CEO Tells Us Why Mercedes-Benz Won't Follow Tesla's Lead On Pricing

September 23, 2023

Trying to pick the right time to buy an EV is increasingly like trying to time the market: a losing game. Tesla started the trend, changing prices on the Model 3 and Model Y based on whim and whimsy. Lately, the electrified side of Ford's house has been following suit, with prices on the F-150 Lightning and Mustang Mach-E rising and falling to match a demand curve that's proven fickle at best.

Don't expect Mercedes-Benz to be the next player in the meandering MSRP game. "You always look at the operating point, demand and supply, in any one market. But, drastic moves for a brand like Mercedes usually is not the right way forward," Ola Källenius, Mercedes-Benz CEO told us.

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Mercedes-Benz is on a mission to electrify its full portfolio, aggressively launching new cars like the all-electric EQE and EQS, while making more traditional ones, like its new E-Class, available only as hybrids. It's all part of the company's Ambition 2039. "For us," Källenius said, "the destination's clear: Mobility has got to go zero emission. There are no ifs or buts." 

However, the current state of the global economy isn't exactly making that shift easy. Källenius says that inflation in the world's major economies, followed by rate hikes, has created a situation "where you can experience a macro-economic cooling down."

An economy that is "cooling down" is not ideal when launching a corporate re-boot like the one Mercedes-Benz is undergoing now, a shift that comes with significant cost. "We are putting billions, tens of billions into this, not just the electrification obviously, everything else that is going on in the car industry," Kallenius said.

Launching new products into growing economies would help pay back some of that investment, but that's been a bit of a challenge of late. China was meant to be a key part. "Many watchers, economic analysts, professors, etc. thought that China would immediately jump up again, post-COVID," Kallenius said. 

How is China's market now? "A little bit flat," Källenius said.

"You have to, as a car producer, decide how are you going to play the market in that context?" he continued. For Mercedes-Benz, he says, price stability is key: "Making sure that these beautiful machines that we build, that they have longevity, residual value, and so-on, is for us the highest priority."

Driving stability on the pricing side requires flexibility elsewhere. Mercedes-Benz's ability to meet demand, shifting from EV to ICE on the same production lines, is key. "Take our big operations in the southeast and Alabama… we can build both," Källenius said. "So, we can go with the market. Same thing goes in Germany. Same thing goes in China and in other locations around the world. So yes, we have production flexibility, but we're gearing ourselves up for a future with significantly more electrification."

So, no, Mercedes will not be following Tesla's lead in modifying MSRPs based on market demand. It is, however, taking another cue from the newly Texan start-up: NACS. Mercedes announced in July that it would adopt the standard put forth in the U.S. by Tesla, shifting away from the current global standard of CCS.

Some have feared that this migration will create short-term confusion in the market from buyers who surely won't want to be left holding the wrong cord. Källenius, though, is confident that won't be a problem. "I don't believe so," he said, "because we are going to take care of our customers in all situations."

That decision, to sidle up with Tesla, wasn't made lightly: "We said, as Mercedes, what do we think is the most likely scenario in terms of which is going to be the dominant plug in North America? And, upon careful analysis, we came to the judgment that the mid- to longer-term solution will rather be the NACS than the CCS," Källenius said.

Källenius continued that, for at least the short term, there will be "coexistence" between CCS and NACS on the North American market, and as part of that, Mercedes-Benz has pledged to support both in its upcoming, luxury-minded charging network. Each charger will have two cables, so no adapters required – for now, anyway.

"We believe this is a move that actually takes away doubt, and creates certainty for the customer. And that's why we did it," Källenius said.

This content was originally published here.

CEO Tells Us Why Mercedes-Benz Won't Follow Tesla's Lead On Pricing