Daimler rules out ‘premature’ end to combustion engine sales

Daimler will not prematurely phase out sales of combustion engine vehicles, its chief executive said, as petrol and diesel models are a “cash machine” that will help to fund future electric models.

Ola Kallenius’s comments come after US automaker Ford pledged to stop selling combustion engine cars in Europe by 2030, becoming the largest manufacturer to make such a concrete commitment to date.

Sweden’s Volvo Cars has also said it expects to be fully electric worldwide by 2030, while General Motors, which no longer sells cars in Europe, plans to sell only emissions-free passenger models by 2035.

While Daimler’s Mercedes brand has committed to having a carbon neutral fleet by 2039, the company has not named a date by which it will stop selling cars with pipe-tail emissions.

“I think it’s too early to definitively say what the market is going to look like in 2030,” Kallenius said, citing regional differences in demand and charging infrastructure, “but it’s our job to put ourselves in a position to address that market”.

Earlier this month, Daimler announced it would split into two, listing its truck arm separately in the hope that a “pure-play” Mercedes company would benefit from investors’ appetite for electric car pioneers, such as Tesla.

The Stuttgart-based company sold fewer than 50,000 purely electric cars and vans in 2020, just 2 per cent of the almost 2.5m vehicles it sold worldwide, but is due to launch four battery-powered models this year, including an emissions-free version of its luxury S-Class saloon.

The company has also pledged that all new models will be designed to be “electric-first”.

However Kallenius said that it did “not make economic sense” for Mercedes to “prematurely” remove petrol and diesel models from its line-up.

“Our combustion engine business is extremely robust and produces cash flows that we invest in the future,” he told reporters.

Unlike rival Volkswagen, Daimler met strict EU emissions targets for 2020, thanks to a late surge in sales of its electrified Smart brand, and plug-in hybrids.

The Swedish executive said a slew of new plug-in hybrids that have a battery-powered range of 100km were “selling like hot cakes” in some markets and would help Mercedes achieve targets for 2021 too.

Daimler delivered better than expected earnings for 2020, making a net profit of just over €4bn thanks to a strong rebound in demand from customers in Asia.

While Mercedes car sales in Europe and the US fell by more than a fifth last year, the company delivered 9 per cent more vehicles in China, the vast majority of which were locally produced.

The company said it expected earnings in 2021 to be “significantly above the prior-year’s level”, and that production stops due to bottlenecks in the supply of semiconductors industry could be compensated for by the end of the year.

Daimler’s shares rose 2 per cent to €67.08 by lunchtime on Thursday in Frankfurt.