Daimler says early electric cars only half as profitable

VW vows to spend €20bn developing electric versions of all 300 models in its line-up

Mercedes CEO Dieter Zetsche and F1 driver Lewis Hamilton at the Frankfurt Motor Show. Photograph: Reuters

Mercedes CEO Dieter Zetsche and F1 driver Lewis Hamilton at the Frankfurt Motor Show. Photograph: Reuters

 

German car maker Daimler has set itself a new target of saving €4 billion by 2024-2025 as electric cars may only deliver half the margin contribution compared to equivalent vehicles with combustion engines, it said on Monday.

“In the beginning of the cycle we believe that we will have to face a significantly lower margin, for some vehicles half of the margin of the vehicles they replace,” Frank Lindenberg, vice-president of finance at Mercedes-Benz Cars, said at Daimler’s investor day.

As part of the programme, Daimler wants to save €1 billion from fixed costs, another billion from research and development and capital expenditure. The remaining savings will come mainly from product costs. Daimler said that by 2025, the purchasing cost of electric cars will likely reach parity with their combustion-engined equivalents.

Electric cars are currently more expensive because of the costs of a vehicle battery.

Separately, Volkswagen chief executive Matthias Mueller announced sweeping plans to build electric versions of all 300 models in the group’s line-up as the world’s largest automaker accelerates the shift away from combustion engines and tries to draw a line under the emissions-cheating scandal.

Speaking on the eve of the Frankfurt auto show, the Mueller laid out the enormity of the task ahead, vowing to spend €20 billion to develop and bring the models to market by 2030, and promising to plow another €50 billion into the batteries needed to power the cars.

“We have got the message and we will deliver,” Mueller said in his speech to hundreds of guests at the carmaker’s event in the German financial capital.

Catching up in electric vehicles is key to the German manufacturer’s effort to move beyond its diesel-emissions crisis that erupted two years ago and meet tightening emission rules across the globe. China over the weekend became the latest country to announce plans to phase-out fossil-fuel powered vehicles, following the lead of the UK and France.

Volkswagen is throwing the fire power of its 12 brands behind the push, aiming to catch up with the likes of Tesla and transform from a battery-vehicle laggard into a leader. Tesla has started to roll out the $35,000 Model 3 to broaden its appeal and stem billions of dollars in losses.

German car makers VW, Daimler and BMW are all accelerating electric-vehicle plans to react to slumping sales of diesel models amid the fallout from VW’s cheating scandal.

Bloomberg and Reuters