Mercedes will redefine the entry point to its line-up from 2024 with the arrival of an all-new compact luxury car. It will also mark the debut of a new platform and infotainment system for the brand.

Based on the firm’s forthcoming MMA underpinnings, the new all-electric compact saloon will rival Tesla’s Model 3 as the most affordable model in the Mercedes range.

Speaking to investors last year on the future of the company’s line-up, Mercedes boss Ola Källenius said: “The entry point to the Mercedes brand in the future will be a different one than it is today.” On top of this, a strategy presentation showed that the company plans to reduce its ‘portfolio of variants’ (understood to mean bodystyles) in the ‘entry luxury’ class from seven to four, raising prices as well.

It’s believed that this new car, previewed by our exclusive images (and which our spy photographers have caught testing) will front the strategy, as well as ushering in new tech.

Expect some of that technology to trickle down from the brand’s record-breaking Vision EQXX concept car, which focused on maximising efficiency to deliver range.

In a smaller car such as the first MMA-based model, this will be key, so some of the EQXX’s motor tech (delivering 95 per cent efficiency), power-control electronics and other features could be scaled up for series production in the new model. It’s also likely that the car’s sleek styling will draw on aerodynamic cues first seen on the EQXX to reduce drag and increase range.

Mercedes Chief Technology Officer Markus Schäfer told Auto Express that the battery, e-motor, aspects of the EQXX’s inverter and some ‘bionic engineering’ cast-metal parts will feature on series production cars in the future, so there will be a large carryover from this test bed. “We wanted to have something that mirrored what was happening in the real world,” he said of the EQXX. “We want to bring this tech to series production and see the same results.”

Källenius was also keen to highlight how: “This new MMA architecture ushers in a new generation of technology, both on the drivetrain side in terms of battery chemistry, efficiency, and the drivetrain itself.”

In line with the EQXX project, Mercedes is explicitly focusing on “greater range from smaller batteries”, with a future target of more than 800Wh/l (for reference, a Tesla Model 3 battery offers an energy density of around 680Wh/l), with a slim battery in the car’s floor helping to free up space. Expect the new car to eclipse the longest range currently on offer in the EQA SUV, at 324 miles.

This tech transfer will extend to the infotainment, because the new car will also mark the debut of Mercedes’ MB.OS infotainment system. The new model will likely offer a widescreen digital dash and infotainment panel as part of the company’s target for its advanced graphical interfaces, but it’s the system behind the scenes that could be even more interesting.

Mercedes has experimented with a new type of processor that performs tasks in “neuromorphic spikes”. Put simply, this means that the computer stores up tasks and executes them in one go once a threshold is reached, saving energy and boosting driving range in the process.

Unlike premium rivals such as Volvo and Polestar, who have paired with Google for their infotainment software, the German firm is going it alone with the development of MB.OS, and Chief Software Officer Magnus Östberg told Auto Express: “We are the architects of our own house, as it were. It’s important to have ownership of your own OS for safety and security.”

The new saloon was initially thought to be called EQA, but the name is now uncertain following reports that Mercedes will drop the EQ branding for EVs as its range moves towards full-electric models in Europe by 2030. Whatever it’s called, this new car represents the start of a renewed focus on profit per car and sales margins, rather than volume. The company is pushing its most affordable models further upmarket, with a greater focus on higher-margin, luxury cars.

Mercedes aims to reduce its presence in the ‘entry luxury’ sector, predicting a 25 per cent reduction in market share by 2026; sales volumes have already declined from around 680,000 cars in this area of the market in 2019 to about 570,000 in 2021.

Despite this, from 2019 to 2021 the average sale price of Mercedes cars in this class rose by around 20 per cent – and the brand says it will be “significantly up” by 2026, reflecting the more luxury-focused approach it will take, ditching mainstream expansion and the chase for sales volumes.

Click here for our list of the best electric cars on sale in the UK…