**Mercedes-Benz Revises Electric Vehicle Demand Outlook Amid Geopolitical Challenges**
In a recent announcement, Mercedes-Benz has adjusted its expectations on electric vehicle demand, signaling a more cautious approach towards the transition from combustion engine vehicles to fully electrified ones. The luxury automaker now anticipates that electrified vehicles, which include hybrids, will constitute up to 50 percent of their sales by 2030. This marks a significant shift from their earlier target, which was to gear up for an exclusively electric vehicle sales scenario by the same year, conditional on favorable market conditions.
The CEO of Mercedes-Benz, Ola Kaellenius, highlighted the various factors contributing to this revised outlook. He pointed out that even Europe might not be prepared for a complete switch to an all-electric vehicle lineup by 2030. Concerns raised by consumers, such as insufficient charging infrastructure and a lack of compelling electric models, were among the reasons for the tempered expectations.
Despite the moderated electric vehicle demand forecast, Mercedes-Benz is not slowing down on innovation. The company reassured customers and investors of its commitment to improving its combustion engine lineup well into the next decade. Kaellenius underscored this commitment by noting plans for a significant update by 2027 that would extend the life of their combustion engine vehicles into the 2030s.
This cautious yet strategic move has been received positively by the market, with shares in Mercedes-Benz climbing by 5.9 percent following the announcement. This uptick was further bolstered by the unveiling of a robust 3 billion euro share buyback program.
The automotive industry is facing a complex landscape characterized by slower economic growth, persistent supply chain issues, and escalating trade tensions, particularly between China, the US, and the European Union. These factors have contributed to a more conservative projection of returns on sales for Mercedes-Benz’s car and van divisions in 2024.
While the luxury carmaker reported an adjusted return on sales in its car division at a solid 12.6 percent for 2023, it anticipates a slight decrease to 10-12 percent for cars and 12-14 percent for vans in the coming year. In response to these challenges, Mercedes-Benz has moderately upped its average vehicle price and is channeling increased investment into research and development for future technologies like its MB.OS platform.
As electric vehicle demand continues to evolve, Mercedes-Benz’s strategy reflects a balanced approach, ensuring readiness for electrification while maintaining a strong presence in the current market with its combustion engine lineup. Industry observers and investors will be watching closely as the company navigates through the geopolitical and economic headwinds of 2024.
