Mercedes-Benz hits the brakes on its electrification goals

Mercedes-Benz has been forced to delay its electrification goals by as much as five years following weaker-than-expected demand for its battery-powered vehicles.

Originally, the German car-maker said that by 2025 more than 50 per cent of all the vehicles it sells would be EVs or hybrids, but now it says it won’t achieve that mix until around 2030 – five years later than its 2021 forecast.

Mercedes-Benz CEO Ola Kallenius said late last year that by 2030 the brand will no longer be a 100 per cent all-electric car-maker, even in Europe.

Currently, EVs account for just 11 per cent of all Mercedes Benz sales globally – a figure that increases to 19 per cent if you include hybrids.

Responding to investor fears that the company has backed the wrong horse with EVs, Kallenius yesterday said Mercedes-Benz remained well positioned to continue to develop and produce combustion engine technology well into the next decade.

With a radical reorganisation of its production plans likely to have occurred behind the scenes, Kallenius said that “it is almost like we will have a new line-up in 2027 that will take us well into the 2030s,” as reported by Reuters.

The car-maker’s share price briefly rose by 5.9 per cent following confirmation that Benz wasn’t abandoning combustion engines.

Mercedes-Benz, which promised to release 10 new EVs by 2023 back in 2018 is already tailoring expectations for a difficult 2024, with lower returns expected for both its cars and vans.

Slower economic growth, supply chain bottlenecks and trade tensions between China and the US are all expected to hit profits this year.

Component shortages remain a headache, with supplier Bosch still struggling to supply parts needed for Benz’s 48-volt mild-hybrid system, limiting how many cars the German car-maker can build.

Despite the pessimism, Kallenius did predict that sales of electrified vehicles (including hybrids) would remain at 19-21 per cent, rather than dropping off.

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