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Automotive sector – Daimler expects pressure on return on electric cars News

Monday, September 11th, 2017 | Economy

CEO Dieter Zetsche stated at an investor conference in Sindelfingen on Monday. Although the company wants to keep the current operating profit in the passenger car business of ten percent "as good as possible" during the transition to electric cars. However, there is a risk of a decline to around eight percent. "We will continue to target ten percent, but we need to be prepared for a corridor of between eight and ten percent during the transition," said Frank Lindenberg, Mercedes-Benz's financial director. In order to intercept this, a savings program of four billion euros is planned by 2025.
Shortly before the start of the Automesse IAA, Daimler also presented new plans for the development of electric mobility. For example, in Europe and the USA, Smart is to be offered only by battery operation. "Smart will become the first brand exclusively with electric drive by 2020," said Zetsche. By the year 2022 all Mercedes models, altogether more than 50, were to be offered with electrified drives of all variants, ie as pure electric cars or hybrids, which combine purely electric driving on short distances with petrol or diesel engine on long distances. To date, Daimler plans to market more than ten pure electric cars by 2022, in order to achieve a sales share of 25 percent by 2025. The rival from Munich announced last week, by the middle of the next decade, 25 partial or completely driving cars into the program. A dozen should be purely electric.
Batteries are cheaper
As battery costs are reduced rapidly, it is possible to produce the even more expensive electric cars by 2025 at the same cost as gasoline or diesel engines, explained Zetsche. Nevertheless, the carer would not earn as much money for each car as with cars with internal combustion engines. For some models, the profit contribution is only half as high as for the vehicles replacing the electrical versions, Lindenberg explained. That is why cars with gasoline or dieseltank will not disappear so soon from the offer. "Combustion engines remain the backbone for CO2 targets and our financial strength over a long period of time," said Zetsche.
The savings are to be achieved, among other things, through lower expenditures for research and development in the coming decade, although these will continue to increase in the next few years according to researcher Ola Källenius. The lion's share of the cost reductions, however, Mercedes-Benz wants to catch up on the production and fixed costs. For example, the Stuttgart car maker wants to produce even less for electric cars than for the conventionally driven ones. This is a conflict with the works council, because he wants to bring more work from suppliers into his own house. This is intended to slow job cuts, which are unavoidable in the long term when switching to the much less work-intensive electric cars.
(Reuters)

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