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Mercedes-Benz Electric Vehicles
German automaker Mercedes-Benz is gearing up to go fully electric by the end of the decade, when market conditions permit. Moving from “electric first” to “electric only”, the world’s preeminent luxury car company is accelerating towards an emissions-free, software-driven future.
By 2022, Mercedes-Benz will have battery-powered electric vehicles (BEV) in all segments that the company serves. From 2025 onwards, all newly launched vehicle architectures will be exclusively electric and customers will be able to choose an all-electric alternative for each model the company manufactures.
Mercedes-Benz intends to manage this accelerated transformation while maintaining its profitability goals. “The shift to electric vehicles (EV) is picking up speed – especially in the luxury segment, where Mercedes-Benz belongs. The tipping point is approaching and we will be ready as markets shift to electricity only at the end of this decade,” said Ola Källenius, CEO of Daimler AG and Mercedes-Benz AG.
“This step marks a profound reallocation of capital. By managing this transformation faster and at the same time safeguarding our profitability goals, we will ensure Mercedes-Benz’s lasting success. Thanks to our highly skilled and motivated workforce, I am convinced that we will succeed in this exciting new era. ”
To facilitate this shift, Mercedes-Benz is unveiling a comprehensive plan that includes significant R&D acceleration. In total, investments in battery-powered electric vehicles between 2022 and 2030 will total more than EUR40 billion (US$47 billion).
Accelerating and advancing the EV portfolio plan will bring the inflection point for EV adoption. Mercedes-Benz is currently preparing its global production network for electrical-only production with the growth rate projected to keep pace with market demand.
Because of its first investments in flexible manufacturing and the next-generation MO360 production system, Mercedes-Benz said it can now mass-produce BEVs.
Next year, eight Mercedes-Benz electric vehicles will be produced in seven locations on three continents. In addition, all car and battery assembly sites managed by Mercedes-Benz AG will switch to carbon neutral production by 2022.
To increase manufacturing efficiency, Mercedes-Benz is joining forces with GROB, the German global leader in highly innovative battery production and automation systems, strengthening its battery production capacity and know-how. The cooperation focuses on assembling the battery module as well as assembling the package.
Mercedes-Benz also plans to install a new battery recycling plant in Kuppenheim, Germany, to develop and secure recycling capacity and know-how. The start of operations will be in 2023, depending on the outcome of promising discussions with the government.
People Plan
The transition from internal combustion engines to electric ones is feasible and is already underway at Mercedes-Benz. Working closely with employee representatives, Mercedes-Benz will continue to transform its workforce, making use of extensive retraining, early retirement and acquisitions schemes.
TechAcademies will provide training for future-oriented qualifications to colleagues. In 2020 alone, around 20,000 employees in Germany were trained in aspects of e-mobility.
To fulfill the MB.OS operating system development plans, 3,000 new software engineering jobs will be created worldwide.
Financial plan
Mercedes-Benz remains committed to the margin targets outlined in the fall of 2020. Last year’s targets were based on the premise of selling 25% of hybrid and electric vehicles by 2025.
Today’s reiteration is based on an assumed share of up to 50% by 2025 and a market scenario for new car sales that in essence switched to all-electric by the end of the decade.
An important lever is to increase net revenue per unit by increasing the proportion of state-of-the-art electric vehicles such as the Mercedes-Maybach and Mercedes-AMG models, while at the same time taking more direct control over pricing and sales.
Increased revenue from digital services will further support the results. Mercedes is also working to further reduce fixed and variable costs and cut the capex share of investments.
Common battery platforms and scalable electrical architectures combined with advances in battery technology will bring higher degrees of standardization and lower costs.
The proportion of in-vehicle battery costs is expected to drop significantly.
Capital allocation is shifting from “EV-first” to “EV-only”. Investments in combustion engines and plug-in hybrid technologies will drop 80% between 2019 and 2026. Based on this, Mercedes-Benz projects company margins in a BEV (battery-powered vehicles) world that are similar to those of the ICE era ( internal combustion engines).
