That Avatar-inspired concept car from CES was outlandish, but Mercedes's plans for greener mobility are based in the real world—witness, for instance, the just-introduced E-class hybrid.



Daimler chairman Ola Källenius says it took regulations to get the industry to focus on EVs and sustainable practices, but Mercedes is now ready to lead even without those rules.

Take the EQC, which is delayed in the U.S. because demand in Europe is too strong.

Without question, the Vision AVTR concept vehicle that Mercedes-Benz showed off at CES in early January was a futuristic, outlandish beast. It explored ways drivers can connect with their cars, as well as ways an electric vehicle can enhance its environmental credentials through a compostable battery.

The AVTR was also, according to Daimler and Mercedes-Benz chairman Ola Källenius, a concept that could act as a champion for the big ideas and changes that are coming to the auto industry. In the real-world, of course, this shift to greener mobility is not exactly driven by movies or concept cars, as Källenius well knows.

2021 Mercedes E-class will have a hybrid model. Mercedes-Benz

Speaking from Europe during a digital version of the canceled Geneva auto show, Källenius said Mercedes's powertrain lineup will remain busy for the next decade or so. Currently, the automaker offers the traditional gasoline and diesel engine options, with some of them going to 48-volt systems. Then there are the newer plug-in-hybrid and all-electric models being added to the mix.



"If you look at the next few years, leading up until around 2025, you're going into what I would call peak complexity," he said. "As we go from 2025 approaching 2030, we are going to come together again, start trimming that tree and, especially on the combustion side, simplifying the powertrain portfolio."



Who Wants a Plug-In Mercedes?

Källenius addressed the idea of who wants to buy a Mercedes plug-in. First, he said, are the people who have already made up their minds to go electric.

"They want to go zero emission, they want an electric vehicle, and they want a plug-in hybrid. They seek us out. And, of course, they are usually quite informed," he said.

The second main group are those who will drive a plug-in Mercedes because someone else told them to. Källenius said 50 percent of Mercedes sales in Europe are to businesses buying them for their employees to use as company cars. Thanks to taxation rules, these companies are opting for the greener choice.

"We are seeing that the companies are starting to change their policies." he said. "They want to have lower CO2 emissions for their car fleet, so the company makes the decision for the user. Here in Germany, as an example, when they changed the taxation law for a company car so you pay half the tax if you have a plug-in or an electric vehicle compared to a combustion only, demand just went through the roof."



"In general, [environmental] regulation over the last decades has driven the industry," he said in a discussion with reporters. "I think we have also come to a point, and this is certainly true for Mercedes and Daimler as a whole, that we have mentally flipped a switch. We know that the long-term future needs to be CO2-free, CO2-neutral mobility."



"We Are Now on This Path"

Källenius said automakers face a choice to either get dragged kicking and screaming into the new reality or to become "one of the architects" of a new, cleaner mobility.

"Almost regardless of regulation, we are now on this path," he said.

It's a path that is already behind schedule. Mercedes's all-electric EQC SUV, for example, has been delayed in the U.S. by almost a year because the company can't build enough just yet.

2020 Mercedes-Benz EQC. Mercedes-Benz

"We had to make a tough choice," he said. "We have such a demand in Europe that demand by far outstrips supply, even though we are ramping up and adding additional battery lines to the production. Also, the new European fleet average regulation kicks in in 2020. We decided to go all in on Europe. We would have launched here [in the U.S.] in March, and now it's going to be nine months later."

Källenius points out that Mercedes currently has a strong lineup of vehicles in the U.S., which made delaying the launch of the EQC here acceptable. When the car arrives, Källenius said U.S. consumers will be ready for it, he said, even if EVs are still a bit of a mystery to some shoppers.



"[EV acceptance has] been a gradual development and not a homogenous one," he said. "The U.S. is one market but it's many markets, of course. You have little ecosystems like Silicon Valley or wherever, where you have a bunch of early adopters and a lot of things happen quickly. I think the EV market is moving out of that first phase . . . to [one with] more and more mainstream pull demand."

Källenius said Mercedes is making and will continue to make the required investments to become a company that's an "architect" for new mobility.

"If I look at the next five years, it's double-digit billion-dollar investments that are going into this," he said. We are in one of the most, if not the most, capital-intensive periods in the automotive industry as we're going through this transformation."

One example of this investment is a just-opened electric vehicle production facility in China, which will make the EQC for the China market. Källenius would not give out a specific number for how many EQCs Mercedes expects to sell in the car's first year on the market, just that it will be in the tens of thousands across the globe in 2020, mostly in Europe.

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