When it comes to increasing fuel economy, turbochargers are the replacement for displacement. The combination of highly efficient snails and smaller engines provides the power people expect, while reducing the overall weight of the vehicle. Like other automakers that have realized that forced induction is a suitable stop-gap for improving fuel economy, Mercedes-Benz is in the process of developing turbo'd engines that will proliferate throughout its lineup in the next two and a half years.
Thomas Weber, a Daimler board member in charge of research and development told Automotive News, "All our vehicles will have turbocharged engines in series production by the end of 2010 at the latest."
Mercedes is joining BMW and Audi by investing heavily into forced induction, primarily to cope with new fuel economy standards in the U.S. and Europe. But turbos are only going to take them so far. Mercedes plans to introduce hybrids into its lineup towards the close of the decade, beginning with the S-class sedan in 2009. According to Weber, zero-emission vehicles are the automaker's long-term goal and Daimler intends to push heavily towards fuel-cells and electric-powered vehicle in the future, including an electric smart fortwo which will go into production sometime in 2010.
Source: Automotive News – Sub. Req. via AutoBlog