Mercedes readies first Tesla rival in US$12b attack plan

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FRANKFURT (Sept 4): Mercedes-Benz, the world’s largest maker of luxury automobiles, is rolling out its first in a series of battery-powered vehicles, adding to a growing array of high-end brands targeting Tesla Inc.

The Mercedes EQC crossover, which starts production in the first half of next year, is part of a plan to develop a range of vehicles for its EQ electric line, Daimler AG Chief Executive Officer Dieter Zetsche told reporters in Stockholm before the car’s world premiere. The plan was to invest 10 billion euros (US$12 billion) on the project, but the spending has become “more than that,” he said Tuesday, without specifying figures.

The car joins models like the Porsche Taycan, Audi E-tron and Jaguar I-Pace in putting pressure on Tesla as the California-based carmaker struggles to ramp up production of the Model 3 and make a profit. Mercedes plans to make its first electric vehicle at its factory in Bremen, where the automaker also makes its best-selling C-Class sedan. Daimler will assemble the vehicle for the Chinese market at a facility in the Asian country.

Including the Smart brand, which will abandon combustion engines in coming years, Daimler plans to offer 10 fully electric cars by 2022. To underscore the shift, Mercedes will spend 1 billion euros on battery manufacturing to create a network of eight facilities globally.

Mercedes and other luxury brands are pushing aggressively into electric cars to challenge Tesla after its success in wooing wealthy buyers with the Model S. Zetsche said that he expects demand for battery-powered vehicles to eat into sales of conventional cars rather than lure new customers.

In addition to responding to shifting consumer tastes, electric models are critical to meeting increasingly stringent emissions standards. Some countries like the UK and France are even planning to ban combustion engines in the coming decades.

Establishing electric cars would help Daimler move beyond concerns over its diesel vehicles. Germany’s Transport Ministry forced the manufacturer to recall 774,000 cars over allegations that they were equipped with questionable software that made them pollute more on the road than during test results.