Mercedes-Benz Group shares (ETR: MBG) are trading at €57.54 today, holding steady despite a challenging start to 2026 that has seen the stock decline 7.07% year-to-date.
The German luxury automaker has commenced series production of its all-electric GLB compact SUV at its Kecskemét facility in Hungary, marking a significant milestone in the company's electric vehicle strategy as it navigates mounting cost pressures and intensifying competition from Chinese manufacturers.
The Kecskemét plant, Mercedes-Benz's second-largest production facility globally and Hungary's biggest automotive factory, began rolling out the electric GLB on January 19, 2026. The facility employs approximately 4,500 workers and represents a critical component of the company's flexible European manufacturing network. The electric version of the compact SUV carries a price tag of €59,000 and will be produced alongside 48V hybrid variants on the same production line, demonstrating the automaker's adaptable manufacturing capabilities.
Mercedes-Benz has invested roughly €1 billion in the Kecskemét site since 2022 to prepare the facility for future production demands. The plant operates in tandem with the Rastatt facility in Germany, creating a coordinated production network that allows the company to respond to shifting market dynamics across Europe. This investment underscores the automaker's commitment to expanding its electric vehicle portfolio amid growing regulatory pressure and changing consumer preferences.
The production launch comes as Mercedes-Benz implements temporary operational adjustments at the Hungarian facility. The company announced a reduction to single-shift operations during the first quarter of 2026 to accommodate extensive modernization and renovation work required for the new electric models. Management has stated that this shift change will not directly impact permanent employee headcount, suggesting the company is attempting to balance operational efficiency with workforce stability.
Markets have shown caution toward Mercedes-Benz shares in recent months, reflected in the year-to-date decline and a recent analyst downgrade. METZLER EQUITIES downgraded the stock from ‘Buy' to ‘Hold' on January 3, 2025, signaling tempered expectations for near-term performance. As of late December 2024, the average one-year price target stood at €66.48, implying potential upside of approximately 15.5% from current levels. Analysts project annual revenue of €163.398 billion, representing a 10.44% increase, with anticipated non-GAAP earnings per share of 12.74.
The company's strategic positioning faces additional headwinds beyond operational challenges. In December 2025, Mercedes-Benz USA and parent company Daimler AG agreed to a $149.6 million settlement resolving allegations of emissions-cheating software in over 211,000 diesel vehicles sold between 2008 and 2016. The settlement includes a $120 million payment, with an additional $29 million potentially waived depending on consumer relief program outcomes. While Mercedes-Benz denied wrongdoing, the settlement removes a significant legal overhang that had persisted for years.
The launch of electric GLB production represents a tangible step in Mercedes-Benz's transformation toward electrification, yet the stock's muted reaction suggests markets are weighing execution risks against strategic ambitions. The threat of additional tariffs on European automotive exports and relentless competition from Chinese EV manufacturers continue to pressure margins across the sector. Mercedes-Benz's ability to control costs while ramping up electric vehicle production at competitive price points will likely determine whether the stock can reclaim lost ground in the months ahead.
Bull Case:
- Launches series production of the all-electric GLB SUV, a significant step in its EV strategy.
- Invested €1 billion in its Kecskemét facility to support future EV production.
- Maintains a flexible and coordinated European manufacturing network to adapt to market changes.
- The average analyst price target suggests a potential upside of approximately 15.5%.
- Resolved a major legal overhang by settling a US emissions-cheating case.
Bear Case:
- The stock is down 7.07% year-to-date, indicating negative market sentiment.
- Faces significant cost pressures and intense competition, particularly from Chinese EV makers.
- Received a recent analyst downgrade from ‘Buy' to ‘Hold', signaling reduced expectations.
- The ongoing threat of tariffs on European automotive exports could pressure profit margins.
- Investors show caution, with the stock's muted reaction suggesting concerns about execution risk in the EV transition.
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