Nicholas Speeks (L) with Hubertus Troska in front of the Concept EQA
FRANKFURT – Less than a year after Daimler’s Mercedes-Benz unit unveiled its EQ dedicated electric nameplate at the Paris Motor Show, the world’s leading luxury brand is speeding up its electrification push with a key announcement at the Frankfurt Motor Show: production of EQ vehicles will begin in China by 2020.
The first EQ model to go into production at Beijing Benz Automotive Co., Ltd. (BBAC), Daimler’s joint venture with BAIC Group, will be the EQC, according to Hubertus Troska, Member of the Board of Management of Daimler AG, responsible for Greater China. It is part of a global approach that will see EQ vehicles rolling off lines of its global production network on four continents.
Troska confirmed the news in an interview on September 12 on the sidelines of the IAA. The previous evening, his boss – Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars – announced that Mercedes-Benz would electrify its entire lineup by 2022 with more than 50 electrified model variants and completely convert the smart brand to all-electric drive in Europe and North America by 2020.
“We are all in and investing €10 billion in our electrification efforts and China will be a strong part of that strategy,” said Troska. “The success in China depends on local production of the right products.”
Troska believes that there is stronger determination to push electric vehicles in China and therefore it will be a core market. In fact, China is so important that he helped unveil the Concept EQA – the first time that Daimler’s board member responsible for China unveiled a global debut at a major international auto show outside China.
Troska told CBU/CAR that currently the industry and players are still in a transition phase toward an electric future as infrastructure and customer demand are being created but Mercedes-Benz wants to motivate the market and is convinced that when that time comes it will be ready to offer compelling products with an aim to take a big share of the electrified market.
“China puts even more emphasis and pushes new energy vehicles even more so it’s only normal for us to give a big focus on our NEV development in China,” said Troska.
He reiterated that Daimler will stick with a two-fold electrification strategy in China – one with the Denza brand through its technology JV with BYD and the other through the BBAC JV with BAIC Group. In fact the Denza now offers a 400-km range variant and has been available at select Mercedes-Benz showrooms to drive sales, which stand at about a couple of thousand units a year and product enhancements are coming soon, according to Troska without revealing more details.
“We are quite happy with the setup and we have a good understanding with BYD to push it even further,” said Troska.
He expects Denza to help Daimler fulfill the yet-to-be-finalized NEV credit policy, which requires automakers to meet a certain percentage of sales that are NEVs. “We are a 50 percent shareholder, this is our assumption and our hope is we can benefit from it,” said Troska.
Daimler will also push strong electric products together with BAIC through BBAC, where the two partners announced a ¥5 billion investment earlier this year to localize battery pack production using locally-sourced cells for the EQC and ensuing products. In fact Troska disclosed that Daimler is working with local battery supplier CATL, among others, on different projects including even global cars.
“We see the competitiveness of Chinese battery and cell technology advancing quickly, so of course Daimler globally is also very interested to look at the Chinese battery suppliers,” said Troska.
He added that as a 10 percent shareholder in BAIC Motor, the Hong Kong-listed subsidiary of BAIC Group, Daimler is in discussions to become a minority shareholder of BAIC BJEV, the NEV arm of BAIC Motor as a “natural consequence.”
“It will give us better insight into the development of the Chinese NEV market. It will also potentially help us with whatever regulations to fulfill. It is part of our long-term vision that we become more and more ‘Chinese,’” said Troska.
Nicholas Speeks, president and CEO of Beijing Mercedes-Benz Sales Service Co., Ltd. (BMBS), echoed Troska’s comments and said that as a part of the Chinese commercial community and in order to be successful in China, Daimler has to meet the relevant requirements from the government through “push and pull” and it will offer Chinese customers a choice of combustion, electric and hybrid vehicles to drive demand.
“It will be a challenge at the moment,” said Speeks. “But we have to invest heavily in the capabilities required to meet demand.”
And rather than worrying about what kind of regulations are set where and when internal combustion engine vehicles completely phase out, Dr. Zetsche said in a separate interview that the task at hand is to develop electric cars so exciting that very few customers can resist from buying them.
“When we accomplish that, no body has to mandate and regulate any manufacturers to build something or force a customer to buy something,” said Dr. Zetsche. “Our intention at this point of time is the next generation of electric cars which we are developing right now and launching 2019, 2020, 2021 and 2022 – products which customers want to have. That’s for me more the question than when and how the breakthrough will happen.”
For now, Dr. Zetsche believes Daimler is in the most profitable time of its history and will use the profit to build a successful future with alternative energy vehicles.
Asked if China can develop a successful luxury brand, Dr. Zetsche’s answer was a clear yes and he mentioned Chinese-based startups who intend to build electric driven luxury cars with Chinese capital. “You don’t need 130 years of experience in the combustion area and all the investment. The opportunity is definitely much higher in this new energy world than it used to be before,” said Dr. Zetsche. “Quite frankly, very legitimately that is something I believe the Chinese government does see and others stand an opportunity.”
On the autonomous driving side, Daimler has set off its Intelligent World Drive using its latest S-Class which will traverse five continents until January 2018, with a stop in Shanghai in October.
“Clearly driving autonomously in cities like Beijing, Shanghai and Chengdu is different than in Frankfurt,” said Troska. “We want to take the (autonomous driving) technologies to all five relevant continents, run them, operate them in the environment and learn and improve the systems to make sure they truly operate in each of their environments and especially in China.”