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Is Mercedes Stock Worth Buying Following Partnership With Wayve?
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Key Takeaways
Mercedes-Benz will integrate Wayve's AI Driver into future vehicles, starting within two years.
MB.OS will be included in every Mercedes, with assisted-driving technology expanding as regulations allow.
Weaker China demand, rising costs and geopolitical uncertainty are pressuring Mercedes-Benz's outlook.
Mercedes-Benz Group AG (MBGYY - Free Report) has entered into a definitive production agreement with British autonomous driving startup Wayve to integrate its “AI Driver” technology into future vehicles of the former, with the integration expected to begin within the next two years. The deal marks the first production deployment of Wayve’s end-to-end driving AI in a premium vehicle and builds on the existing partnership between the companies, including Mercedes-Benz’s investment in Wayve’s $1.5 billion Series D funding round earlier this year.
Under this agreement, Wayve has integrated its AI Driver with Mercedes’ production system architecture, including the automaker’s hardware, MB.OS operating system and mapping interfaces.
Mercedes-Benz is expanding its MB.OS software platform across the vehicle lineup, including both BEVs and ICE vehicles. Per the company’s second-quarter 2026 earnings transcript, MB.OS will be included in every Mercedes going forward, while its AI-based point-to-point assisted-driving technology is already being deployed in China and the United States. The company expects to expand the technology into Europe as regulations allow. Mercedes-Benz’s Level 2++ system, with the necessary sensors, computing power and AI software built into vehicles, allows customers to activate the functionality later. This creates potential for additional software-related revenues as adoption expands.
The Wayve partnership and broader MB.OS rollout highlight Mercedes-Benz’s efforts to strengthen its software and autonomous-driving capabilities. However, the company continues to face several challenges that could weigh on its near-term performance. Let’s dig deeper and see why you should consider offloading this Zacks Rank #4 (Sell) from your portfolio.
Weakness in China, Inflation to Hurt MBGYY’s Prospects
Mercedes-Benz lowered its 2026 sales outlook and now expects full-year sales to be slightly below 2025 levels, largely because of weaker-than-expected conditions in China. China remains the biggest challenge for Mercedes-Benz. The Chinese auto market declined roughly 20% in the second quarter, resulting in a significant reduction in Mercedes-Benz sales. The company also recorded valuation adjustments related to its Chinese investments because market developments indicated lower future profit contributions from joint ventures.
Cost inflation remains a significant pressure on Mercedes-Benz margins. The company expects energy, freight and raw-material costs to increase in the second half of 2026. These pressures come alongside higher depreciation following the launch of numerous new models. The company expects these headwinds to affect second-half profitability. Vans also face raw-material pressures and higher costs related to the ramp-up of the new VLE and associated factories.
Mercedes-Benz continues to operate amid considerable geopolitical and trade uncertainty. The Middle East conflict can potentially affect material, raw-material and energy prices, inflation and market demand. The company also expects some normalization of tariffs in the second half compared with the first half, when an IEEPA refund provided a benefit. In addition, U.S.-China tensions and potential U.S. regulatory changes could affect Mercedes-Benz's operations. The uncertain policy environment creates additional risks for costs, supply chains and market access.
Price Performance, Valuation and Estimates
MBGYY has underperformed the Zacks Automotive - Foreign industry in the past six months. Its shares have lost 24.9% compared with the industry’s decline of 12.4%.
Image Source: Zacks Investment Research
From a valuation perspective, Mercedes appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.29, lower than the industry’s 0.57.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MBGYY’s 2026 and 2027 EPS has fallen a penny each in the past 30 days.
The Zacks Consensus Estimate for MBLY’s 2026 sales and earnings implies year-over-year growth of 5.6% and 36.1%, respectively. The EPS estimate for 2026 and 2027 has improved 3 cents each over the past 60 days.
The Zacks Consensus Estimate for GTX’s 2026 sales and earnings implies year-over-year growth of 7.2% and 25.7%, respectively. The EPS estimate for 2026 and 2027 has improved 5 cents and 4 cents, respectively, over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Is Mercedes Stock Worth Buying Following Partnership With Wayve?
Key Takeaways
Mercedes-Benz Group AG (MBGYY - Free Report) has entered into a definitive production agreement with British autonomous driving startup Wayve to integrate its “AI Driver” technology into future vehicles of the former, with the integration expected to begin within the next two years. The deal marks the first production deployment of Wayve’s end-to-end driving AI in a premium vehicle and builds on the existing partnership between the companies, including Mercedes-Benz’s investment in Wayve’s $1.5 billion Series D funding round earlier this year.
Under this agreement, Wayve has integrated its AI Driver with Mercedes’ production system architecture, including the automaker’s hardware, MB.OS operating system and mapping interfaces.
Mercedes-Benz is expanding its MB.OS software platform across the vehicle lineup, including both BEVs and ICE vehicles. Per the company’s second-quarter 2026 earnings transcript, MB.OS will be included in every Mercedes going forward, while its AI-based point-to-point assisted-driving technology is already being deployed in China and the United States. The company expects to expand the technology into Europe as regulations allow. Mercedes-Benz’s Level 2++ system, with the necessary sensors, computing power and AI software built into vehicles, allows customers to activate the functionality later. This creates potential for additional software-related revenues as adoption expands.
The Wayve partnership and broader MB.OS rollout highlight Mercedes-Benz’s efforts to strengthen its software and autonomous-driving capabilities. However, the company continues to face several challenges that could weigh on its near-term performance. Let’s dig deeper and see why you should consider offloading this Zacks Rank #4 (Sell) from your portfolio.
Weakness in China, Inflation to Hurt MBGYY’s Prospects
Mercedes-Benz lowered its 2026 sales outlook and now expects full-year sales to be slightly below 2025 levels, largely because of weaker-than-expected conditions in China. China remains the biggest challenge for Mercedes-Benz. The Chinese auto market declined roughly 20% in the second quarter, resulting in a significant reduction in Mercedes-Benz sales. The company also recorded valuation adjustments related to its Chinese investments because market developments indicated lower future profit contributions from joint ventures.
Cost inflation remains a significant pressure on Mercedes-Benz margins. The company expects energy, freight and raw-material costs to increase in the second half of 2026. These pressures come alongside higher depreciation following the launch of numerous new models. The company expects these headwinds to affect second-half profitability. Vans also face raw-material pressures and higher costs related to the ramp-up of the new VLE and associated factories.
Mercedes-Benz continues to operate amid considerable geopolitical and trade uncertainty. The Middle East conflict can potentially affect material, raw-material and energy prices, inflation and market demand. The company also expects some normalization of tariffs in the second half compared with the first half, when an IEEPA refund provided a benefit. In addition, U.S.-China tensions and potential U.S. regulatory changes could affect Mercedes-Benz's operations. The uncertain policy environment creates additional risks for costs, supply chains and market access.
Price Performance, Valuation and Estimates
MBGYY has underperformed the Zacks Automotive - Foreign industry in the past six months. Its shares have lost 24.9% compared with the industry’s decline of 12.4%.
Image Source: Zacks Investment Research
From a valuation perspective, Mercedes appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.29, lower than the industry’s 0.57.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MBGYY’s 2026 and 2027 EPS has fallen a penny each in the past 30 days.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the auto space are Mobileye Global Inc. (MBLY - Free Report) and Garrett Motion Inc. (GTX - Free Report) . While MBLY sports a Zacks Rank #1 (Strong Buy), GTX has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MBLY’s 2026 sales and earnings implies year-over-year growth of 5.6% and 36.1%, respectively. The EPS estimate for 2026 and 2027 has improved 3 cents each over the past 60 days.
The Zacks Consensus Estimate for GTX’s 2026 sales and earnings implies year-over-year growth of 7.2% and 25.7%, respectively. The EPS estimate for 2026 and 2027 has improved 5 cents and 4 cents, respectively, over the past 60 days.