LCT-busting EVs not a tactic Mercedes will follow

While it has set itself the goal of reclaiming luxury sales leadership from BMW in Australia, Mercedes-Benz says it will do so without introducing a slew of cut-price electric vehicles like arch-rival BMW.

Since the introduction of the electric car discount by the federal government in 2022, BMW has rolled out six EV variants based on four models – iX1, iX2, iX3 and i4 - that undercut the luxury car tax threshold ($91,387 in FY 2024/25) and are therefore eligible for fringe benefit tax concessions.

The results have been spectacular for BMW. Its sub-LCT BEVs account for 24 per cent of its 2024 sales to the end of July.

The i4 eDrive35 is the poster child for this success, accounting for 1083 out of 1335 total i4 sales and seven per cent of total BMW volume in 2024.

Overall, BMW sales are up 9.4 per cent in 2024 to 15,771 to the end of July, with sub-LCT BEVs worth 3716 of that. In the same period, Mercedes-Benz sales have fallen 23.6 per cent to 11,189.

In 2023 BMW took the overall luxury sales lead from Mercedes-Benz for the first time since 2012.

Mercedes-Benz actually sells more EV passenger models in Australia than BMW – eight to seven – but only the EQA 250 and EQB 250 qualify for the FBT exemption.

“We develop our own [tactics],” new Mercedes-Benz Australia chief Jaime Cohen told carsales when asked if Benz would introduce more sub-FBT EVs.

“Of course we observe what the others are doing. They [BMW] did great, let them enjoy the position they have today.”

He added: “For our neighbour from Bavaria, great they have decided to go that way and it’s working out for them and that’s perfectly ok.

“We are looking at how we develop in an avenue, let’s put it that way.”

That avenue is not a rush of sub-LCT EV models from Benz. Instead it seems likely to stay the course on investing in higher priced electric models.

In fact, its most expensive EV yet, the $328,607 (plus on-road costs) Maybach EQS SUV is rolling into the Australian market now.

Overall, Cohen struck a conservative tone about Benz’s transition to EVs in Australia. He made it clear the pace of that commitment would be dictated by local conditions.

“The sale of electric vehicles does of course attract us,” he said. “In the end that is where we are all going.

“We have a plan and a vision that of course aligns with the global vision, but then we have to look here and constantly review it.

“What’s selling, what’s moving, what’s infrastructure, what kind of incentives are or are not here, what are the regulations for example on carbon emissions in Australia; we have to see how that balances out against the corporate portfolio.

“Based on that we are creating our path with a certain amount of movement.”

In support of this constant need to review, Cohen pointed to global Benz boss Ola Kallenius’ recent statements about the brand adopting “tactical flexibility”.

With the global EV market cooling, this refers to a Benz willingness to extend the life of internal combustion engine models alongside electric vehicles rather than be replaced by them.

It has recently announced a multi-billion Euro investment in ICE development.

The flexibility to continue with ICE would apply in Australia as much as other places, Cohen indicated.

“Our focus is different than just create a brand new, whole new portfolio of electric vehicles,” he said. “That’s not where we are going, we are going into this flexibility to our platforms to allow us to have both in one.

“So that is what we are looking at in each market – including Australia. What is the speed, what we have available and what kind of roll-outs we should have in the coming years for electric.”

For everything you auto know about EVs, listen to carsales' Watts Under the Bonnet: the electric car podcast

Join the conversation at our Facebook page
Or email us at editor@carsales.com.au