Mercedes-Benz Grand Prix Ltd is likely to enter the FIA Formula E Championship in 2018 after an option agreement was signed between Formula E Operations Ltd and Mercedes Grand Prix on Tuesday.
As revealed by Motorsport.com in August, the all-electric series has been looking to expand its participating teams from 10 to 12, and Mercedes has been evaluating an opportunity to join the championship during the last year.
Formula E must, however, get the backing of the 10 existing teams in order to expand the grid in season five.
"We have been watching the growth of Formula E with great interest," said Toto Wolff, Head of Mercedes-Benz Motorsport.
"At the current time, we are looking at all the options available in the future of motor racing, and we are very pleased with an agreement that secures us an opportunity to enter the series in season five.
"Electrification will play a major role in the future of the automotive industry - racing has always been a technology R&D platform for the motor industry, and this will make Formula E very relevant in the future."
Mercedes engineers and hierarchy have attended Formula E races in previous seasons, and an initial plan to partner with a team, much in the same way that its German rivals Audi and BMW did, is believed to have gone through several feasibility and operational evaluations.
Common ground between F1 and FE
Mercedes and Formula E share a major partner – Qualcomm. The wireless technology giant is an official partner of both and is believed to have had a significant involvement in ensuring that Mercedes has the prospect of racing in Formula E.
Talking about the reservation for Mercedes-Benz Grand Prix Ltd (MGP), Alejandro Agag, CEO of Formula E, said: "We are delighted to confirm that we have reserved one of our two new entries in season five for MGP.
"Formula E wants to become the platform where car manufacturers test and develop the technologies that they will then introduce on their road cars.
"Having the chance to include a brand like Mercedes in our championship in the future would be a major boost to achieve that objective," he continued.
"Formula E is becoming an exciting mix of consolidated manufacturers like Renault, Citroen-DS, Audi, Mahindra or Jaguar, and new futuristic brands like Faraday Future, NextEV, or the likes of major component manufacturers like Schaeffler and ZF.
"Mercedes would be a great addition to that growing line-up."
Two Mercedes-contracted drivers have entered Formula E this season, with Felix Rosenqvist and Maro Engel competing with Mahindra and Venturi respectively.
Venturi is known to have spoken to several well-known OEMs over the summer about a potential partnership.
Nissan, Volvo/Polestar, Porsche and Mugen are also known to be interested in joining Formula E in some capacity over the coming years.