252) from its Chinese partner Geely, which powers the mild-hybrid version of the CLA. However, working with BMW would provide a more suitable fit for key Western markets such as North America and Europe, thanks to regulatory alignment and consumer expectations. One strong candidate under review is BMW’s B48 2.0-liter turbocharged engine, widely used across BMW and Mini lineups. This versatile engine is compatible with both longitudinal and transverse setups, supports plug-in hybrid applications, and could even serve as a range-extender unit in certain electrified models.
If the partnership proves successful, it may expand beyond Europe. Reports indicate that Mercedes and BMW are considering establishing a joint powertrain facility in the United States, a move that would allow both companies to avoid tariffs and share manufacturing costs in one of their most important global markets.
The potential tie-up also reflects broader shifts in the auto industry. Like many carmakers, Mercedes is reassessing its all-electric transition strategy in light of slower-than-anticipated EV adoption. CEO Ola Källenius has openly described the brand’s approach as a “course correction,” confirming that electrified combustion engines will remain in the lineup longer than originally planned. Partnering with BMW could therefore provide the flexibility Mercedes needs to balance its EV push with continued demand for combustion-powered vehicles.