Mercedes Latest German Automaker To Pull Back On Its Electric Car Plans
The Volkswagen brand, the company at the center of the Volkswagen Group, was gung-ho for electric cars after its financially painful and enormously humiliating Dieselgate fiasco came to light in 2015. It evicted all those responsible from their positions in upper management and promised to atone for its sins by transitioning to manufacturing cars that ran on electrons instead of molecules. But this week, the Volkswagen brand said it is backing away from its electric car ambitions and will include more plug-in hybrids in its product mix. Shortly thereafter, Mercedes also significantly altered its electric car plans.
Mighty Mercedes now says it miscalculated when it said it would sell only electric cars by 2030. Now it says it will continue to manufacture cars with “electrified internal combustion engines” well into the next decade, according to a report by Handelsblatt. The German newspaper says four company insiders have told it that Mercedes has stopped development of the MB.EA-Large platform due to disappointing sales of the electric cars it currently offers. In particular, customers have shied away from the EQS, the large battery-electric luxury sedan that is the standard bearer for electric cars from Mercedes. Sources said the budget for the MB.EA-Large platform was several billion dollars and Mercedes has had to make “tough cuts” to pare back its EV ambitions.
Originally, Mercedes had two different versions in mind for the MB.EA platform. The MB.EA-Medium would form the basis for the C-Class and GLC, while the MB.EA-Large would serve as the platform for the large electric vehicles such as the S-Class, GLS, E-Class, and GLE. But now that the MB.EA-Large is on hold, the production for future large luxury models from Mercedes will be based in part on the existing EVA2 architecture. EVA2 is the 400-volt platform the EQE and EQS sedans and SUV models are based on. There are rumors the EVA2 could be about to switch to 800 volts. However, this has not been confirmed.
When electrive asked Mercedes for a comment about the Handelsblatt story, a spokesperson for the company said in general terms that Mercedes is utilizing “sustainable efficiencies between new and existing model series” for the further development of its product portfolio and that market conditions and customer wishes determine the pace of transformation. “We will build the perfect Mercedes for every customer requirement. We will be able to flexibly offer vehicles with both fully electric drive systems and electrified high tech combustion engines well into the 2030s.” To this end, production has been set up to allow the company to build whatever cars its customers require.
Mercedes Rethinks Its EV Strategy
What the definition of “electrified high tech combustion engines” might be is a bit of a mystery. It could suggest plug-in hybrids such as Volkswagen is now manufacturing or it could mean conventional hybrids. Although, whether Mercedes customers would want to drive a $100,000 version of a Toyota Prius is debatable. It could also imply “mild hybrid” technology that uses 48-volt systems to add a foot-pound or two of torque to help move a big Mercedes car down the road. What Mercedes really seems to be saying here is we need to build cars that we can sell at a profit, regardless of where the motive power comes from.
According to Handelsblatt, the end of development of the MB.EA-Large platform is part of a larger strategic reorientation at Mercedes. The background to this is said to be a misjudgement by Group CEO Ola Källenius, who expected the sale of electric cars to increase more rapidly than they have. At its annual meeting on May 15, 2024, Källenius said, “In the coming years, there will be both — electric cars and ultra-modern, electrified combustion engines if the demand is there, well into the 2030s.” He assured the audience that Mercedes is still focused on manufacturing zero emissions. “That is certain,” he said, “but the transformation could take longer than expected.”
Mercedes once planned to sell only electric cars by the end of the decade. Although, that plan was hedged with the statement “wherever market conditions allow.” Plug-in hybrids were then no longer to be sold either. The interim target of 50 percent electric cars and 50 percent internal combustion engines in 2025 is still the goal, but plug-in hybrids will be counted as electric cars when making that calculation.
Changing the goal posts in its electrification plan will have knock on effects throughout the Mercedes model lineup. The life cycles of important combustion engine model series will now have to be extended and money spent on model upgrades, according to Handelsblatt. “In the coming years, Mercedes faces the expensive and extremely complex task of keeping its portfolio of combustion engines and electric cars up to date,” it says.
Forbes said this week that the latest remarks by Ola Källenius represent the most caution that an auto CEO has shown over the future of electric vehicles. Rivian and Lucid, two carmakers that only sell EVs, stated that they anticipate flat production this year, while Elon Musk has cautioned that Tesla is anticipating much slower sales growth in 2024. Some automakers, particularly Ford and GM, have cancelled models or postponed building new factories in response to a slowdown in electric car sales. In the US, EV sales accounted for approximately 8 percent of overall sales last year, while in Europe they made up 13 percent of new car sales. While concerns regarding charging time and reliability persist, sales are still rising, Forbes notes.
The Takeaway
The evidence that Mercedes may have gotten its sums wrong when it comes to electric cars is that sales of its flagship EQS have been disappointing. Originally, the car came without the traditional Mercedes star on the hood — no doubt in pursuit of aerodynamic efficiency — but now the EQS proudly wears that star, a symbol that people have been known to make Faustian deals with the devil to get. The battery has also been bumped up in size to juice the range numbers a bit.
It seems the whole world of automobiles has suddenly fallen in love with the idea of plug-in hybrid powertrains, presumably because the fear of running out of battery charge on a dark night somewhere east of South Succotash is so strong that they will do anything to extinguish it. Many drivers won’t even bother to plug the damn things in, preferring to just drive on gasoline instead. They will pay a few extra euros for the badge on the back that makes it appear they are doing their bit for climate justice while failing to make use of the technology lurking under the hood that makes it possible to drive without producing quite so much carbon pollution.
The EV revolution seems to have hit a speed bump and automakers everywhere are suddenly in love with plug-in hybrids. We can’t know for sure, but we suspect this phase may last for two to three years until charging infrastructure and battery technology can deliver the performance drivers expect. One thing we can be sure of is that millions of plug-in hybrids will not produce the sharply lower transportation emissions the world needs in order to slow the rise of average global temperatures.
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