EV Costs Will Remain Higher For Foreseeable Future - Mercedes Benz

The chief executive of Mercedes-Benz stated that the variable costs for producing electric vehicles will continue to be higher than those for combustion engine models for the foreseeable future, adding that this would fuel intense competition.

Ola Kaellenius' remarks coincide with Mercedes-Benz releasing additional information about its newest electric vehicle architecture, the CLA compact electric sedan, which will debut next year and seeks to increase driving range by 30% to 35%.

"The variable costs for an electric car are higher. It will remain that way for the foreseeable future," Kaellenius told Reuters at the IAA car show in Munich, adding higher costs could not be passed on to customers on a like for like basis.
Raw materials for batteries, software development, and electricity prices are all variable costs that affect the price of EV production.

This, according to Kaellenius, is why the automaker is working to optimise fixed costs and resource allocation in order to achieve the same profitability with electric cars as it could with combustion engines. The new CLA aims for a power consumption of 12 kilowatt hours per 100 kilometres and a driving range of 750 kilometres, compared to the 17 to 18 kWh per 100 kilometres offered by Mercedes' current EQA 350 compact SUV model.

In terms of pricing, Mercedes-Benz Chief Technology Officer Markus Schaefer stated that the company was aiming for a 50% cost reduction.

CATL and ACC, of which Mercedes owns a third, will manufacture batteries for the CLA.

The CLA, which will go into production next year and hit the market in 2025, is an attempt to reduce model development complexity, which has increased significantly in recent years, according to Schaefer.

Mercedes-Benz will offer hybrid and all-electric models, but no diesel models are planned.