(Reuters)

Mercedes-Benz will pause deliveries of its EQ electric range to the United States, the carmaker said on Wednesday as it responded to slowing demand and high inventories at dealerships.

Since President Donald Trump’s spending bill earlier this month cut tax EV credits sooner than anticipated, analysts have warned that the U.S. electrification drive will underperform expectations this year.

“Mercedes-Benz is temporarily putting on hold order banks for EQ models in the U.S. to align with current market demand,” a spokesperson for the company said.

Mercedes produces cars, including battery-electric vehicles (BEVs), in its U.S. plant of Tuscaloosa, Alabama, which supplies its network of dealers in the country.

The group’s CEO Ola Kaellenius told reporters on Wednesday that despite the slower trajectory, he expected U.S. consumers to buy more EVs over time.

Presenting the company’s second-quarter results, he said: “We don’t believe that the BEV demand in the United States goes to zero: we still think that the medium to long-term adoption rate of BEVs in the U.S. will creep upwards.”

The carmaker said in February that it would make more petrol and diesel cars than EVs in its new product range. It said it was targeting 19 new combustion engine models and 17 battery-electric cars by the end of 2027, after its battery-electric sales collapsed by a quarter last year.