German carmaker Mercedes-Benz has seen its share of the luxury market in the US decline as customers trade in their V8 sedans and sport utility vehicles for Teslas. Now, the company is following in Tesla's footsteps by building its own charging network, accelerating its fleet of electrified vehicles, and adding Level 3 autonomous driving technology to its vehicles.
Mercedes' goal is simple: To become "the most coveted luxury electric vehicle brand," according to Dimitris Psillakis, president and CEO of Mercedes-Benz North America.
Psillakis is helping oversee the company's aggressive push towards electric vehicles. The first Mercedes EV, the futuristic EQS sedan, debuted in October 2021. Four other models, including three electric SUVs, quickly followed. The EQS SUV and EQE SUV are built at the company's Tuscaloosa, Alabama plant. Mercedes' brand new factory in Bibb County supplies lithium-ion batteries. Mercedes aims to go all-electric by 2030.
“To be the most coveted luxury electric vehicle brand, we had to strike a balance between good product and good design and support,” Psillakis told ABC News. "We don't see Tesla as a luxury competitor... we see Tesla as an automotive disruptor, especially when it comes to electric vehicles."
The EQE SUV is manufactured at the Mercedes-Benz plant in Tuscaloosa, Ala. The company's battery plant in nearby Bibb County supplies batteries for the SUV.
Mercedes' strategy seems to be working. It sold 7,341 EVs in the first quarter of 2023, up 251% year-over-year. The company says electric vehicles now account for 12% of its sales in the US.
"Luxury shoppers are more interested in electric vehicles. They have higher disposable income and are tech-oriented," Jessica Caldwell, chief executive officer of expertise at Edmunds, told ABC News. "Tesla has redefined luxury... but its market share is now falling. Tesla peaked in 2019 when it controlled 80% of the market."
Electric vehicles currently account for 6% of the US auto market. Worries about the range and availability of public charging remain the top reasons why motorists aren't switching to electric vehicles, Caldwell said.
"Charging is still a big barrier for customers," she said. "Mercedes charging stations are a reassurance for customers and a good, albeit expensive, marketing strategy."
The company's charging network, which launches first in the US and Canada and will be open to non-Mercedes models, could solve the country's EV charging dilemma.
"The logic behind it is better service, more convenience, and eliminates some of today's customers' worries about electric vehicles," said Psillakis. "We care about the product... our responsibility is to bring the best convenience to our customers."
Tony Quiroga, editor-in-chief of Car and Driver, says Tesla's highly reliable network of superchargers and wide-ranging models have given it a dedicated fan base. Premium brands like Mercedes are still struggling to overtake the popular Tesla Model 3 and Model Y, he argues, although Mercedes may be closing the gap. He argues that Tesla's aging fleet of vehicles could also convince consumers to look elsewhere.
"Mercedes doesn't want to sit behind Tesla," he told ABC News. "The charging network could be a big win for Mercedes."
The Mercedes-Benz battery plant in Bibb County, Ala., supplies high-performance lithium-ion batteries for the company's electric SUVs.
Quiroga has shown that two Mercedes EVs -- the EQ S450+ and EQ S580 -- beat their EPA range estimates when Car and Driver staff conducted extensive 75 mph in-vehicle tests.
"It's rare for a car to beat its EPA numbers," he said.
According to Robby Degraff, an analyst at AutoPacific, Mercedes' EV dynamics will give it an edge over the competition.
"So far, they've really hit all the right segments, from the larger EQS SUV to the EQE sedan," he told ABC News. "If a loyal S-Class owner wants to focus exclusively on electrification, then there should absolutely be an EV equivalent, such as the EQS sedan. That's an approach and strategy that I take for granted. think Mercedes-Benz has really succeeded."
EQS, Mercedes-Benz's all-electric luxury sedan, will debut in the fall of 2021.
Mercedes-Benz
Mercedes recently unveiled the Mercedes-Maybach EQS 680 SUV, the first EV from the uber-exclusive brand. The large SUV uses technology from EQS SUV and is equipped with sustainably treated leather. Many of the vehicle's parts and components are made from resource-efficient materials, including secondary steel and recycled aluminum.
The Mercedes-Maybach EQS 680 SUV is the first electric model of the Maybach brand.
Mercedes-Benz
However, electric cars are expensive and Psillakis said Mercedes is not immune to rising interest rates and economic uncertainty.
"Obviously it affects us, but we have a wide range of products in terms of price style," he said. "There is high demand for the new GLC. The vehicle is currently unaffected by any high interest rates or inflation."
Electric vehicles are part of Mercedes' long game; The company achieved a "huge achievement" when Nevada regulators certified their autonomous driving capabilities on public roads earlier this year. According to Mercedes, "Drive Pilot" will be fitted to S-Class and EQS models in 2024 and is the only SEA Level 3 autopilot system approved by lawmakers. Psillakis said California could be the next state to approve the system, which operates at speeds up to 40 mph and has more advanced technology than Tesla's Autopilot feature.
“We have to make sure that the customer's expectations are right and that the system is working,” says Psillakis.
Mercedes-Benz Drive Pilot is the first SAE Level 3 autonomous driving system authorized for use on public highways in the United States.
The attention to electric vehicles hasn't stopped Mercedes from perfecting gasoline-powered SUVs and high-performance AMG models. Last month, Mercedes unveiled an updated E-Class midsize sedan and introduced the GLE 450e 4MATIC plug-in hybrid SUV. A bunch of new GLS 2024 models will hit US dealerships later this year.
The all-new GLE 450e 4MATIC plug-in hybrid produces 381 hp and 479 lb-ft of torque.
“Mercedes is running two companies at the same time,” Caldwell said. "Mercedes has an expanding EV product line, but internal combustion vehicles are paying the bills. Running the two companies side-by-side is expensive."
Mercedes-Benz recently updated the design, technology and equipment in its GLS models. The Mercedes-AMG GLS 63 is shown here.
Degraff says Mercedes' internal combustion cars are still highly desired and sought after by enthusiasts.
“Mercedes-Benz has been able to generate incredible performance just by harnessing mild hybrids and plug-in hybrids,” he said.
Psillakis dismissed concerns that the company's legendary AMG division would lose its mark in the world of electric vehicles.
"EQS is electric and it's an AMG," he said. "Yes, I miss the sound of the V8. Do I remember the fun? Torque? Performance? No. AMG isn't just about sound and horsepower. It's about exclusivity, design and performance. The same goes for the power you can get on a tram."
