No Money In EV’s Says Mercedes Chief

Mercedes chief Dieter Zetsche was in Spain this week to introduce the Mercedes Benz B Class Electric Drive. While there, he told a press conference that the money Mercedes and other automakers are investing into EVs won’t be returned to them anytime soon. 

According to Green Car Reports, Zetsche was quoted as saying;

“Manufacturers will not see a return within a reasonable time on the billions they’re investing now in electric cars. You can reasonably say that nobody today is making a battery-powered vehicle that’s economically viable in its own right.”

If the head of Mercedes Benz says there is no money in EV’s, what does that say for the future of electric cars? How can manufacturers justify spending billions to develop battery powered vehicles to their shareholders if, as Zetsche says, there won’t be a significant return on that investment in a reasonable time?

A big part of the problem is that EV sales have been considerably lower than anticipated. Manufacturers will need to move a lot more electrics if they want to recoup their investment and eventually make a profit. According to Bloomberg News, demand for electric vehicles has been developing slower than expected. Buyers are deterred by high vehicle prices and fears of being stranded along the roadside by a dead battery.

Carlos Ghosn, CEO of Renault and Nisan, predicted his companies would sell 1.5 million electric cars by 2016. But IHS Automotive suggests global sales will not top 1 million cars per year until 2020, and even that will be just 1% of the market. EV sales this year are not expected to exceed 0.3% of the global new car market. Ghosn has since revised his prediction to 1.5 million EVs by 2020, which is still 50% more than the IHS Automotive prediction.

Mercedes thought it could limit its costs by using an existing chassis and turning to Tesla to supply the batteries and motors for the B Class Electric. As a result, the Mercedes EV weighs almost 500 lbs more than BMW’s similarly sized i3, which was built from the ground-up as an electric vehicle. The battery pack takes up a large chunk of the rear cargo area in the Mercedes, limiting the usefulness its hatchback design and failing to impress Consumer Reports.

In the end, Mercedes elected to take the cheapest way out. BMW, on the other hand, not only offers a range extender option but also designed its car to look different from every other car in the market. Carlos Ghosn has also said that the Nissan LEAF is nearing profitability as the company continues to invest in electric cars and battery technology. Those are important differences to buyers and why industry analyst IHS predicts the BMW i3 wil outsell the B Class 5 to 1. No wonder BMW has a sunnier view of the future of EV’s than Mercedes does, and why the Benz CEO has such a sour outlook on electric cars.

Source: Gas2