Mercedes Benz Group AG, the luxury automaker, is adjusting its electric vehicle (EV) goals as sales have not met expectations. CEO Ola Källenius stated during the company’s annual meeting that the transformation to fully electric vehicles might take longer than expected. Previously, Mercedes aimed to produce a fully electric new car fleet by 2030, but Källenius announced that the company has no plans to stop building combustion engines in the near future. He emphasized that Mercedes will continue to produce both electric cars and cars with modern electrified combustion engines as long as there is demand, even into the 2030s.
This decision comes after orders for Mercedes’ expensive EV models, such as the EQE and EQS sedans, fell short of expectations. Källenius had hoped that focusing on EVs would boost profits. However, the company now acknowledges the importance of providing flexibility to meet market demands. Mercedes has set up its plants to produce both combustion engine models and electric cars, allowing them to react quickly to market trends.
Källenius also highlighted that several factors influence the pace of transformation, including the expansion of the charging infrastructure. He assured shareholders that Mercedes will keep all drive systems up to date and let customers decide which type of engine they prefer. The company aims to build perfect Mercedes vehicles for every customer’s preference.
In addition to Mercedes, other automakers are also reevaluating their EV strategies. Ford’s electric vehicle sales have been declining this year, with a net loss of $1.32 billion in its electric vehicle segment in the first quarter of 2024. The company reported profits among its gas-operated vehicles and hybrid vehicles. Similarly, Tesla reported a 9 percent drop in revenue year over year and announced layoffs of thousands of employees.
These challenges faced by automakers coincide with a decline in interest among Americans in purchasing electric vehicles. A recent Gallup poll showed that only 9 percent of Americans are seriously considering buying an electric vehicle, down from 12 percent in 2023.
Despite these setbacks, Mercedes remains focused on increasing sales of its high-end vehicles, including AMG performance models, EQS, G-Wagon SUV, and Maybach line. The company aims to achieve a 60 percent increase in sales of these vehicles by 2026 and increase the operating margin to about 14 percent.
In conclusion, Mercedes Benz Group AG is adjusting its electric vehicle goals due to lower-than-expected sales. The company will continue to produce combustion engine models alongside electric cars to meet market demand. Other automakers, such as Ford and Tesla, are also facing challenges in their EV segments. However, Mercedes remains focused on increasing sales of its luxury vehicles and providing customers with various options. Despite a decline in interest among Americans in purchasing electric vehicles, the future of EVs and the automotive industry as a whole remains unpredictable.
