Mercedes-Benz said it is confident that China is a growth market for luxury electric vehicles in the long-term despite its economic recovery not progressing as expected, and that it was sticking to its strategy of not engaging in the price war.
“I don’t think we should buy market share in China with irrational actions on the pricing side. It’s not our general policy,” CEO Ola Kallenius said Thursday on an analyst call following second-quarter results.
Asked about Volkswagen’s move to build new models with Chinese partners and potentially co-create local platforms, Kallenius said the premium carmaker was working with competent partners in the country to adapt its technological offering to local taste.
“We are not handing the task of creating the Mercedes of the future to another OEM — that task stays with us,” Kallenius added.
China is a crucial market for Mercedes. The country accounted for 18 percent of revenues and 37 percent of sales in 2022.
At the same time, Mercedes-Benz Group’s two largest shareholders are Chinese companies, with BAIC and Geely founder Eric Li each holding just under 10 percent of the company.
Mercedes has started building the EQE full-electric sedan at its joint-venture factory in Beijing and will soon add production of the EQE SUV there.
However, sales of the EQS full-electric flagship sedan and the smaller EQE have been disappointing, according to reports, and Mercedes said in December that it was cutting prices by as much as 30,000 euros, as well as providing subsidies for customers who recently bought the cars.
Kallenius said most of the growth in Chinese EV sales has been in the entry level segment – cars costing less than 300,000 renminbi ($42,000) or below — which he said was “price driven.”
“This level of adoption has not yet happened in the premium or luxury segments,” he said. “Many [Chinese] customers view the S Class with a high-tech V8 as the ultimate buy.”
Mercedes is “carefully, organically” building a position in the Chinese EV market, Kallenius said, and won’t push adoption rates with more price cuts. “We’ve decided to apply some strategic patience to this going forward,” he said.
“We’re investing massively to build our position on EVs in China, then we’ll see how things unfold,” he said.
Reuters contributed to this report