24 August 2021
24 August 2021
In his acclaimed 2002 best seller The Tipping Point: How Little Things Can Make a Big Difference, author Malcom Gladwell writes about the moment an idea, trend, or social behaviour crosses a threshold, tips, and spreads like wildfire. Gladwell defines a tipping point as “the moment of critical mass, the threshold, the boiling point”.
In January 2021, the Guardian reported that, “Electric vehicles are close to the ‘tipping point’ of rapid mass adoption thanks to the plummeting cost of batteries.”
Author Damian Carrington cited Norway as an example of a country where the tipping point has already been reached, with market share of battery-powered vehicles soaring to 54 per cent in 2020, alongside a 43 per cent increase in global electric vehicle (EV) sales in the same year. He also quoted experts who predicted even faster growth as falling battery prices bring the price of electric cars below that of equivalent petrol and diesel models.
Electric-first to electric-only
It is this EV ‘tipping point’ scenario that has prompted Mercedes-Benz to boldly announce a shift from an ‘electric-first’ to an ‘electric-only’ strategy, where market conditions allow.
The new strategy represents a supercharging of the company’s battery electric vehicle (BEV) plans, with plug-in hybrid and full-electric vehicles to account for 50 per cent of global sales by 2025, up from the previous 25 per cent target.
The company also announced it plans to offer battery electric vehicles (BEV) in all segments where it competes by 2022. And, from 2025 onwards, all newly launched vehicle architectures will be electric-only, meaning customers will be able to choose an all-electric alternative for every Mercedes-Benz model.
This means that instead of developing battery electric and internal combustion engine (ICE) vehicles on the same platform, Mercedes-Benz will be developing dedicated BEV platforms exclusively.
Bringing forward the EV tipping point
By changing its focus in this way from “electric-first” to “electric-only”, Mercedes-Benz believes it can accelerate and advance its EV portfolio plan, and bring forward the tipping point for EV adoption more broadly.
“The EV shift is picking up speed – especially in the luxury segment, where Mercedes-Benz belongs,” says Ola Källenius, CEO of Daimler AG and Mercedes-Benz AG. “The tipping point is getting closer, and we will be ready as markets switch to electric-only by the end of this decade.”
Preparations have required “a profound reallocation of capital”, according to Källenius, who unveiled a comprehensive plan that includes significantly accelerated research and development, underpinned by investments amounting to more than €40 billion (A$63.7 billion) between 2022 and 2030.
“By managing this faster transformation while safeguarding our profitability targets, we will ensure the enduring success of Mercedes-Benz. I am convinced that we will be successful in this exciting new era,” he says.
New platforms and gigafactories
At the heart of the new strategy is an extensive technology plan, comprising five key elements. It includes the development of three new electric vehicle platforms. The first is MB.EA, to cover all medium to large size passenger cars and establish a scalable modular system as the electric backbone for the future EV portfolio. The second, AMG.EA will be a dedicated performance electric vehicle platform, while the third is VAN.EA, which will usher in a new era of purpose-made electric vans and Light Commercial Vehicles.
These new EV platforms will be complemented by greater vertical integration in manufacturing and development, as well as the insourcing of electric drive technology. This includes the acquisition of UK electric motor company YASA, which brings with it access to unique axial flux motor technology, along with the expertise to develop the next generation of ultra-high-performance motors.
At the same time Mercedes-Benz will embark on a massive expansion of its battery manufacturing capability, establishing eight new battery cell ’gigafactories’ in addition to the already planned network of five plants. By working with partners in Europe and elsewhere, and continuously integrating the most advanced battery cell technology in its cars and vans, the company aims to increase electric vehicle range during the production lifecycle of a model.
More charging stations
A major expansion of the EV charging network is the next plank in the plan, including a partnership with Shell’s Recharge network that will add an additional 30,000 charge points by 2025 across Europe, China, and North America. This is in addition to the existing Mercedes me Charge network, already one of the world’s largest, comprising more than 530,000 AC and DC charging points worldwide.
In Australia, Mercedes-EQ drivers have access to the country’s largest ultra-rapid EV charging network, Chargefox, which recently announced its own plans to expand to 5,000 charging stations around the country by 2025.
The final element of the technology pillar is the development of the Vision EQXX, an experimental electric car with a real-world range of more than 1,000 kilometers, that will introduce a range of new technologies designed to reset the bar on EV energy efficiency. Arriving in 2022, it’s expected the advances made with Vision EQXX will be adapted and applied in production vehicle electric architectures.
In addition to this detailed technology plan, Mercedes-Benz will also implement major changes to its global production network, as it shifts from ICE to electric-only output. The company is well advanced with the transformation of its workforce, too, including training employees in aspects of e-mobility and creating 3,000 new software engineering jobs for developing the new MB.OS operating system.
Finally, on the finance front, Mercedes-Benz expects to deliver on previously outlined margin targets, despite the revised assumptions around EVs. This will be achieved by increasing the proportion of more profitable high-end electric vehicles in the mix, taking more direct control over pricing and sales, using more common battery platforms and scalable electric architectures, and the expected significant lowering of battery costs.
“Our main duty in this transformation is to convince customers to make the switch with compelling products. For Mercedes-Benz, the trailblazing EQS flagship is only the beginning of this new era,” Källenius says.
As Malcolm Gladwell wrote so presciently almost two decades ago, the world is not immovable. Tiny ‘pushes’, if done the right way, can change things fundamentally. Mercedes-Benz is now pushing to deliver one of the most fundamental shifts in the history of the automobile, a tipping point that must happen sooner rather than later, to secure the future of our planet.
Learn more about how we’re ushering in a new era of electro-mobility with Mercedes-EQ.
By Jonathan Weller