Mercedes, profits 2023 down. 'Electric cars more expensive for years'

At its annual conference in Stuttgart, Mercedes-Benz warned that electric vehicles will continue to cost more than those with internal combustion engines for a long time to come. The manufacturer of premium and luxury cars (including the Amg, Maybach and Smart brands as well as its namesake brand) is preparing for a cooling of demand for plug-in cars and forecast a reduction in profits in 2024, citing the challenges posed by the economic slowdown. This is 'exceptional' uncertainty, caused by conflicts in the Middle East and Ukraine and tensions between China and the US. Supply chain bottlenecks for critical components remain 'a significant risk factor', while the potential for an 'even more pronounced' slowdown in economic growth could impact automotive markets.

Sales in the first quarter are therefore likely to be below the previous year's level.

For 2024, the Stuttgart-based group said it expects a lower return on adjusted sales than in 2023 (12.6 per cent), 10-12 per cent for cars and 12-14 per cent for vans (down from 15.1 per cent last year).

A not insignificant problem, however, is that variable cost parity between electric vehicles and conventional cars would be 'many years away', is Källenius' reading. "You can see this in the prices." Mercedes-Benz, in fact, increased the average price by 2 per cent to EUR 74,200. This is in spite of recent forecasts by Goldman Sachs, which estimated cost parity between electric and thermal already achievable by 2025, thanks to the collapse (-40%) of raw material prices for batteries, which are 30% of the cost of a Bev (battery electric vehicle).

After all, demand for electric vehicles has cooled across Europe, with rivals China and Tesla exposing the competitive weaknesses of continental manufacturers. Volkswagen, for example, has shelved plans to list its battery business. The signs on demand in Spain, where Vw aims to build its third cell factory in Sagunto, near Valencia, and whose production is expected to start by 2026, are negative.

To make itself better understood, Mercedes-Benz has warned customers and investors: the company is well-positioned to continue producing cars with internal combustion engines and upgrading the related technology well into the next decade. What's more, targets are changing: now in Stuttgart they expect 50 per cent (no longer 100 per cent) of sales by the end of the decade to come from electrified cars. Källenius had already warned at the end of 2023 that Europe would probably not be ready. Manufacturers' investments in capacity and technology development have outstripped the actual demand for electric vehicles, increasing the pressure to cut costs.

That is why 'we think that plug-in hybrids will remain relevant for a long time to come', the Mercedes-Benz CEO said yesterday. And it is precisely hybrids, according to a Deloitte survey anticipated by Il Sole 24 Ore, that are the real drivers of demand among European consumers, along with thermal cars. For the boom in demand for electrics we still have to wait. Do you want to see that Toyota, which has been second in sales on the Old Continent for two years now thanks to its hybrids, was right about electric cars?