Mercedes CEO Urges Long-Term Electric Vehicle Subsidies Amidst Struggling Domestic Market
Mercedes CEO, Ola Källenius, is advocating for long-term subsidies for electric vehicles as demand starts to weaken. The goal for Mercedes by the end of the decade is to have electric vehicles available in every market segment, from the luxury S-class to compact cars.
In an interview with Süddeutsche Zeitung, Källenius emphasized that Mercedes fully supports decarbonization efforts. However, current sales numbers are not meeting expectations set five years ago. To address this, Källenius proposed long-term purchase incentives to provide more certainty for consumers. He pointed to China as a prime example of implementing successful electric vehicle promotion strategies. “We can learn from other regions that are ahead of us in terms of incentives and subsidies,” Källenius stated.
During an industry summit hosted by Handelsblatt, Germany’s economy minister, Robert Habeck, suggested additional measures to boost the electric vehicle market. These proposals include offering a 1,000 euro charging credit when purchasing new or used electric cars, as well as tax incentives for individuals with lower incomes. Habeck also urged Volkswagen to produce affordable electric vehicles priced under 20,000 euros, emphasizing the importance of staying true to the company name, Volkswagen, meaning people’s car.
The average price of electric vehicles has risen significantly over the past couple of years, resulting in a slower adoption rate. This trend is impacting not only Mercedes but the entire German car industry. Facing the most substantial transformation in decades, car manufacturers and suppliers are struggling to maintain traditional business models. Ford recently announced a 14% cut in its workforce due to weak demand for electric vehicles in Europe. Volkswagen, the country’s leading car producer, is also experiencing challenges, including mass walkouts as negotiations between management and labor representatives stall.
Despite these difficulties, Mercedes CEO Källenius confirmed that cost adjustments are necessary for the company. However, there are no plans for mandatory layoffs at Mercedes-Benz in Germany at this time. The automobile industry in Germany, along with other countries, is at a pivotal moment where adapting to new technologies and market demands is crucial for sustainability and growth.
