Mercedes-Benz changes course on its EV strategy and reassures investors

Photo: Mercedes-Benz

Mercedes-Benz is adjusting its electrification strategy due to market difficulties. The German luxury brand is pushing back its aim to go all-electric by 2030, Reuters says. The company also assures investors that it will continue making vehicles with combustion engines well into the next decade.

In 2021, Mercedes—along with other automakers—was hopeful about the future of EVs. The company committed €40 billion, about CA$58 billion, to a strategy that would phase out the combustion engine and sell only EVs by the end of the decade. The plan was realistic for a company that was launching the EQ lineup, which was only EVs. It also aligned with the E.U.'s ban on new gas and diesel vehicles sales by 2035.

The plan Mercedes presented three years ago expected that half of its sales would be electrified, meaning EVs or hybrids, by 2025. That goal has now been delayed to 2030, according to the news source. The reason for the change is clear. Battery-powered vehicles only accounted for 11 percent of the company’s sales in 2023, and that number increased to 19 percent if hybrids were counted.

It’s also obvious that the plan to stop gas- and diesel-only cars is on hold for now. CEO Ola Kaellenius, who foreshadowed Thursday’s announcement late last year, said the brand remains loyal to combustion engines. The executive said that the marque is working on updates of these vehicles, stating that, “It is almost like we will have a new lineup in 2027 that will take us well into the 2030s.”

Mercedes’s change of course, however major or minor it ends up being, is not unexpected. Over the past year, the industry has been concerned by low demand for EVs in the U.S. and Europe. Companies like Ford and General Motors have also announced modifications to their electrification plans. Thursday’s news already seems to satisfy investors. In the hours after the announcement, together with news of a US$3.2 billion (~CA$ 4.3 billion) share buyback, Mercedes’s stock price rose by more than five percent.

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