Mercedes rethinks China BEV strategy

Mercedes-Benz is trying to improve its sluggish BEV sales in China. According to an interview in German media, the automaker is adapting already developed models for China to better meet the needs of Chinese customers. In an interview, Mercedes boss Ola Källenius also reaffirmed the China focus of his strategy.

Included in the Automobilwoche article was not only an interview with the company CEO but also quotes from a source described as a “high-ranking Mercedes manager” who revealed future models based on the upcoming MB.EA electric platform are currently being revised. This is meant to “better meet the needs of Chinese customers in terms of space or digital content in the future.”

In the interview, Group CEO Ola Källenius emphasised the focus on the Chinese market, “For our next wave of the electric offensive, which will start in 2025 with the new E-architectures, China is absolutely central. We have to master the electric drive just as perfectly as digitalisation. That’s what our customers expect.”

Mercedes has seen disappointing sales results in China, where the company’s BEV sales in the first half of this year are “significantly below” its global average of ten per cent, according to Automobilwoche. In the German automaker’s report on the half-year sales, Mercedes did not even mention BEV share in China, merely reporting growth in China with 486,900 units (+7%), among other things, with increased sales in the E-Class (+43%) and the GLB (+77%) – whereby both are combustion models.

Although Mercedes had massively reduced prices even for the EQE and EQS in China at the end of 2022, Källenius says he doesn’t want to engage in further discount battles. “You can always buy market share, but in terms of profitable growth, strategic patience is necessary here,” he explained. “Most of the growth in electric cars in China has been in the entry-level and volume segments. That’s also where most of the funding flowed.”

At the same time, competition from Chinese manufacturers is also growing in the premium segment, where BYD offers the Han EV, Nio the ET7 and the Chinese carmaker Human Horizons is also aiming for the luxury class with its HiPhi X and Z models, just to name just a few examples. “The competitive situation and innovative power in China must be taken seriously. At the same time, we are self-confident and don’t let ourselves go crazy,” says Källenius. “I promise you: There will be more models from Mercedes that you can’t get past. Of course, we want to defend and expand our technological lead in the future as well.”

The Mercedes boss did not want to commit to a concrete end of production for the last combustion engine model, the new E-Class generation presented this year: “What is important for us is strategic clarity. This starts with our 2039 ambition for CO2-neutral new cars throughout the entire supply chain. We want to cover all segments fully electrically by the end of this decade, which is why we are focusing investments on new E-architectures from 2025. Nevertheless, we have the tactical flexibility if it takes longer. Our plants around the globe are designed to produce all types of powertrains.”

automobilwoche.de (in German)