Mercedes boss says EV costs may remain high in foreseeable future

Ola Kaellenius, the chief executive of Mercedes-Benz made a prediction on Sunday (September 9) and said that costs for making electric vehicles will remain high compared to combustion engine models for the foreseeable future. He added that this would continue to give rise to intense competition.

His comments came as Mercedes-Benz released more details about the architecture of its newest vehicle, the CLA compact electric sedan. The car is due to launch next year.

"The variable costs for an electric car are higher. It will remain that way for the foreseeable future," Kaellenius told journalists at the IAA car show in Munich. He added that higher costs could not be passed on to customers on a like-for-like basis.

Variable costs that weigh on the price of production of electric vehicles include raw materials for batteries, software development, and electricity prices.

Kaellenius said this was the reason why the group was working to optimise fixed costs and resource allocation to reach the same profitability with electric cars as it could with combustion engines.

The new CLA is targeting power use of 12 kilowatt hours per 100 kilometres, and 750 km of driving range, which compares to the 17 to 18 kWh per 100 km in an EQA 350 compact SUV model Mercedes offers today.

When he was asked how much the new CLA class reduced cost from cars in the previous generation, Mercedes-Benz Chief Technology Officer Markus Schaefer said they were moving towards a level of 50% cost reduction.

CATL and ACC will produce batteries for the CLA class. Mercedes owns a third in ACC.

The CLA will go into production next year. It will be available in the market from 2025. The car is an attempt to reduce complexity in the development of the model, said Schaefer.

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