Mercedes-Benz will go 100% electric by 2030, CEO Ola Källenius announced Thursday, with a massive global transformation in its global design, engineering and production network to ensure they hit the target.
The transformation will require, among other things, the set-up of eight “gigafactories” to produce the batteries future Mercedes-Benz, AMG and Maybach products will require. The luxury manufacturer also announced a series of new partnerships and acquisitions to improve battery technology, supply better motors, set up a global charging network and source steel, lithium and other materials from carbon-neutral sources.
Despite the costs involved, Källenius and other officials said during a webinar they intend to maintain the company’s target of delivering double-digit profit margins.
Mercedes already laid out plans earlier to increase its production of plug-based vehicles. The “Ambition 2039” plan it revealed two years ago set a goal of making plug-in hybrids and pure battery-electric vehicles – or PHEVs and BEVs – 25% of its sales by mid-decade. Now, that has been raised to 50 percent. And by 2030, said Källenius, the target is 100% BEVs “where market conditions allow.”
“We have to change”
The Swedish-born CEO pointed to the mounting evidence of climate change for forcing Mercedes to accelerate its transition to battery power. “We have to change, and we will, even faster than we previously planned.”
Mercedes has already begun rolling out an assortment of battery-electric vehicles, including the new EQS set to go into production later this year. The all-electric equivalent of its S-Class flagship, it will become the first Mercedes model to ride on an all-new, dedicated BEV platform. Going forward, noted Britta Seeger, the Mercedes board member overseeing marketing and sales, there will be three dedicated “architectures”:
- MB.EA for conventional vehicles;
- AMG.EA for high-performance models; and
- VAN.EA for light commercial vehicles.
As with rivals such as Tesla, BMW, Lucid and others, these will be skateboard like platforms with batteries, motors and other key components mounted below the load floor.
Eight new battery plants, next-gen batteries
Mercedes will set up eight new battery plants, including four in Europe and one in North America, officials said. The automaker will standardize its battery system, though there will be some variation in cells, primarily in terms of chemistry and height, noted Chief Operating Officer Markus Schafer, to match the specific target for individual products. That could mean trade-offs in range, performance or charging times.
Mercedes is working on more advanced forms of batteries, including lithium-ion cells using silicon anodes, as well as next-generation solid-state batteries, added Chief Technology Officer Sajid Khan. A goal is to more than double the amount of energy individual cells can store: from a peak 550 watt-hours per liter today to 1,200. That would allow for longer-range, smaller packs, while potentially lowering costs. Another goal is to bring charging times closer and closer to what it currently takes to fill a gas tank.
The automaker plans to offer a glimpse of how all this will come together when, sometime next year, it unveils the EQXX, a concept BEV flagship able to travel 1,000 miles on a charge using “normal-sized batteries,” said Schafer, who stressed that in the battery-car world, “efficiency is the new currency.”
The Mercedes electric drive system will run at 800 volts, a step that, while more costly, will offer advantages such as faster charging. But the real challenge, stressed Källenius, will be to put in place a global electric vehicle charging network.
Cooperation the key
“Industry and government must work together on this,” he stressed during the webinar.
Mercedes is partnering with several energy suppliers to give future buyers access to a larger charging network, including California-based ChargePoint, as well as Shell, which has set up a charging subsidiary, GreenLots. Even now, said Khan, these relationships will allow Mercedes EV owners to plug in at 60,000 public ChargePoint locations in the U.S., and thousands more “semi-public” chargers operated by hotels, restaurants and other retail operations.
New software, meanwhile, will permit owners to “plug-and-charge.” This will allow a motorist to simply drive up to a charger, plug in and have all necessary payment info automatically transferred from the vehicle.
Among the many moves Mercedes is making to support its transition, the company will acquire British-based startup YASA. It has developed a completely new high-performance motor design, called an axial flux, that will be used in future electric AMG models.
Carbon-neutral mining and manufacturing
Källenius also said Mercedes is working with various suppliers to develop carbon-neutral methods for mining and producing key raw materials, including steel and lithium. That push will extend to manufacturing, said production chief Jorg Burzer. “By 2022,” he said, “all passenger car and battery assembly plants run by Mercedes will switch to carbon neutral energy.”
The extensive transformation planned by Mercedes won’t come cheap, officials said. While costs are coming down, Chief Financial Officer Harald Wilhelm acknowledged that the cost of battery drive technology will remain higher than a comparable internal combustion system well into the future.
To compensate, he said, Mercedes will “radically reduce” fixed costs and both CAPEX and R&D spending, in particular, on conventional gas and diesel technology. The target for all of these is to trim 20% by 2025 compared to 2019 spending levels.
Sustaining profit margins
We believe that, even in a BEV world, Mercedes-Benz should be a double-digit (margin) company,” said Wilhelm, “and that is what we shoot for.”
The auto industry, on the whole, has rapidly accelerated plans for transitioning to battery-electric technology. General Motors, for one, has increased 5-year spending plans from $20 billion, as laid out in March 2020, to $35 billion. Several small brands, including Bentley, also plan to go all electric by 2030, others, like GM, targeting a transition by the mid- to late-2030s. If it can hold to its new targets, Mercedes would be the largest automaker to go fully electric by the end of this decade.