Meanwhile, the e-tron quattro concept Audi will showcase at this month's Frankfurt auto show previews an all-electric crossover coming in 2018 that will compete with the coming Tesla Model X.
BMW is reported to be planning an i5 electric car based on the 5 series that would rival Tesla's Model S. BMW CEO Harald Krueger said "there is space" for a new electrified car between the company's i3 and i8.
Porsche could decide to sell an electric-only version of its long-planned Pajun sedan to compete with vehicles such as the Model S. The Pajun would be built on a smaller version of the Panamera's MSB platform.
With governments introducing tougher fuel economy targets, Mercedes parent Daimler spent roughly half of its r&d budget of 5.68 billion euros ($6.88 billion, based on the Dec. 31, 2014, exchange rate) last year to develop low-emission technologies.
Mercedes is no stranger to electric vehicles. It has had a variety of small fleets of battery electric or fuel cell electric cars on the road for years, including versions of the Smart ForTwo, A class, B class and SLS AMG. Daimler founded two fully owned new subsidiaries for making EV batteries and their lithium ion cells.
Unlike other German carmakers that scoffed at Tesla when it revealed it would use laptop battery cells to power its Roadster, Daimler partnered with Tesla. Daimler initially took a 9.1 percent stake in 2009, it received a seat on Tesla's board and it used Tesla's cells in the B-class Electric Drive, a compact hatchback.
But as Tesla grew, ties with the German carmaker weakened, and Daimler eventually was removed from the board in June 2014. Afterward, it divested the remaining 4 percent of its shares.
Daimler is also investing in 10 hydrogen refueling stations as part of plans to bring mass-produced, competitively priced fuel cell vehicles to market starting in 2017, together with Ford and Nissan.
Nevertheless, Daimler believes that for the medium term the most successful commercial technology will not be battery electric or fuel cell cars, but plug-in hybrids. It announced late last year it would bring at least 10 new plug-ins by 2017 starting with the S class and the C class, with the C350e.