Mercedes will produce more combustion engines – 02/22/2024 – Market

Mercedes-Benz on Thursday lowered expectations about demand for electric vehicles and said it will update its range of combustion engines by the next decade, becoming the latest automaker to signal a slower appetite than expected. what is expected from electrically powered cars.

The company now expects sales of electrified vehicles, including hybrids, to represent up to 50% of the total by 2030, a major step back from its previous ambition to prepare for all-electric sales by 2030, which was conditional on favorable market conditions.

The automaker’s chief executive, Ola Kaellenius, warned late last year that Europe would likely not be ready until 2030 for an all-electric lineup, with multiple studies showing that customers were holding back for a range of reasons, including the lack of charging infrastructure and attractive electric models.

Kaellenius said Mercedes-Benz wants customers and investors to know that the automaker is well-positioned to continue producing combustion engine cars and that it is ready to update this technology well into the next decade.

The manufacturer’s current plans for upgrades mean that “it’s almost like we have a new lineup in 2027 that will take us into the 2030s,” Kaellenius said.

The luxury automaker’s shares rose 5.9% after the news, also supported by a 3 billion euro (R$16 billion) share buyback program revealed on Wednesday (21).

While automakers and suppliers are betting big on future demand for electric vehicles, investment in capacity and technology development has outpaced actual demand, increasing pressure on companies to cut costs.

Slower economic growth, supply chain bottlenecks and trade tensions involving China, the United States and the European Union have also weighed on Mercedes-Benz’s outlook for 2024, the automaker said, predicting lower returns on sales across its division. of cars and vans.

First-quarter sales will likely be below the prior-year level, the company said.

Sales of electrified vehicles, including hybrids, are expected to remain at approximately between 19% and 21% of the total, Mercedes-Benz said, in line with industry reports of slower growth in demand for electric vehicles.

The luxury carmaker reported an adjusted return on sales in its car division of 12.6% for 2023, in line with its forecast, as inflation and supply chain-related costs, as well as shortages of components, affected their profits.

For 2024, the company said it expected a lower adjusted return of 10% to 12% for cars and 12% to 14% for vans, down from 15.1% last year.

The company increased its average price by 2%, to 74.2 thousand euros, and increased spending on research and development of future technologies, such as the MB.OS platform.

Group profits before interest and taxes fell to 19.7 billion euros from 20.5 billion euros last year, despite a 2% increase in revenue.