In a major twist, Mercedes-Benz is reportedly considering outsourcing its engines from its biggest rival, BMW. According to German news outlet Manager Magazin, the three-pointed star marque is negotiating a supply deal with its competitor for four-cylinder engines. If successful, it would lead to Merc getting Bimmer engines by 2027.

In a follow-up interview with Autocar, an anonymous source within Mercedes confirmed that the automakers are already at a “high level of planning and negotiations.” The companies will likely announce the result of their talks by year’s end.

The news outlets claimed the move is part of Mercedes’ “strategic step to cut development costs.” The new engine would probably be a spin-off of the 2.0-liter turbocharged B48 of BMW, which the brand would manufacture at its factory in Steyr, Austria. Merc would integrate the powertrain with its plug-in hybrid electric vehicle (PHEV) line-up to accommodate longitudinal and transverse configurations.

Mercedes recently launched its new four-cylinder unit, the M252, paired with mild-hybrid technology in models like the CLA. However, this engine is less compatible with plug-in hybrid setups. Compounding the issue, the M252 is manufactured in China—a country that risks higher tariffs for US-bound vehicles. A potential collaboration with BMW could involve a US-based plant, eliminating tariff concerns.

The rumored deal surfaces at a time when Mercedes is rethinking its electrification roadmap. While the company once pledged to go fully electric by 2030, it has since softened its stance, with CEO Ola Källenius confirming combustion technology will remain part of its portfolio well into the next decade.