With its engineering department being fully occupied with the development of the new S-Class, Mercedes-Benz commissioned Porsche in 1989 to redesign the W124 chassis along with the necessary changes to the suspension system and drivetrain as to accommodate the wider 5-litre M119 V8.

Rather than do the expensive physical changes, Mercedes-Benz organised the new assembly line at Porsche‘s manufacturing plants specifically for 500 E. This arrangement had a strong benefit for Porsche during its financial crisis brought on from the crippling metalworker strikes and costly engineering and development work on 959.

The chassis constructed by Porsche was also used to produce the 400 E (W124.034), that was technically identical to its big brother, save its 4.2L V8 also used in the S-Class and some other minor changes.

The 400 E (later renamed 'E 420') was produced in Sindelfingen, since it lacked the widened wings and thus was perfectly understated as it looked like one of its lesser siblings.

In the USA, the 500 E came fully equipped, with the only options available to the buyer being a dealer-installed CD changer and an integrated cellular telephone.

To increase the speed past what Mercedes limited the vehicle to, different gear sets must be installed changing the final drive ratio.

With its aggressive stance due to a 38mm wider track, 23mm lower profile, flared wings, side skirts, front air-dam and wide tyres, the 500 E is easily distinguished from its lesser brethren.

Because of its appearance, limited numbers, hand-built construction, and unique pedigree, the 500 E is already considered a "modern classic", even within Mercedes-Benz.

These last cars were produced in Porsche's Rössle building alongside Audi RS2 sport wagons, as that production contract went into full swing with the same work-staff that built the 500E and E500.

Numerous running changes were made to the car's mechanical systems during its production life.In the early 1990s, California in the U.S. introduced many measures, including gasoline reformations to reduce emissions to control the state's air quality.

It consisted of trim upgrades, including a mottled, colored leather pattern on the center inserts of the front and rear seats, steering wheel, and gear shift lever; exclusive "bird's-eye maple" interior wood on the dashboard, doors, and front and rear center consoles; 17" EVO-II alloy wheels; a slight drop in ride height over regular E 500 models, specially edged and color-coded floor mats; and an owner's manual package with leather cover matching the seat leather inserts.