One by one, the world's auto manufacturers have made bold commitments to electric vehicles, setting targets for turning over their entire fleets and disclosing large capital expenditure plans for the future. Today, it looks like it's Mercedes’ turn.
The luxury auto manufacturer has said this morning it is going to spend more than $47 billion over the next 10 years to "electrify its lineup and defend its position as the world’s best-selling luxury-car maker through a historic industry transformation," according to Bloomberg.
Mercedes says it'll launch 3 new EV platforms in 2025 and that it is going to build 8 additional battery factories with partners.
Chief Executive Officer Ola Kallenius said: “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.”
Mercedes's first foray into EVs with the EQS was a resounding success, as the vehicle "drew praise from analysts and car reviewers" alike.
Investors will be happy to hear that Mercedes says it is sticking with its profitability targets despite the shift. "Mercedes is forecast to be more profitable in 2021 than it’s been in years," Bloomberg reported. The current tailwind has been a result of higher-margin models mixed with increased post-Covid demand.
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However, like Stellantis did earlier this week, Mercedes warned about headwinds coming from raw material prices rising. Recall, in a webinar organized by the Detroit-based Automotive Press Association this week, Stellantis CEO Carlos Tavares said: “I see the inflationary pressure very clearly. I see inflation coming from many different areas.”
"Transaction prices are rising and lacking supply of components like semiconductors is causing disruptions and cost increases," he continued.
Mercedes will unveil an electric version of its E-class to supplement its fleet at the Munich auto show in September, the report notes. The company is expecting that plug-in hybrid and fully EVs will account for more than half of global sales by 2030.
By 2039, it is aiming for a carbon-neutral fleet.
Tom Narayan, an analyst at RBC Capital Markets, concluded: “We would be buyers of Daimler ahead of its truck spin at year-end. According to our math, you would basically be getting the cars business for free.”
The company has yet to give a date for when it expects to fully phase out combustion engines.
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As a proof, more than 100 countries have so far committed themselves to achieve net-zero emissions by 2050. How many of those will keep their commitments? In the ideal situation less than 10 countries while in a realistic one none.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London