Mercedes-Benz working towards EV price parity

MERCEDES-BENZ is undergoing significant research and development investment in order to help bring about the advent of price parity for electric and internal-combustion vehicles, however achieving parity is still “several” years away.

The German car-maker is set to release its first-ever series production full-electric vehicle, the EQC, in global markets from July, with an Australian arrival slated for around October.

While local pricing is yet to be confirmed for the EQC, Mercedes-Benz Australia/Pacific is targeting a price of about $140,000 plus on-road costs, pitting it against the likes of the Jaguar I-Pace EV400 HSE and Tesla’s Model X Performance.

Speaking to Australian journalists at the global first drive of the EQC in Oslo, Norway, current Mercedes-Benz head of R&D and soon-to-be chief of Mercedes-Benz Cars Ola Kaellenius said the brand is seeing a major shift in R&D funding towards full-electric and electrified powertrains, as part of the brand’s recently announced Ambition2039 business plan.

“The investment program alone for the EQ family is €10 billion, for those first vehicles that are coming now,” he said.

“So, it feels like we are already tilting very heavily into this direction. I would like to say, though, if we take the ambition from 2030 to have about 50 per cent EVs, this means about 50 per cent will still have a combustion engine.

“Obviously the 48V and plug-in hybrids, so we are continuing investing on making that better, both of the emission side and the fuel economy side, because that’s also a contributor to reduction of CO2.

“So, you have to do both during the transition, but needless to say (there is) a very, very strong shift towards electrification as we speak.”

When asked if Mercedes knows when EVs will become as affordable as their internal-combustion equivalents, Mr Kaellenius said there was no concrete timing yet, but it was still many years away.

“As we sit here today, the product cost structure for electric vehicles is significantly higher than what we have been used to on a combustion-engine vehicle,” he said.

“With tightening regulations all around, the product cost of combustion-based vehicles will go up in the future as well.”

“From a total cost of ownership point of view, depending on prices of petrol or diesel and electricity, and of course depending on tax regulations in individual countries, for the customer the total cost of ownership point can be much quicker.

“In the long term, though, we cannot rely on a subsidy to forever create that potential, that TCO parity, so our job – and that’s what we’re working on – is to in the next several years significantly engineer cost out, improve the chemistry of the cells together with the battery cell suppliers, work on scale and start shaving cost layer after cost layer off.

“I don’t want to pick a date, but it is several years away.”

While Mercedes builds its own engines and transmissions, it currently purchases its battery cells and electric motors from a wide range of outside suppliers and has plans to do so for the foreseeable future.

This could change further down the track, with the brand working on developing its own battery cell technology that could be used in the future, which would help reduce cost for its EVs.

“On the battery side, which is the most expensive part, on the R&D side, we are invested all the way down to the research level, all the way down to chemistry,” said Mr Kaellenius.

“But for economy of scale reasons, battery cell production needs to be massive, as there is a very dynamic competition going on here both on the technical side and the commercial side.”

Mercedes is also developing its own electric axles at the R&D level, and while it has chosen to work with suppliers for the first couple of generations of its EVs, future generations could feature in-house motors.

According to Mr Kaellenius, the brand’s R&D developments in battery technology are “game-changing” and slated for production around 2025, including a silicon-based anode that could improve batteries by up to 20 per cent either in increased range or reduced cost.

Mr Kaellenius also hinted at Mercedes developing its own dedicated EV architecture, unlike the EQC which is built on a modified version of the GLC mid-size SUV’s platform.

“We have not been very forthcoming with our technical strategy, so I don’t want to shed too much light on it now,” he said.

“What I would like to say is watch this space. You will see a very comprehensive product strategy unravel for Mercedes in the next two to three to four years, and obviously on the way to 2030 we have big plans.”