The Strategist

German carmakers go electric

08/05/2016 - 12:09

Mercedes is planning to launch its own line of electric vehicles, defying Tesla Motors, which tries to entice buyers of C-Class cars.

German carmaker Mercedes is going to start production of two electric SUVs and two sedans, said to Bloomberg two sources familiar with the company’s plans.

According to one of the sources, Mercedes intends to create a separate brand for its electric cars, but no name has been called yet. The first Mercedes electric car will be released at the company’s plant in Bremen.

Previously, Mercedes has added batteries and electric motors to existing models, unlike BMW, which has spent more money on carbon fiber and futuristic design of its electric line «i». Now, the companies reversed roles: BMW will continue to produce «i» for five years, and Mercedes will sell its first electric car before the end of the decade, the sources told Bloomberg. In June, Dieter Zetsche, Chief Executive Officer of Mercedes, said the company plans to introduce its own electric car at the Paris Motor Show in September. 

Earlier, Daimler revealed its plans to release the first electric heavyweight by next decade.

In early summer, Tesla unveiled two cheaper versions of its electric vehicle Model S. As stated by the company, the project is primarily aimed to make the car appealing to buyers accustomed to luxury cars such as Mercedes-Benz C-Class and Audi A4.

In late July, another German manufacturer, Porsche, announced its intention to create an electric car, as reported by Reuters, citing one of the company’s top managers Uwe Hück.

"The impetus for this was the ‘Dieselgate’ scandal among Volkswagen, Porsche’s parent company. Now, we are talking about creating a car with zero emissions into the atmosphere, filled with lots of modern digital equipment", - said the company in a statement.

The new electric vehicle, which is positioned as a competitor to model Tesla S, is planned to be put into production on the company’s assembly line in Zuffenhausen in 2019.

The manufacturer will need not less than 1.4 thousand new jobs to develop and build the new vehicle. In addition, Porsche is going to hire about 350 programmers to develop the new concept and, probably, new business as a whole. More than a thousand people will be employed on the construction of a new painting shop and assembly line.

In total, the company plans to spend about € 1 billion on the project of electric vehicles production. At the same time, Uwe Hück declined to specify volume of future production line, yet noted that Porsche will need to sell at least 10 thousand EVs per year in order to make a profit. 

Tesla's success with the Model S has increased pressure on other manufacturers of luxury cars. Now, the leaders of this market in Germany have to show that they, too, are able to innovate and to get buyers interested, Bloomberg notes. Besides, the problem of regulating the exhaust emissions is pushing the German automakers to create vehicles with low levels of environmental pollution.