Mercedes-Benz Drops EV Vision, Doubling Down on Gas-Powered Vehicles

Feb 26, 2024 02:55 AM EST

PHOTO OF WHITE BMW — (Photo : PEXELS/Trace Constant)

Mercedes-Benz has changed its strategy and is no longer planning to sell just electric cars "where market conditions allow" by 2030. This change happens as the demand for battery-powered vehicles rises. Concurrent with this shift, the high-end carmaker is planning to continue producing gas-powered vehicles well into the 2030s, indicating a calculated reversal in its direction toward electric vehicles.

Mercedes-Benz Drops EV All Out Plan

Electrek announced that in 2021 Mercedes-Benz shared plans regarding its lineup. The brand declared that it intended to transition to all-electric vehicles by 2030. Such plan is contingent upon market conditions. Additionally, Mercedes-Benz said that it will only start offering electric vehicle architectures in 2025. Currently, it offers a wide variety of EVs. This selection includes sedan and SUV models like the EQS, EQE, and EQB electric SUV. However, Mercedes just announced a change in EV policy, choosing to keep making gas-powered cars well into the upcoming ten years.

Furthermore, the study disclosed that Mercedes-Benz has updated its forecast, projecting that electrified automobiles (including hybrids) will represent 50% of overall sales by 2030-a notable decrease from the 100% pledge made in 2021. The carmaker is proceeding with its shift more gradually after experiencing a 21% drop in net profits in the fourth quarter. Mercedes shared that it is certain it can continue to satisfy a wide range of client needs well into the 2030s.

Mercedes-Benz sold 240,000 electric cars worldwide in 2023, according to the Drive, a 77% increase over the previous year's sales number. Industry insiders issued a warning. They claim it is expected that global sales of electric vehicles would reach all-time highs in 2024.

However,the growth pace will slow down. The Drive also disclosed that in October 2023, Reuters published a report emphasizing the company's dedication to achieving its objectives and describing the challenges posed by the "brutal" electric vehicle market, wherein automakers' profit margins have been severely curtailed due to shortages of parts and price reductions.

Bumpy Path Ahead

Mercedes-Benz stated, as reported by Reuters, that lower economic growth, supply chain limitations, and trade issues between the United States, China, and the European Union have affected its view for 2024. As a result, the carmaker anticipates diminished profitability in its car and van division.

The company further projected that first-quarter sales are expected to fall below the levels of the previous year due to ongoing production constraints, particularly related to shortages of 48-volt systems supplied by Bosch.

Mercedes-Benz anticipated that sales of electrified vehicles, including hybrids, would account for approximately 19-21% of the total. The luxury car manufacturer achieved an adjusted return on sales of 12.6% in its car division for 2023, aligning with its projections, as inflation, supply chain-related expenses, and component scarcities impacted its profitability.

However, for 2024, it projected a reduced adjusted return of 10-12% for cars and 12-14% for vans, a decline from the previous year's 15.1%. The company implemented a 2% increase in the average price to 74,200 euros and boosted investment in research and development for future technologies such as its MB.OS platform.

Despite a 2% uptick in revenue, group earnings before interest and taxes decreased to 19.7 billion euros from the previous year's 20.5 billion euros.