Daimler – Don’t Expect Economical Viability Of Electric Cars In Near Term

NOV 20 2014 BY MARK KANE 26

2014 Mercedes-Benz B-Class Electric Drive (W 242) cirrus white

2014 Mercedes-Benz B-Class Electric Drive (W 242) cirrus white

Daimler is moving forward by introducing new all-electric and plug-in hybrids models, but it is not willing to risk too much as it doesn’t expect return on investment within a reasonable time.

Daimler Chief Executive Officer Dieter Zetsche recently dampened enthusiasm on the EV situation:

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

A similar statement comes from Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany:

The B-Class electric is a low-cost and low-risk solution for Daimler.”

Well, if Daimler doesn’t see opportunities to earn, then we shouldn’t expect any high volume electric cars from Mercedes-Benz, right?

Source: Bloomberg

Categories: Daimler, Mercedes

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26 Comments on "Daimler – Don’t Expect Economical Viability Of Electric Cars In Near Term"

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David Murray

Tell that to Elon Musk and Carlos Ghosn.

Mint

He said, “Manufacturers will not see a return within a reasonable time on the billions they’re investing now”.

That’s true. Even Tesla isn’t going to make up the $1B+ it invested for a long time, as gross margins are going into R&D and expansion.

But it’s rather irrelevant. If your company has billions in cash in the bank right now, your return is still almost zero. Buy $1B in 10y treasury notes, and you make only $23M/yr by the end of the term.

It looks like MB thinks they can jump in at a moment’s notice when the conditions are right. We’ll see if that’s true.

Jouni Valkonen

Nissan Leaf is just milking the government incentives. Today Nissan does not have any ambitions to produce electric cars that could stand on their own legs. Perhaps this changes in 2017 or 2018, but today there is nothing.

However, Daimler’s claim is obviously false, because Tesla Motors is very profitable and its next four years of electric car production is fully booked. After that it is difficult to predict, but it seems that the demand expansion of electric cars is faster than the supply expansion.

io

What planet are you on?

Obviously your rants against Nissan are groundless, they’re not the recipient of government incentives and also sell the Leaf in countries offering none.

Tesla only makes a (tiny) profit when using non-GAAP accounting. On a GAAP basis, it just posted a 75 M$ loss, and announced it will narrowly miss its 2014 target.

krona2k

To state Nissan aren’t serious about electric vehicles just isn’t credible, sorry.

Thanh Lim

Sooner rather than later, Nissan will exceed the 100K total in the US, and that incentive starts to drop quite a bit.

That’s when the real costs will come out.

Bonaire

Carlos is probably not yet close to break even but acts like it. They spent $5B so far on electrification. Tesla wants to spend $5B and are seemingly on their way to do so. Will need more bonds to get there.

Big Solar

I think they meant to say we don’t have the guts to make a decent electric car for our customers or potential customers because we are milquetoast.

JR

Well the argument contradicts of the $780 million they just earn on Tesla shares

Big Solar

Good Point!

ffbj

Note he said reasonable return. Using semantics one could argue that he is not contradicting himself. For one it was a spectacular return completely unreasonable. In addition he said manufacturers, and in that case, Daimler was an investor reaping those profits.
Or in other words complete BS.

LOL

liberty

No, it doesn’t. Mercedes made that by stock, discounting the long term future, not by manufacturing. It was aquired by speculation, plus I have to say a real desire to contribute to progress. The Tesla S might be just getting out the door now without mercedes timely investment.

I think Mercedes isn’t making fun of tesla, they are partnering with tesla to do R&D as inexpensively as possible. Nissan is the big loser here if you look at 10 year ROI, they spent $5B and its unlikely to see any of that money back soon. It was also taking a shot at BMW, which has invested far more in its i seriew, but likely loses money on every i3. The question is when batteries get cheap enough in 5 years, with Mercedes have learned enough from tesla to compete with bmw, gm, and nissan.

pjwood

Comment says it isn’t important for MB to deliver to its customers smoother, quieter, cleaner, better handling and more reliable luxury cars. Cheers, to Aston and Bentley.

By being more lux, than sport, Mercedes is the biggest of the Germans to suffer by being slow. They’re knodding “ICE”, in the boardroom, like GM and Ford did “SUV”. That didn’t work out so well.

ffbj

Another way to say this is: We can’t do it so it can’t be done.

Jouni Valkonen

indeed, it does not matter how you look it, but Mercedes SLS AMG Electric Drive is just bad or almost a shameful attempt to make an electric car. It has inferior technology and it is way overpriced compared what it could be.

““The B-Class electric is a low-cost and low-risk solution for Daimler.”
———-

This equates to a low-appeal plugin.

Jouni Valkonen

Although B class ED is an horrible electric car, it is still the best non-Tesla electric car on markets. This more or less tells that car companies just do not want compelling electric cars to the markets.

Levy

I have it and I love it! You are talking without knowledge.

Low risk, low reward. Fortune favors the bold.

Reminds me of statements I heard from Kodak and Xerox execs.

ffbj

Right! Kodak: Digital technology will never replace film.
Xerox: We see little potential in developing the graphical user interface we invented.

Chris O

So MB chooses to actually pay money to Tesla for doing its compliance cars rather than come up with a Model S rival itself.

Wonder if that shows confidence or arrogance.

TomArt

Tesla is profitable now, if it wasn’t for the X and III development. That much has been well-established from their SEC filings.

Simple facts are elusive even to those who otherwise know better.

io

Huh? And where do you think Tesla, or any manufacturer for that matter would be, or go, without R&D?
You can’t just subtract it from their expenses and claim “voilà! profit!”, it’s an integral and necessary part of the business.

Anyway, for those actually interested in the numbers (which IMHO paint a less rosy picture), see http://ir.teslamotors.com/sec.cfm form 10Q page 5.

Dan

A substantial portion of Tesla’s profits come from selling ZEV credits, which is not really “economically viable in its own right.”

Phr3d

Along the lines of bold vs wait-and-see, the public memory really stinks for all things revolutionary.

In 2025 when Tesla is still aching along as the 6th or 8th largest auto manufacturer by volume and profit, Honda and Toyota will have released the ‘best durned BEV money can buy’ for ~$35k and people will be scrambling to buy them, careless of the fact that they are a decade late to the party (mindset of ‘it took ten years to get them “right”, I’ll buy now).

(all maker marques referred to can be replaced with any of your choice, no specific insult to those mentioned intended)