The Mercedes Benz Group AG is adjusting its electric vehicle strategy due to lower sales, opting to continue producing combustion engines alongside electric cars. CEO Ola Källenius informed shareholders during the annual meeting that the transition to electric vehicles may take longer than anticipated.
Previously, the German automaker aimed to have a fully electric new car fleet by 2030. However, Källenius stated that there are currently no plans to cease combustion engine production in the near future. He emphasized the importance of meeting customer demand, mentioning the potential continuation of combustion engine models well into the 2030s.
Mercedes-Benz has ensured flexibility in its plants to accommodate both combustion engine models and electric cars, allowing the company to adapt quickly to market demands. Källenius highlighted the impact of various factors on the transformation pace, such as the expansion of charging infrastructure.
The company’s focus remains on boosting sales of high-end vehicles like the AMG performance models, EQS, G-Wagon SUV, and Maybach line. The goal is to increase sales by up to 60 percent by 2026 and raise the operating margin to around 14 percent.
Other Automakers Facing Challenges
Mercedes is not alone in reevaluating its electric vehicle approach. Ford has experienced a decline in electric vehicle sales, reporting a significant loss in its electric vehicle segment compared to profits in gas-operated vehicles.
Similarly, Tesla announced workforce reductions after reporting a drop in revenue, reflecting a broader trend of slowing electric vehicle sales in the market. These developments indicate a shifting landscape in the automotive industry, prompting companies to reassess their strategies to align with evolving consumer preferences and market dynamics.
Overall, the automotive sector is navigating a period of transition as it seeks to balance traditional combustion engine models with the growing demand for electric vehicles. Adapting to these changes requires agility and a customer-centric approach to meet evolving market needs.
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