Actually, this topic has been covered a number of times before.

The "E" stood for "Einspritzung" which is German for "injection" meaning fuel injection vs. the use of carburetors, which was the base model equipment for gasoline powered vehicles. It applied to all fuel injected engine equipped cars except the sport models, the SL series. It is not used on Diesels because they are all fuel injected. Diesels are designated by the "D" after the displacement numbers and the chassis designator in the old models, just like the "E" designation was back then.

In the MB line up for quite some time there was an "S" class which was a different body from the "non-S class" car. The "S" stood for "Sonder" which translates into "Special" loosely, but " 'Spensive" was pretty close too. So your choices for the sedans was an "S" and "not an S" class. If the S class was fuel injected it was called an "SE" to let everyone know you had the latest technology in your 'spensive car.

In general the nomenclature model was to distinguish those things that were different in terms of the chassis or the engine, or the transmission from the base model car with letters. In the '60's an automatic transmission got you a chome "automatic" designator on the trunklid. Like you get today with "4-Matic" for the all wheel drive designator.

"SL" was "Sportlich, Leicht" or "sporty, light" meaning a lighter weight, higher performance, two door. "SL" models generally came with the higher performing engine as standard, so they did not need to have an "E" to identify they had the higher performing engine.

The "T" is the designator for station wagon model. The "D" is the Diesel. The numbers used to be the engine displacement until the 190 series came out, which was given the designation "190" to reflect the engine displacement of the base model. Other engine sizes were so noted on the other corner of the trunk. This trend continued with the W124 body when smaller engines were offered to avoid confusion over which chassis you had. A 300E 2.6 turned out to be a W124 with the same 2.6 liter, 6 cylinder that the 190E 2.6 had in it.

While it made sense to those who grew up with it, it apparently did not make sense to some marketing guy with an MBA. So, since all the W124 models were equipped with fuel injection in the US, the W124 became the "E" class. I like Larry's "Executive" designator, but am not sure the marketing guy came up with that. I would credit Larry with that.

The numbers are much more loosely tied to engine displacement now, but generally follow the logic of 500E or now E500 was mid size, not "S" Class car, with a 5 liter engine. There are now "SLK" and "CLK" and so on designations, and AMG engine displacement distinguishing numbers (E55 vs. E550, for example).

The base models apparently were all gasoline engine equipped models and therefore the engine designator "D" for Diesels. Pretty soon all Diesels will be turbocharged, if not already, and the "TurboDiesel" or "Turbo" will fall away as it no longer designates a unique engine feature.

Jim

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Own:
1986 Euro 190E 2.3-16 (291,000 miles),
1998 E300D TurboDiesel, 231,000 miles -purchased with 45,000,
1988 300E 5-speed 252,000 miles,
1983 240D 4-speed, purchased w/136,000, now with 222,000 miles.
2009 ML320CDI Bluetec, 89,000 miles

Owned:
1971 220D (250,000 miles plus, sold to father-in-law),
1975 240D (245,000 miles - died of body rot),
1991 350SD (176,560 miles, weakest Benz I have owned),
1999 C230 Sport (45,400 miles),
1982 240D (321,000 miles, put to sleep)