Mercedes-Benz recently indicated that it would be reconsidering its commitment to transitioning to fully electric vehicles by 2030 as consumer interest in EVs has fallen short of expectations. The German luxury automaker is tapping the brakes on its EV lineup, pivoting back to gas-powered cars to accommodate consumer preferences.
Mercedes-Benz CEO Ola Källenius recently told investors the EV transition will take longer than anticipated. “The transformation might take longer than expected,” the chief executive told shareholders at the auto manufacturer’s annual meeting this week, according to prepared comments.
Källenius’ latest sentiment toward EVs starkly contrasts his outlook on the vehicles in 2021, forecasting the auto industry to become increasingly electric as the decade progresses. He emphasized that the “tipping point” is fast approaching.
“The tipping point is getting closer and we will be ready as markets switch to electric-only by the end of this decade. This step marks a profound reallocation of capital. By managing this faster transformation while safeguarding our profitability targets, we will ensure the enduring success of Mercedes-Benz. Thanks to our highly qualified and motivated workforce, I am convinced that we will be successful in this exciting new era,” he said.
Earlier this year, The American Tribune reported on guidance from Mercedes-Benz that it would be pulling back on its plans to phase out gas-powered cars completely. The company’s fourth-quarter earnings statement from 2023 acknowledged that the lofty EV forecasts did not align with consumer demand and “market conditions.”
“Customers and market conditions will set the pace of the transformation,” Mercedes said. “The company plans to be in a position to cater to different customer needs, whether it’s an all-electric drivetrain or an electrified combustion engine, until well into the 2030s.”
Källenius outright confirmed that his company would not reach the goal of full electrification by 2030. “It’s not going to be 100% in 2030, obviously… from the whole European market, but probably from the Mercedes side as well,” he said. “We will be ready … but we will also have tactical flexibility,” he said.
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The German carmaker’s report from earlier this year further outlined some of the market dynamics impacting the auto industry, such as geopolitical uncertainty and war, continual supply chain disruption, and a challenging macroeconomic backdrop that puts consumers and companies at a disadvantage.
“The economic situation and automotive markets continue to be characterized by an exceptional degree of uncertainty. Unexpected developments may arise in particular from geopolitical events and trade policy. Among them are the current Middle East conflict, the Russia-Ukraine war, and other regional crises. Other potential uncertainties include the exacerbation of tensions between China and the United States and a further deterioration of political relations between the European Union and China,” the report stated.
“Further supply chain disruptions and in particular, availability bottlenecks for critical components, remain a significant risk factor. These may impact supply chains and the development of prices for raw materials and energy. In addition, higher-than-expected inflation and interest rates, potential financial market disruptions and an even more pronounced slowdown in economic growth, may have an impact on the world economy and automotive markets,” the company added.
Featured image credit: Dinkun Chen, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons, https://commons.wikimedia.org/wiki/File:MERCEDES-EQ_EQS_China_(4).jpg