Daimler to ‘pick up speed’ in electric car transition

Daimler will probably phase out combustion engine cars before its internal target of 2039 thanks to increasing demand for the German carmaker’s electric Mercedes models, says chief executive Ola Källenius.

“Do we intend to pick up speed? Yes, we do,” the Swedish boss told the FT’s Future of the Car Summit. The transformation into a zero-emission company, he added, was “going to be faster, and probably that 2039 scenario is the most conservative scenario that we are looking at in the different plans we are discussing”.

The Stuttgart-based group set a goal in 2019 of offering a completely carbon-neutral new car range within 20 years, but competitors including General Motors and Ford have since unveiled more ambitious targets.

In February, Daimler told investors that it would not prematurely phase out sales of petrol and diesel vehicles, referring to them as a “cash machine” that would help to fund future electric models.

But Källenius, who would not name a precise date for the end of combustion engine models, said “market dynamics”, as well as regulatory pressure and lower battery costs, would make the economic case for a more rapid switch to electric vehicles compelling.

Since taking the reins at Daimler two years ago, the former F1 executive has overseen the rollout of Mercedes’ first luxury electric vehicle, the EQS, which was designed from scratch as a battery-powered alternative to the brand’s flagship S-Class saloon. Four more electric models based on the same architecture are set to follow in the next 18 months.

Sales of existing electrified cars are also picking up pace. In the first three months of the year, Mercedes sold some 43,000 plug-in hybrids worldwide and more than 16,000 pure electric cars, together amounting to 10 per cent of global sales. Last year, such vehicles accounted for just 7.4 per cent of deliveries.

Källenius also welcomed EU plans to sharpen its CO2 targets for the transportation sector. “It’s an ambition that we say yes to,” he said, but warned that the bloc would need to “have an honest conversation about jobs”.

“Everybody knows it takes more labour hours to assemble and build a combustion-based power-train compared to an electric power-train,” he said.

“When a new technology takes over and we have this overriding goal of combating climate change and making sure the CO2 burden reduces, that’s politically the higher priority and also for our company, the higher priority.”

In recent months, Daimler has benefited from a spectacular recovery in the car market, led by China.

But the current semiconductor crisis, has forced the carmaker to cut production just as demand is rising, a development Källenius warned was a sign of things to come.

“There’s an underlying pressure on the chip side, with vehicles getting more sophisticated . . . [and] also volume makers putting content into vehicles that was perhaps only found in premium and luxury vehicles before,” he said. “There you have an additional layer of pressure that may affect us beyond the resolution of this immediate chip shortage situation.”