Mercedes unveils first Tesla rival in $12 billion attack

Mercedes unveils first Tesla rival in $12 billion attack
The 2020 Mercedes-Benz EQC starts production in the first half of next year. (Mercedes)

Mercedes-Benz, the world’s largest maker of luxury cars, is rolling out its first in a series of battery-powered models, adding to a growing array of high-end brands targeting Tesla Inc.

The Mercedes EQC crossover starts production in the first half of next year, part of a plan to develop its EQ electric line, Daimler AG Chief Executive Officer Dieter Zetsche told reporters in Stockholm at the car’s world premiere. The company intended to invest $12 billion on the electric-car push, but the spending has become “more than that,” he said Tuesday, without specifying figures.

“There is no alternative to betting on electric cars, and we’re going all in,” Zetsche said. “It is starting right now.”

The car joins the Porsche Taycan, Audi E-tron and Jaguar I-Pace in putting pressure on Tesla as the California-based carmaker struggles to ramp up the Model 3 and make a profit. Mercedes plans to assemble the EQC at its factory in Bremen, where the automaker also makes its best-selling C-Class sedan. Daimler will build the car in China for the local market.

The EQC is set to be profitable and will “offer the best package” compared to rivals, he said, declining to comment on pricing.

Taking on Tesla

Mercedes and other luxury brands are pushing aggressively into electric cars to challenge Tesla after its success in wooing wealthy buyers with the Model S. Including the Smart brand, which will abandon combustion engines in coming years, Daimler plans to offer 10 fully electric cars by 2022. To underscore the shift, Mercedes will spend $1.16 billion on battery production to create a network of eight facilities globally.

As they encroach onto Tesla’s turf, traditional luxury manufacturers are trying to capture some of the pioneering electric carmaker’s techy glitz. Mercedes unveiled the EQC on the sidelines of the me Convention in Sweden, an event it co-sponsors with South By Southwest that is billed as “a tour of the future through the lens of tech, art and design.” Audi’s E-tron will be launched later this month in San Francisco, Tesla’s backyard and the heart of the tech community.

Competition will be particularly fierce in the SUV and crossover categories. In addition to the Model X, which starts at about $85,000 before tax rebates, the rivals include the coming E-tron and Jaguar Land Rover’s well-received $70,000 I-Pace.

The new EQC — roughly the size of the brand’s popular GLC SUV — features a range of more than 280 miles and accelerates to 62 miles per hour in as little as 5.1 seconds. The Model X has a range of 237 miles.

Daimler doesn’t plan to establish a dedicated electric assembly plant and will instead build the vehicles at the same sites as conventional automobiles to be able to better adjust output, Zetsche said, adding that he expects demand to mainly eat into sales of combustion cars rather than lure new customers.

The company has already announced plans to produce electric versions of its Alabama-built models at its Tuscaloosa County plant.

“One major pillar of our strategy is flexibility,” said Markus Schäfer, executive board member of Mercedes-Benz Cars, Production and Supply Chain. “Our decision to produce electric vehicles on the same line as models with combustion engines enables us to respond flexibly to demand and use plant capacity to best effect. In this way we can continue to ensure both high efficiency and top quality with well-proven production processes.”

Combustion bans

In addition to responding to shifting consumer tastes, electric models are critical for carmakers to meet increasingly stringent emissions standards. Some countries like the U.K. and France are planning to ban combustion engines in coming decades.

Establishing electric cars would help Daimler move beyond concerns over its diesel vehicles. Germany’s Transport Ministry forced the recall of 774,000 cars over allegations that they were equipped with questionable software that made them pollute more on the road than during test results.

Even as he targets Tesla, Zetsche praised CEO Elon Musk for making electric cars popular. But Daimler has no plan to consider investing again in Tesla. “This isn’t a good point in time,” he said.

(Contact the reporter at [email protected])

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