Mercedes Readies E-Class’s EV Sibling to Bolster Overhaul

(Bloomberg) —

Fresh off starting sales of its new flagship electric sedan, Mercedes-Benz is following up with its second serious plug-in car: the E-Class’s battery-powered brother.

Like the EQS that Mercedes started taking orders for last month, the EQE sedan that debuted Sunday is built off a new dedicated electric-vehicle platform, rather than converted combustion model underpinnings. The ground-up approach resulted in better range and a roomier interior.

Mercedes hopes the EQE premiering at this week’s Munich auto show will coast off the cachet from EQS, which was well-received by the analysts who took test drives in prototypes before its unveiling back in April. Since then, Daimler AG’s main division has mapped out a massive push into EVs, vowing to plow more than 40 billion euros ($47 billion) into electrifying its product range this decade.

The automaker is in “advanced” talks with potential partners regarding plans for eight battery factories that the company announced during its recent strategy update, Daimler Chief Executive Officer Ola Kallenius told reporters on Sunday in Munich. The company also is discussing “a European initiative” on battery production with other companies and could reach an agreement soon, Kallenius said, declining to elaborate.

The luxury-car leader got off to a bumpy start with its transition to EVs, in part because early models like the EQC sport utility were more expensive alternatives to the combustion vehicles they were based on. The EQE should help drive sales volumes, revenue and margins, Metzler Bank analyst Juergen Pieper said in a note to clients last week. 

The growing offerings of electric cars across the industry “have the potential to change the sentiment to the positive,” Pieper said.

Stalling Sector

The sector could use a morale boost. 

Auto stocks swiftly swung from top-performers to trailing Europe’s benchmark index mainly because of the global chip shortage that has ravaged production schedules in recent months. Mercedes warned deliveries will be impacted distinctly this quarter and continues to wrestle with long delivery times for some models.

While Mercedes has been affected by factory closures at semiconductor suppliers in Malaysia, there is “hope” that the situation starts to ease in the fourth quarter, Kallenius told reporters. Still, he cautioned there are “structural” supply and demand issues across industries that may persist next year, and it could take until 2023 until those are resolved.

Daimler cut its annual sales forecast for Mercedes cars in July, projecting deliveries will be roughly in line with 2020. The company had been predicting significant growth.

Way Forward

Robust underlying demand and healthy returns are helping Mercedes finance its shift to EVs, which will include rolling out three new all-electric platforms in 2025. The company expects upscale cars to go electric faster than cheaper vehicles because customers have greater purchasing power and the means to charge their vehicles at home.

Mercedes will show five fully electric vehicles in Munich — Europe’s first motor show since before the pandemic — as well as one new hybrid model. Among the purely battery-powered vehicles will be a Mercedes-Maybach design concept that signals how the brand plans to lure well-heeled customers in the ultra-luxury segment.

Kallenius has pledged to focus Mercedes more on larger luxury cars that generate higher returns. He’s putting the finishing touches on a dramatic shake-up for Daimler, spinning off its sprawling truck division later this year. The Mercedes cars division will retain a 35% stake in the trucks unit, the world’s best-selling maker of commercial vehicles.

The timeframe to complete the separate listing for the truck unit by the end of this year remains unchanged, Kallenius said Sunday. Daimler shareholders will vote on the plan on Oct. 1. 

Read More: Where We Are on the Road to Electric Vehicles: QuickTake

(Updates with CEO’s comments on batteries in the fourth paragraph and chips in the .)

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