Mercedes-Benz Plans Major Rollout of New Models Including Electric and Combustion-engine Vehicles

Mercedes-Benz Prepares for Major Vehicle Launches, Balancing Electric and Combustion Models

Mercedes-Benz is gearing up for a significant launch of new vehicle models, encompassing both electric and combustion-engine cars. CEO Ola Källenius stressed the importance of adaptability in achieving carbon neutrality by 2039, while also ensuring that combustion-engine vehicles remain competitive. The company has adjusted its electrification plans in response to a slowdown in electric vehicle (EV) demand, experiencing lower sales compared to its competitor, BMW. The EQS, initially launched in 2021, faced criticism and underwhelming sales, leading to redesigns for its relaunch next year. Mercedes aims for approximately half of its sales to be electric by 2030, aligning with the goals of other major automakers. The forthcoming models, commencing with the CLA and GLB, will incorporate new frameworks and enhanced technology. Despite the emphasis on EVs, Mercedes recognizes the ongoing profitability of combustion-engine cars and is looking to reduce expenses in other areas. The company is contemplating the sale of its remaining stake in Daimler Truck to generate funds for strategic investments. Moreover, Mercedes has halted plans for two out of three European battery plants due to the sluggish EV market. Geopolitical tensions, including impending EU tariffs on Chinese-made battery cars, are influencing the transition to EVs, impacting Mercedes' Smart models.

Key Takeaways

• Mercedes-Benz is poised to launch a substantial array of products, concentrating on both electric and combustion-engine vehicles.
• CEO Ola Källenius underscores the necessity of adaptability in transitioning to electric, aiming for carbon neutrality by 2039.
• Mercedes has revised its EV sales target, aiming for half of total sales by 2030, in response to reduced demand and elevated prices.
• The company is enhancing the EQS model with improved rear-seat comfort and a revamped hood emblem.
• Mercedes is contemplating the divestment of its stake in Daimler Truck to procure capital for strategic endeavors.

Analysis

Mercedes-Benz's strategic shift, consolidating electric and combustion models, mirrors fluctuations in market demand and geopolitical pressures. The postponed battery plant projects and EU tariffs on Chinese EVs are straining Mercedes' Smart division. Financial flexibility is paramount; offloading Daimler Truck could bolster investments. In the short term, the revamped EQS aims to stimulate sales, while in the long term, Mercedes' carbon neutrality objective and adjusted EV sales target align with industry trends. This dual approach ensures competitiveness and sustainability amid evolving market dynamics.

Did You Know?

• Carbon Neutrality by 2039:
  • Carbon neutrality entails achieving net-zero carbon dioxide emissions by balancing emitted carbon with sequestered or offset amounts. For Mercedes-Benz, this ambition involves eliminating greenhouse gas emissions from all operations and products or compensating for them through carbon offset initiatives. Achieving this goal by 2039 signifies a substantial commitment, considering the continued production and sales of combustion-engine vehicles.
• Selling Remaining Stake in Daimler Truck:
  • Divesting ownership shares in a subsidiary like Daimler Truck can yield significant capital. Mercedes-Benz's move could be strategic, directing focus towards core automotive operations or investment in electric vehicle technology and infrastructure. The decision to divest may also signal a shift in business strategy or financial requisites, such as funding for research and development or other critical areas.
• EU Tariffs on Chinese-Made Battery Cars:
  • The EU's imposition of tariffs on battery cars produced in China is a significant geopolitical and economic measure that impacts automakers like Mercedes-Benz, particularly those importing or using components from China. These tariffs can raise the cost of Chinese-made electric vehicles in the European market, influencing pricing strategies and sales. For Mercedes, this could necessitate reassessing supply chains and potentially accelerating plans to localize production to avoid these tariffs, thereby upholding competitiveness in the EU market.