Mercedes-Benz changes plans and reverses its strategy of becoming a 100% electric brand by 2030, five years before the date initially established by the European Union to prohibit the marketing of new internal combustion passenger cars – although this is to be seen, since it opened the door to saving them if they were powered by synthetic fuels.
The reason for the decision taken by the German company lies in the weakening of its sales of zero-emission cars, as confirmed this Wednesday by its general director, Ola Källenius, before the group’s General Meeting of Shareholders. “We will continue manufacturing hybrid and combustion engine vehicles well into the 2030s, if there is demand,” said the German manager after pointing out that the transformation of the business model “could take longer than expected.”
In July 2021, the company announced that it was preparing to go fully electric by the end of this decade, if the right conditions were met. The route to achieve its goal established that in 2022, it would have battery electric vehicles (BEV) in all the segments in which it is present. And, starting in 2025, all newly developed car platforms will be exclusively electric and customers will be able to choose a zero-emission version of each model manufactured by the star firm. Mercedes-Benz indicated that, in total, its investments in battery electric vehicles between 2022 and 2030 will amount to more than 40 billion euros.
However, market conditions have forced it to redefine the pace of this transformation, which will be slower than expected. The brand has recorded disappointing sales in its electric car division due to the high costs of the EQS and EQE sedans, a key segment of the strategy that Källenius revealed at the time to increase profits through the marketing of high-end vehicles .
According to data shared by Europa Press, the company’s profit margin fell to 9% in the first quarter of this year, the lowest in the last two years and below the long-term expectations of the German group, at the same time which warned that margins will fall even further in the remainder of 2024.
Mercedes-Benz’s goal is to increase sales of its most expensive cars by up to 60% by 2026 and raise the operating margin to around 14%, which would represent an increase of about five percentage points compared to current records.
The Stuttgart-based company is behind its rivals in the business model transition: in the first quarter, Mercedes’ electric vehicle deliveries fell by 8%, while BMW saw a 41% increase in vehicle sales totally electric of the brand.