Mercedes-Benz is getting ready to go all electric by the end of the decade, where market conditions allow, in a defensive move that attempts to preserve its luxury reputation. This is a sharp reversal from its previous stated “electric-first” to electric-only. AutoInformed thinks it was prompted by runaway global warming and the increasing desire of consumers – and above all regulators and nations of affluent people – to eliminate fossil fuels. Daimler investments into combustion engines and plug-in hybrid technologies will drop by 80% between 2019 and 2026.
The latest indication that the slow walk to CO2 free needs to become a sprint comes from the EU “Fit for 55 in 2030” package to align EU climate and energy policies and ensure the achievement of a more ambitious reduction target of CO2 reduction of 55% for 2030. German politics has recently been roiled by the drowning deaths of its citizens from severe flooding that resulted from climate change. China, the world’s largest new energy vehicle (NEV) market, which is home to hundreds of companies and suppliers specialized in EV components and software technologies, is expected to play a key role in accelerating the Mercedes-Benz electrification strategy. (AutoInformed.com on EU Gets Tougher on Climate Change – Wants All EVs by 2035; Daimler Q2 Results – Group Net Profit of €3,704 million; Daimler Earns €4.0 billion in 2020; New Mercedes-Benz Strategy Aimed to Help Higher Profits)
By 2022, Mercedes-Benz had previously said it will have battery electric vehicles (BEV) in all segments the company serves. However, in a nod to the automaker leading General Motors commitment to EVs from 2025 onwards announced this past January, all newly launched MB vehicle architectures will be electric-only, and customers will be able to choose an all-electric alternative for every model the company makes. Mercedes-Benz says it intends to manage this accelerated transformation while sticking to its profitability targets. The GM announcement when made was the most sweeping endorsement by an international automotive powerhouse that climate change and global warming need to be addressed as the serious life-threatening threats they are. (Environmental About Face – General Motors Ditching Internal Combustion Engines by 2035. Carbon Neutral by 2040?)
“The EV shift is picking up speed – especially in the luxury segment, where Mercedes-Benz belongs. The tipping point is getting closer, and we will be ready as markets switch to electric-only by the end of this decade,” claimed Ola Källenius, CEO of Daimler AG and Mercedes-Benz AG. “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.” The strong German economy is run on fossil fuels of course, and there continues to be strong behind the scenes lobbying against the EU proposal by industrialist’s and their bought and sold for politicians in Europe.
Mercedes-Benz this morning said the plan includes significantly accelerating R&D. In total, investments into battery electric vehicles between 2022 and 2030 will amount to more than €40 billion. Accelerating and advancing the EV portfolio plan will bring forward the tipping point for EV adoption in its newly enlightened view.
Architectures: In 2025 Mercedes-Benz – ala GM, Volkswagen Group and Toyota among others – will launch it says three electric-only architectures:
- EA will cover all medium to large size passenger cars, establishing a scalable modular system as the electric backbone for the future EV portfolio.
- EA will be a dedicated performance electric vehicle platform for technology and performance-oriented Mercedes-AMG customers.
- EA for purpose made electric vans and Light Commercial Vehicles, which will contribute to emission free transportation and cities in the future.
Vertical integration: After reorganizing powertrain to unify planning, development, purchasing and production, Mercedes-Benz will increase the level of vertical integration in manufacturing and development, and insource electric drive technology. This includes the acquisition of UK-based electric motor company YASA. With this deal, Mercedes-Benz gains access to so-called axial flux motor technology and expertise to develop ultra-high-performance motors. In-house electric motors, such as the eATS 2.0, are part of the strategy with an emphasis on efficiency and the overall cost of the entire system, including inverters and software.
Batteries: Mercedes-Benz will need a battery capacity of more than 200 Gigawatt hours and plans to set up eight Gigafactories for producing cells, together with partners. This is in addition to the already planned network of nine plants dedicated to building battery systems. Next generation batteries will be standardized and suitable for use in more than 90% of all Mercedes-Benz cars and vans, while being flexible enough” to offer individual solutions to all customers it’s claimed.
Mercedes- Benz intends to team with new European partners to develop and efficiently produce future cells and modules, a step that could place Europe as a key player of an electric era industry previously spurned. Cell production will give Mercedes-Benz the chance to transform its established powertrain production network. By continuously integrating the most advanced battery cell technology in cars and vans, Mercedes-Benz aims – as do all competitors – to increase range during the production lifecycle of a model. Mercedes-Benz will work with SilaNano to increase energy density by using silicon-carbon composite in the anode. This will allow for greater range and shorter charging times. Mercedes-Benz is in talks with others to develop solid state batteries with higher energy density and safety.
Charging: Mercedes-Benz is also working on charging: “Plug & Charge” will allow customers to plug-in, charge and unplug without extra steps needed for authentication and payment processing. Plug & Charge starts with the market launch of the EQS later this year. Mercedes me Charge is already one of the world’s largest networks and currently has more than 530,000 AC and DC charging points worldwide. Mercedes-Benz is working with Shell on expanding the network. Customers will get “enhanced access” to Shell’s Recharge network consisting of more than 30,000 charge points by 2025 in Europe, China, and North America – including over 10,000 high-power chargers globally. Mercedes-Benz is also planning to launch several premium-charging sites in Europe. (Dutch Court Rules Shell Must Cut Greenhouse Gas Emissions)
Vision EQXX: Mercedes-Benz is currently developing the Vision EQXX, an electric car with a real-world range of more than 1,000 kilometers (621 miles), targeting a single-digit figure for Kwh per 100 kilometers (more than 6 miles per Kwh) at normal highway driving speeds. A multi-disciplinary team including experts from Mercedes- Benz’s F1 High Performance Powertrain division (HPP) is claimed to be making progress towards the project’s ambitious goals. The world premiere will be in 2022. Technological advances made with Vision EQXX will be adapted and applied for potential use in new electric architectures. (New Mercedes-Benz Strategy Aimed to Help Higher Profits)
Mercedes-Benz is currently preparing its global production network for electric-only output with the pace of the ramp-up designed to follow market demand. Mercedes-Benz can mass produce BEVs already. Next year, eight Mercedes-Benz electric vehicles will be produced at seven locations on three continents. Furthermore all passenger car and battery assembly sites run by Mercedes-Benz AG will switch to carbon neutral production by 2022. To enhance manufacturing efficiency, Mercedes-Benz is joining forces with GROB, a German global leader in what’s said to be “innovative battery production and automation systems, strengthening its battery production capacity and know-how. The cooperation focuses on battery module assembly as well as pack assembly.” Mercedes-Benz also plans to install a new battery recycling factory in Kuppenheim, Germany to develop and secure recycling capacity. Start of operations will be in 2023, depending on the outcome of discussions with public authorities.
The transition from internal combustion engines to electric vehicles is feasible and already underway at Mercedes-Benz. Working together with employee representatives, Mercedes-Benz will continue the transformation of its workforce, making use of extensive re-skilling schemes, early retirement as well as buyouts. TechAcademies will be offering colleagues training for future-oriented qualifications. In 2020 alone, about 20,000 employees in Germany were trained in aspects of e-mobility. To deliver on plans for developing the MB.OS operating system, 3,000 new software engineering jobs will be created worldwide.
Mercedes-Benz remains “committed to the margin targets outlined in fall 2020. Last year’s targets assumed of selling 25% hybrid and electric vehicles by 2025. Today’s reiteration is based on an assumed share of up to 50% by 2025 and a market scenario for new car sales which in essence has switched to fully electric by the end of the decade.” An important move is to increase net revenue per unit by raising the proportion of high-end electric vehicles such as Mercedes-Maybach and Mercedes-AMG models, “while at the same time taking more direct control over pricing and sales.”
Rising revenue from digital services will further support results, it’s claimed. Mercedes is also working on further reducing variable and fixed costs and cutting the capex share of investments. Common battery platforms and scalable electric architectures combined with advances in battery technology, will bring higher degrees of standardization and lower costs. The proportion of battery costs within the vehicle is expected to fall significantly. Capital allocation is moving from EV-first to EV-only. On this basis, Mercedes-Benz projects company margins in a BEV world which are similar to those in the ICE era.