Mercedes-Benz Group is broadening its battery-powered lineup with a sport utility vehicle that will take on Tesla Inc.'s Model Y in another step toward the automaker's goal to go all-electric by the end of the decade.
The EQE SUV, unveiled on the eve of the Paris car show, will edge out the cheaper Model Y with 590 kilometers (367 miles) of driving range and start at around 70,000 euros ($68,000) when sales begin late this year. It's the fourth model to use Mercedes' dedicated EV platform, which also underpins the flagship EQS sedan.
"It's the latest proof that we're consistently executing on our strategy to go all-electric," Mercedes Chief Executive Ola Kallenius said in a statement.
Features
The SUV features a 141-centimeter (55.5-inch)-wide screen, and the high-performance AMG version will reach a top speed of 210 kilometers per hour. The carmaker also announced its vehicles will be the first non-Apple devices to offer a surround-sound system developed by Dolby Laboratories.
Mercedes plans to offer electric siblings for all combustion-engine models in its portfolio by the end of the year, then introduce three new platforms to underpin its cars, AMGs and vans by 2025. By 2030, it will only sell EVs in markets where phasing out engines entirely is possible.
To help fund this ambitious rollout, Mercedes plans to weed out lower-margin vehicles in favour of more profitable G-Wagon SUVs and performance models.
Chinese competition
The EQE SUV, which will be manufactured at Mercedes' U.S. plant in Alabama, debuted at the Muse Rodin in Paris ahead of a show lacking many western carmakers, including Volkswagen and BMW. Among those filling the void will be Chinese manufacturers led by BYD Co., the country's biggest EV maker.
China's EV manufacturers are increasingly seeking to make inroads into Europe. Nio Inc. this month announced plans to start sales in Germany, Denmark, Sweden and the Netherlands after modest success in Norway.
Great Wall Motor Co. and Seres Group Co. also are part of the Chinese contingent exhibiting at the Paris show.
After many false starts by Chinese brands over the years, the transition to EVs could pry open the door to competitive European markets. British brand MG, owned by China's SAIC Motor Corp., last year sold some 40,000 vehicles in Europe.
'Robust' Sales
The carmakers proffering shiny new models in Paris are contending with low consumer confidence amid surging inflation and rising interest rates. While its archrival BMW recently warned orders have started to slow, Mercedes said last week that sales jumped by 21% during the third quarter, with China leading a strong showing of growth across all key regions.
In an interview with Bloomberg Television, Kallenius called the third-quarter deliveries "robust" and said that while the economy "might cool down," Mercedes will be prepared.
"We're also looking at finishing this year off in a robust fashion, and then we'll see what next year brings," he said.
Promise to deliver
Mercedes-Benz Group AG still has its sights set on delivering solid returns next year even if the global economy continues to take a turn for the worse.
"If we end up in an economically-challenged environment, our goal is to still, in that environment, produce robust financial results," Chief Executive Officer Ola Kaellenius said Monday in an interview at the Paris car show. "Whether it's rain and thunder and a hailstorm at the same time."
In May, the luxury-car maker outlined operating margin goals of 14% in a favorable environment by 2025 and no lower than 8% in poor conditions. The push, which hinges on moving Mercedes's portfolio upmarket, is meant to convince investors the company can whether economic cycles and lead to an improved valuation.
Carmakers have gone through a number of setbacks since the shock of the pandemic and the related supply-chain disruption that's now easing. There's little reprieve as increasing economic upheaval, sky-high energy prices and China's strict pandemic measures threaten to put off buyers.
Still, many manufacturers including Mercedes are working down burgeoning order lists and haven't so far seen much of a shift in demand.
Despite the push, which includes a focus on more performance cars, Mercedes shares have declined 18% this year. Unlike German peers Volkswagen AG and BMW AG, the maker of the EQS sedan has no dominant anchor investor that can fend off outside approaches.
"Our multiple is too low," Kaellenius said. If "we can see the shore on the other side of the transformation, I'm convinced there's a lot of value to unlock in our stock."
While Mercedes is seeking more luxury buyers, other carmakers are taking steps to separate out their EV business in a bid to ignite languishing shares. Ford Motor Co. in March said it's separating its fast-growing EV operations and software development from the rest of the business while Renault SA is set to detail plans for a carve-out of its EV assets in November.
The Mercedes CEO ruled out such moves.
"There's only one Mercedes team," Kaellenius said. "I don't want to create the psychology of here's the current team and here's the future team. I think that's the wrong psychology for how you play this ultimate team sport that is automotive."
Offshore wind deal for electricity from 2027
Mercedes-Benz has also struck a preliminary agreement with an offshore wind provider to supply electricity equivalent to 25% of its demand in Germany from 2027 onwards, a spokesperson for the carmaker said on Monday.
The energy provider, which the spokesperson declined to name, will reserve the energy for Mercedes-Benz from an offshore wind park under construction in the Baltic Sea.
German industry, which consumes 30% of the country's energy, seeks to move away from fossil fuels, as tools like carbon offsets and renewable energy certificates are no longer enough to meet the new goal of energy independence.
The carmaker, which previously said it aims to cover 70% of its energy demand with renewables by 2030, said in April it was sourcing all its electricity for Germany from green sources from 2022 onwards under purchase power agreements with Statkraft and Enovos.
It is also planning to build a wind farm in the northwestern German state of Lower Saxony by 2025 that is able to produce a hundred megawatts of electricity, equivalent to over 15% of the carmaker's annual demand in Germany.
