Recently, we have seen quite a few car companies commit (and recommit) to electric vehicles, and Mercedez-Benz has now joined them. At the Daimler’s investor day, Dieter Zetsche, the company’s chief executive announced that by 2022, Mercedes would offer electric versions of each of the cars they produce. The company is also planning on converting its popular city SmartCar into a fully electric line by 2020.
As the carmaker quietly works on its EQ badge, which the company will put on its best electric cars, they have to prepare for a change in their financial landscape as EVs begin to substitute traditional cars on the road. As the EVs boost in popularity, the profits of Mercedes will take a hit, even as they are selling hundreds of electric cars. Due to higher production costs (mainly the battery), electric cars can be up to half as profitable as vehicles with traditional combustion engines. As a result, Zetsche revealed at the same conference that by 2025, the company plans on saving 4 billion euros to offset that potential hit to profit.
The news comes on the heels of a series of news on car makers going all-in on electric. By the end of 2020, Jaguar is preparing on putting electric drivetrains in every car. Also, Volvo has already revealed that within two years, all its cars will be either electric or hybrid. Even several countries are embracing EVs including France which already has plans to ban the sale of cars powered by fossil-fuel by 2040. Even China, which is surprisingly also on board with this sort of ban (though the timeline is not yet clear). Apparently, electric cars are not just a trend; rather, they are here to stay, for the long term.