The head of Mercedes-Benz, a leading German automotive manufacturer, has announced that the company will continue producing gasoline cars well into the 2030s.
This statement marks a shift from its earlier commitment to fully transition to battery-powered vehicles by 2030.
Ola Källenius, the CEO of the group, highlighted that the point at which electric vehicles (EVs) will be as affordable as their petrol counterparts is still several years away.
Mercedes, known for its high-end vehicles like the S-Class and the electric EQ series, now anticipates that electric and plug-in hybrid vehicles will account for half of its sales by the late 2020s. However, the company intends to maintain production of petrol hybrid models into the following decade.
Mercedes emphasized its strategy to meet diverse consumer preferences, offering both fully electric and hybrid engines well into the 2030s.
This strategic adjustment is in response to the decreasing demand for electric vehicles, driven by high prices that put off many consumers. Additionally, competition from Chinese manufacturers offering more affordable options is a significant challenge for Western car producers.
Other major automobile manufacturers, including Ford, Toyota, and Volkswagen, have also recently scaled back their electric vehicle sales forecasts.
Adjustments in carbon neutrality goals have also deterred potential customers. In September, UK Prime Minister Rishi Sunak extended the deadline for prohibiting petrol car sales in the UK by five years to 2035.
In a similar move, the European Union modified its own 2035 ban on petrol car sales. The EU’s revised regulation now permits the use of synthetic “e-fuels”, which can power internal combustion engines. This change came after intense lobbying efforts by Germany.
In a recent interview with Bloomberg, Mr. Källenius, CEO of Mercedes-Benz, noted that achieving price parity between electric vehicles (EVs) and petrol cars is still a long way off, as evident in current pricing structures.
Mercedes-Benz has projected that its sales for the first half of 2024 will fall short of the levels reached in 2023. The company also anticipates that the proportion of electric and plug-in hybrid vehicles in its new sales will remain unchanged, hovering between 19% and 21%.
Recently, the company has expanded its range to include electric vehicles, such as the eSprinter electric van.
The group has noted that the broader economic outlook for the automotive industry is marked by significant uncertainty. This is due to ongoing trade tensions among the United States, Europe, and China, which has become the largest market in terms of sales for the carmaker.
The European Commission is currently investigating subsidies provided by China for electric cars, which are increasingly entering European markets.
Mercedes has also expressed concern about potential disruptions arising from the ongoing conflict in Ukraine and the unrest in the Middle East.
For the year 2023, the group reported an increase in annual revenues to €153.2 billion (£131.2 billion), a 2.1% increase. However, its profit decreased by 1.9%, totalling €14.5 billion.
Following the announcement of a €3 billion share buyback, the company’s shares saw a 5% increase on the Frankfurt stock exchange.
