Mercedes-Benz will lean on ICE sales to bolster earnings as ‘brutal’ EV sector squeezes margins

Key Points

• 🚗 Mercedes-Benz is relying on sales of its internal combustion engine (ICE) vehicles to boost earnings.
• ⚡ The electric vehicle (EV) sector is described as “brutal,” and EV margins are at the lower end of Mercedes-Benz’s goals.
• 💰 Mercedes-Benz reported Q3 earnings and plans to maintain its EV goals but seeks better returns from its gas car portfolio.
• 🌐 The CEO acknowledges the current state of the EV market may not be sustainable for all players.
• 🛒 Mercedes-Benz chose to offer some discounts on EV models in Germany, but this doesn’t represent its overall EV strategy.

Mercedes-Benz is leaning on the sales of its internal combustion engine vehicles to bolster its earnings reports as “a pretty brutal” space in electric vehicles has squeezed margins to the lower end of its goals.

The German carmaker reported its Q3 Earnings this week and said that it would remain committed to its plans and goals for the EV side of its business, but that it would bolster earnings with better returns from its gas car portfolio because it has not been able to increase margins as it previously planned.

“This is a pretty brutal space,” CEO Harald Wilhelm said on the call. “I can hardly imagine the current status quo is fully sustainable for everybody.”

He was right. Ford delayed a $12 billion EV investment due to various macroeconomic factors during its Earnings Call this week, and other brands have struggled to get even close to profitability because they have not been able to scale production to a point where losses per vehicle are sustainable.

Mercedes-Benz chose to offer some discounts on EV models in Germany, but Wilhelm said this would not represent the brand’s overall strategy regarding EVs and trimming its losses, according to Reuters.

Earlier this year, as Tesla trimmed prices and other automakers decided to do the same to keep up with the automaker’s price points, Mercedes-Benz resisted the idea to do so. It couldn’t afford to trim prices just to get vehicles out the door. Instead, it maintained its pricing strategy.