Mercedes EQ could make up nearly half of all sales by 2025

The tri-star brand could electrify everything by the end of next decade, with EVs and PHEVs now a key pillar in its future plans.

Mercedes-Benz’s new EQ electric technology could be powering a significant proportion of cars it sells by 2025, according to Mercedes-Benz research and development chief Ola Kallenius.

Speaking with Australian media at the global launch of the new EQC electric SUV in Sweden this week, Kallenius shared some insight on the company’s plans for EQ electric and EQ Power plug-in hybrid (PHEV) models in the next decade.

The company will go hard on full battery electric offerings, having already confirmed it will offer 10 options on the market by 2022 – including the Smart range not available in Australia – while still more cars will debut with petrol- and diesel-electric PHEV systems.

“The planning assumption we have made for the battery electric vehicles, for the calendar year 2025 – so that we can have kind of a stake in the ground so we can do our industrialisation planning on – is a range of between 15 and 25 per cent for fully battery electric vehicles,” Kallenius says.

“That’s the planning assumption we have made, and the plug-in hybrids will come in on top of that, somewhere in the range between 10 and 15 per cent.”

As for when profitability will come to the EQ brand, which has been an investment to the tune of billions of dollars already – including not only the upcoming EQ models but also the Electric Drive project in the years before – and with another 10 billion invested recently, Kallenius is not so forthcoming.

“We don’t comment on the profitability of individual cars or segments, but needless to say, we’re going to have to make the growth into EVs part of our profitable growth strategy,” he tells us.

“At the beginning of the electric journey, the cost structures are higher than what we experienced previously on combustion-based cars, but as we get into volume and further develop the technology – especially on the battery side – we go from thousands, tens of thousands, to hundreds of thousands of vehicles per year, we see a very good chance for that cost curve to become much more attractive.

“So, profitable growth must be part of the picture for electric mobility.”

The greatest margins are in the premium market, which makes the EQC a right-sized first step into the series-production EV game. As a mid-sized SUV that should hit Australia at somewhere between $100,000 to $150,000, it’s within reach of buyers that opt for flagship models in a hugely popular segment.

But, with no meaningful incentives available in Australia, and with flagship lines like the AMG brand traditionally making up just 10 per cent of sales, the EQC is unlikely to sell in especially significant numbers.

More accessible models will come as the technology becomes more affordable and the business case more effective – but don’t expect Mercedes to be the brand that ‘democratises electric vehicles’. That’s a slogan Elon Musk and his Model 3 are welcome to, it seems, with a size-and-price rival in the Mercedes EQ stable appearing unlikely.

“There’s no question that Mercedes as a brand is a premium, luxury brand; albeit with a very wide production portfolio going all the way from the A-Class to our S-Class flagship,” Kallenius says.

“So when we approach the market for electric vehicles, we kind of use the same playbook. We’re not going to completely redefine the brand in terms of its premium and luxury position. We’re adding a zero-emission dimension to it.”

“And yes, we do want to play a leading role in ushering in this new era of electric mobility,” he adds.