• Latest E-Class sedan version to be equipped with new motor
  • Engine to meet new EU tests that include real-world driving

Mercedes-Benz unveiled the first in a 2.6 billion-euro ($2.9 billion) series of diesel car engines, committing to the technology’s future even as competitor Volkswagen AG is rocked by an emissions-cheating scandal centered on the fuel.

The four-cylinder motor will be available for the first time in the revamped E-Class sedan that goes on sale in March, Bernhard Heil, head of powertrain development at Mercedes parent Daimler AG, told reporters Thursday in Stuttgart, Germany. The engine offers 80 percent lower nitrogen-oxide emissions and 13 percent less fuel consumption than the previous type, Heil said.

“This new engine will define our diesel strategy for the next 10 years,” Heil said. “We believe it’ll convince the public we’ll have a bright future for diesel.”

Volkswagen’s admissionto rigging software in diesel engines to cheat on emissions tests has called the technology’s future into question. The deception added to concerns in municipalities such as Paris that exhaust from the fuel is a major contributor to smog. More than half of passenger vehicles in the European Union are equipped with diesel engines, which emit less carbon dioxide than gasoline versions -- helping carmakers meet tough CO2 limits on fleets -- and consume fuel more efficiently.

Diesel models’ share of German car market
Diesel models’ share of German car market

Mercedes plans to roll out the new diesel motors across its model range through 2019, after starting work on the project about four years ago. The engines will comply with new EU standards on testing vehicles for emissions and consumption that take real-world driving into account.

The German luxury-car manufacturer is betting that conventional powering systems will dominate the auto market for awhile, even as the industry takes steps to add all-electric vehicles. General Motors Co. said Thursday that its Opel division will bring out its first solely battery-powered car in 2017. Daimler’s electric offerings now include battery-powered versions of the Mercedes B-Class hatchback and two-seat Smart city car.

“Spending on the improvement of existing diesel engines brings a much greater cost-benefit efficiency than spending on electrification,” Heil said. “That said, electrification is key to our powertrain strategy despite the cost.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE