Mercedes-Benz adjusts EV strategy, admits misjudgment to sell only EVs by 2030

KUALA LUMPUR:  While electric vehicles (EVs) are gaining popularity in Malaysia, especially due to lower road taxes compared to internal combustion engine (ICE) vehicles, not all automakers are fully committing to an all-electric future. Mercedes-Benz has significantly revised its EV plans, opting instead to blend electric drive systems with traditional ICE technology.

According to a report by cleantechnica .com, Mercedes recently acknowledged that it misjudged when it previously announced plans to sell only electric cars by 2030. According to a report by Handelsblatt, the company will continue to manufacture vehicles with "electrified internal combustion engines" well into the next decade. This strategic shift comes after disappointing sales of its electric models, particularly the EQS sedan.

 

Mercedes initially planned to create two versions of its MB.EA platform: the MB.EA-Medium for mid-size models like the C-Class and GLC, and the MB.EA-Large for larger vehicles such as the S-Class and GLS. However, development of the MB.EA-Large platform has been discontinued. Future luxury models will instead utilize the existing EVA2 platform, which supports the EQE and EQS models. There are speculations that the EVA2 platform may be upgraded to 800-volt technology, although this has not been confirmed.

The company cited market conditions and customer preferences as reasons for maintaining a mix of fully electric and hybrid models. This approach aims to balance profitability with consumer demand.

Mercedes' shift away from an all-electric future aligns with a broader strategic pivot. CEO Ola Källenius acknowledged that the company had overestimated the rapid growth of EV sales. At a recent annual meeting, Källenius emphasized that Mercedes will continue to produce both electric and advanced ICE vehicles as long as there is demand, extending well into the 2030s.

This strategic change will affect the lifecycle of key ICE models, which will now see extended production and updates. Plug-in hybrids are expected to play a crucial role in meeting the company's electrification goals.

Forbes recently noted that Källenius' cautious approach contrasts with the more aggressive EV strategies of other automakers. Companies like Rivian and Lucid have also projected slower growth, and Ford and GM have postponed or canceled some EV projects due to sluggish sales. In 2023, EVs made up 8% of vehicle sales in the US and 13% in Europe, with ongoing concerns about charging infrastructure and reliability.

In Asia, the electric vehicle (EV) market is experiencing remarkable growth. Thailand has reported a staggering 380% increase in EV sales, while Malaysia saw an impressive 286% surge in 2023. Meanwhile, China, often considered the epicenter of the EV revolution, recorded a 28% year-on-year sales increase in the first quarter of 2024. This indicates sustained growth in the EV sector despite varying numbers across the region.

The Takeaway

Mercedes-Benz's revised strategy reflects a pragmatic approach to electrification, ensuring it remains profitable while meeting customer needs. As the industry grapples with infrastructure and technology challenges, Mercedes' focus on hybrid models may offer a balanced solution until broader adoption of EVs becomes viable.

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