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Mercedes “too optimistic” about electric cars – CEO also talks about job cuts

2024-02-16T09:12:14.480Z

Highlights: Mercedes “too optimistic” about electric cars – CEO also talks about job cuts. Mercedes boss is revising e-car strategy – combustion engines will also be on offer after 2030. “Customers are actually asking: Can I still get a combustion engine from Mercedes after 2030?” explains Mercedes CEO Ola Källenius. Mercedes: “Over the air” updates as a lucrative source of income. Personnel costs should fall - job cuts planned until the end of 2029.



As of: February 16, 2024, 9:57 a.m

By: Patrick Freiwah

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Mercedes-Benz, like other traditional automakers, is in the midst of a transformation.

However, the door for combustion engine models is not finally closed.

Stuttgart/Munich – Mercedes-Benz has stated several times in the past that it only wants to deliver electric cars from 2030 as part of the electrification of the auto industry.

The company has now apparently moved a little further away from this planned electric car offensive.

“Perhaps there was a bit too much optimism throughout the industry, now there is more realism,” explains Mercedes CEO Ola Källenius in an interview with

Zeit Online

Mercedes keeps the door open for the future of combustion engines – “I’m very happy about it”

The traditional Stuttgart company therefore keeps a back door open when it comes to the development of models with combustion engines.

“(...) I am very happy that we are flexible: we can build highly efficient combustion cars, but also plug-in hybrids and electric vehicles on the same production line,” explains the 54-year-old.

Foreign markets such as North America and Asia are the most important sales areas for Mercedes-Benz - and compared to the EU countries, it is not yet clear how many years the sale of petrol, diesel and hybrid vehicles will continue to generate profits.

In addition, according to Källenius, the switch from combustion to electric cars will only be carried out where market conditions allow it: “We simply don’t know when the last combustion engine will be available,” emphasizes the CEO (in office since 2019).

Certain factors would influence the ramp-up of e-mobility, including the loss of state funding and the expansion of the charging infrastructure.

Mercedes boss is revising e-car strategy – combustion engines will also be on offer after 2030

The CEO admits that combustion engines will remain in the carmaker's portfolio for longer than previously expected.

“Customers are actually asking: Can I still get a combustion engine from Mercedes after 2030?” explains Källenius.

And he would like to reply “Yes, of course”. 

The Mercedes boss doesn't even think that the planned end of combustion engines in the EU has been decided: "The EU's plan is to first take stock in 2026 and then see what is feasible and what is not." Also explained Källenius describes the challenges Mercedes faces in developing electric cars: 

Mercedes star on the front of an electric SUV: The near future of the premium manufacturer is not purely electric.

© IMAGO/Kabir Jhangiani

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According to the CEO, the company needs to improve in certain areas during the current transformation: “For example, the costs of the electric drive train, i.e. the motor and battery.”

The premium manufacturer has comparatively high costs, which is why “raw material prices and production costs for batteries” should fall.

Mercedes: “Over the air” updates as a lucrative source of income

Because Mercedes-Benz “builds quite large cars”, larger batteries are also required, which in turn cost “proportionately more per kilowatt hour”.

The German-Swede also talks about the luxury brand's pricing strategy: "If we can't pass on the higher costs to the customer one-on-one because they don't want that or because competitors are cheaper, we have to open up new sources of revenue."

According to the 54-year-old, digital offerings therefore play a major role at Mercedes-Benz.

Källenius, for example, has high hopes for “over the air” updates, where Mercedes customers can, for example, buy “automated driving and entertainment packages”.

Mercedes: Personnel costs should fall - job cuts planned 

While this business model increases sales figures, fixed costs must shrink.

Källenius explains at

Zeit Online

that this also affects personnel costs.

The Mercedes boss insists on the current job security until the end of 2029, but says: “We will not fill every position in the coming years” - and refers to demographic developments.

According to the Mercedes boss, protectionism in geopolitics and the mix of increased energy costs and planned decarbonization are also a major challenge.

The Wolfsburg-based company will also rethink its approach to the end of combustion engines in 2023, reported

Auto, Motor & Sport

.

At Volkswagen - despite the recent turbulence - there is also job security for permanent employees.

After negotiations between VW and IG Metall, it was made clear that this would expire in 2029.

(PF)

Source: merkur

All news articles on 2024-02-16

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