German automaker Mercedes-Benz is pausing electric vehicle exports to the U.S. market in the wake of weak Q2 financial results. The automotive brand reports that despite enjoying “robust free cash flow” in the just-concluded quarter, its net profit in the first half of 2025 fell from $6.7 billion to $3 billion, a massive 56% drop in net profits compared to Q2 2024.
With the Trump administration levying a 25% tariff on all vehicles imported into the country from Europe, Mercedes-Benz is having a hard time selling its battery electric vehicles (BEVs) in the U.S. market.
Although the automaker’s recent earnings report shows that its earnings before interest and taxes (EBIT) dropped by 68%, Mercedes-Benz Group AG CEO Ola Källenius says the Q2 financial results were actually robust considering the “dynamic business environment” Mercedes experienced in the first half of the year.
Electrified vehicles accounted for 20.7% of the company’s sales in Q2 2025, falling by 9% year-over-year, while BEVs (purely electric) made up just 7.7% of Mercedes-Benz’s Q2 sales. Källenius notes that the company’s best move is to remain on course, delivering intelligent and desirable products while minimizing its costs.
The past two years haven’t been great for electric cars altogether, particularly in the U.S. market where low electric vehicle demand forced local automakers to scale down their ambitious electrification plans.
With interest rates high and costs of living rising, the majority of Americans simply couldn’t afford or justify the cost of a new electric car. The recent tariffs on vehicle imports have made the already expensive electric cars even costlier, resulting in poor electric vehicle sales in the U.S. for Mercedes and most of the automotive industry.
Consequently, Mercedes will temporarily halt exports in the EQ electric line and lower model prices within the line by 4% to 16% beginning 2026.
The Stuttgart, Germany-based company will try to offload remaining inventories while EQ line deliveries are paused, before switching to its Tuscaloosa, Alabama, manufacturing plant to build EVs for the U.S. market. This would enable it to bypass the Trump administration’s import tariffs and, without the additional tariff costs, allow the company to price its electric cars competitively.
According to the automaker, the Trump administration’s tariffs, coupled with retaliatory measures from other countries, are injecting significant uncertainty into the auto sector. The administration’s recent decision to revoke electric vehicle tax credits and withdraw financial support for a nationwide network of public EV charging infrastructure was also a major blow to America’s fledgling electric vehicle industry.
It will now cost Americans more to purchase EVs, and the pace of adoption may slow further. Mercedes says it will focus on local production and cost optimization to remain competitive while monitoring the policy landscape closely.
The challenging auto market conditions in the U.S. could also be driving other firms like Massimo Group (NASDAQ: MAMO) to tweak their strategies in order to cope with the policies that the Trump administration has passed to end support to renewable energy and vehicle electrification.
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