Paris Big claims, small results: This is how the electric offensive by Mercedes-Benz can be summarized so far. No other German car manufacturer is currently as dependent on combustion engines as the brand with the star. Only five percent of the car sales of Stuttgart are pure Stromer. For comparison: the Volkswagen Group has six percent, the BMW Group more than eight percent.
Mercedes is actually pursuing the most ambitious electrification strategy among domestic vehicle manufacturers. The Swabians only want to deliver fully electric new cars in less than eight years. “For that to succeed, Mercedes must slowly show volume,” states Stefan Bratzel, Director of the Center of Automotive Management (CAM).
But the EQC, the first electric SUV from Mercedes, is a slow seller. The smaller brands EQA and EQB are technically only partially convincing. And the two top models EQS and EQS SUV are not for the general public. With the EQE sedan and above all the EQE SUV derived from it, Mercedes is now hoping for its first real electric bestseller.
On Sunday, the almost five-meter-long sports all-terrain vehicle celebrated its world premiere in Paris. The EQE SUV offers “everything” that customers around the world are looking for, said Mercedes boss Ola Källenius: lots of space, an adequate range of up to 590 kilometers and free “hot stone massages”.
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The car is like a “design studio on wheels” that is particularly easy to maneuver thanks to the optionally available rear-axle steering. Thanks to a cooperation with Apple Music and Dolby Atmos, Källenius also promises a sound experience that is at least equal to that in high-quality concert halls. In short: the Swede considers the EQE SUV to be an all-purpose weapon.
In fact, it is the foreseeable highest-volume power brand from Mercedes, according to internal sources. Independent experts also certify the series as having good prospects of success. “We currently see three growth drivers in the automotive industry: electric vehicles, SUVs and premium,” explains Frank Biller, analyst at LBBW in Stuttgart. “With the EQE SUV, Mercedes covers all levels.”
“The EQE SUV is of great importance for Mercedes, especially for the US market,” adds capital market expert Daniel Röska from Sanford C. Bernstein. “Here, the group is not really perceived as a manufacturer of electric cars.” One of the reasons for this is that Mercedes did not have any larger electric SUVs in the USA until recently.
Crossover for China, G-Class with giant battery
That is now changing. The EQE SUV is built exclusively in the United States, in Tuscaloosa, Alabama. Mercedes has been producing the GLE there for years, one of the Group’s most important guarantees of returns. The EQE SUV is the all-electric counterpart of the GLE and should be just as successful sooner or later.
Internally, they dare to sell tens of thousands of vehicles a year. Externally, the forecasts are a bit more conservative, the experts from IHS-Markit expect a sales volume of initially slightly more than 30,000 cars per year. Either way, Mercedes is doomed to succeed with the EQE SUV, which is technically based on the EVA2 electric platform.
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Because apart from an electric crossover, which is to be offered exclusively in China, and a G-Class with a giant battery, the next major market launches of new power brands are not planned until around 2025.
However, Mercedes must increase the electric share of total sales to almost 50 percent by 2026 in order to prepare production and the supplier network for a share of up to one hundred percent by the end of the decade, explains Bernstein analyst Röska.
The EQE should combine modern on-board technology, a range of almost 600 kilometers and dynamic driving characteristics with plenty of space – says Mercedes.
(Photo: Mercedes)
At the same time, the financial expert recommends a gradual ramp-up of electric cars. In his view, Mercedes should not switch to “electric only” too soon. “One must not forget: the gross margin of the EVA2 models is still not particularly good compared to combustion engines. As we know from other manufacturers, it’s easy to talk about a difference of sometimes seven to eight percentage points.”
LBBW expert Biller also expects that Mercedes electric sales will only increase sharply around 2025 with the new MMA and MB.EA platforms. “Then we will also see the tipping point for electric cars. From then on, there will be hardly any incentive to continue building combustion engines on a large scale,” says Biller. Not least because the fleet limits for emissions of climate-damaging carbon dioxide will be tightened again in Europe in the middle of the decade.
More: Why Tesla is not yet building battery cells in Grünheide