Mercedes-Benz hits accelerator in an all electric car race with Tesla

Mercedes-Benz maker Daimler plans to invest more than 40 billion euros ($47 billion) by 2030 to be ready to take on Tesla in an all-electric car market, but warned the shift in technology would lead to job cuts.

Outlining its strategy for an electric future, the inventor of the modern motor car said on Thursday it would, with partners, build eight battery plants as it ramps up electric vehicle (EV) production.

From 2025, all new vehicle platforms will only make EVs, the German luxury automaker added.

“We really want to go for it and be dominantly, if not all electric, by the end of the decade,” Chief Executive Ola Källenius told Reuters, adding that spending on traditional combustion-engine technology would be “close to zero” by 2025.

However, Daimler – to be renamed Mercedes-Benz as part of plans to spin off its trucks division later this year – stopped short of giving a hard deadline for ending sales of fossil-fuel cars.

Some carmakers like Geely-owned Volvo Cars have committed to going all electric by 2030, while General Motors Co says it aspires to be fully electric by 2035, as they all try to close the gap to industry leader Tesla.

Mercedes-Benz hits accelerator in an all electric car race with Tesla

“We need to move the debate away from when you build the last combustion engine because it’s not relevant,” Källenius said. “The question is how quickly can you scale up to being close to 100% electric and that’s what we’re focusing on.”

Daimler shares rose as much as 2.5% after the news, which comes just over a week after the European Union proposed an effective ban on the sale of new petrol and diesel cars from 2035 as part of a broad package of measures to combat global warming.

Ahead of the EU’s announcement, carmakers had announced a series of major investments in EVs. Earlier this month, Stellantis said it would invest more than 30 billion euros by 2025 on electrifying its line-up.

TOUGH DECISIONS

At Mercedes-Benz, the shift will see an 80% drop in investments into combustion engines and plug-in hybrid technologies between 2019 and 2026, which the group said would have a direct impact on jobs.

EVs have fewer components and so require fewer workers than combustion engine vehicles.

“A transformation of our workforce will involve tough decisions. Yes, overall we must and will reduce our personal costs,” Mercedes-Benz management board member and head of human resources Sabine Kohleisen said.

Daimler said that as of 2025, it expects electric and hybrid electric cars will make up 50% of sales – with all-electric cars expected to account for most of that – earlier than its previous forecast that this would happen by 2030.

The carmaker will unveil three electric platforms – one to cover its range of passenger cars and SUVs, one for vans and one for high-performance vehicles – that will be launched in 2025.

Daimler is also acquiring British firm YASA Limited to help develop high-performance electric motors.

The company said it would build out 200 gigawatt hours (GWh) of battery cell capacity. Four of its new battery plants will be in Europe and one in the United States.

Daimler said it would announce new European partners for its battery production plans soon.

The EU has been pushing hard to build out battery capacity to counter China’s dominance of battery production.

Rival Volkswagen AG plans to build half a dozen battery cell plants in Europe.

Daimler said that as part of its electrification strategy it would build a battery recycling plant in Kuppenheim, Germany, which would start operations in 2023. ($1 = 0.8481 euros)

(Reporting by Nick Carey; Additional reporting by Joe White, Ilona Wissenbach and Christoph Steitz; Editing by Mark Potter)