Forbes.com: Mercedes-Benz is set to begin shipping its first mass produced pure electric vehicle B-Class electric drive in the U.S. by the end of this month or early July. With this launch, Mercedes will now compete with models such as the Nissan Leaf and the popular Tesla Model S in the fast growing U.S. plug-in electric vehicle market. This also places the Mercedes B-Class ED in direct competition with its chief rival BMW’s i3 pure-play electric car. Although PEVs presently constitute an extremely small portion of the overall U.S. automotive industry, with growing consumer attention towards electrically-powered vehicles and higher investments in this sector to improve infrastructure, the PEV segment could become a crucial growth driver for automakers going forward. In particular, Mercedes-Benz will aim for significant volume-growth in the U.S. in the long term, in order to meet its goal of becoming the largest luxury automaker by the end of the decade. The German carmaker lost the global luxury sales crown to BMW in 2005, and now ranks third behind both its compatriots BMW and Volkswagen AG‘s Audi in terms of global volumes.
The U.S. remains the largest market for Mercedes-Benz, accounting for over one-fifths of all unit sales for the brand last year. Mercedes fended-off growing competition from BMW to hold the lead in the U.S. luxury auto market last year, however, the company has since posted lower volumes compared to the latter in the first five months of the year in the country. With both BMW i3 and Mercedes B-Class ED launching almost side-by-side, the competition in the U.S. PEV market is set to heat up.
BMW i3 And Mercedes B-Class ED Go Head-To-Head
Led by a 25.5% increase in sales of light trucks, including sports utility vehicles, BMW has overtaken Mercedes in the first five months of this year, selling 127,181 units in the U.S., up 12% year-over-year. In contrast, the brand Mercedes has sold 125,118 units in the country during this period, up 6.5% from 2013 levels. BMW i3 recorded the highest sales for any PEV in its debut month, selling 336 units in May. The Mercedes B-Class ED has a base price of $41,450, around $100 more than the i3, putting it in direct competition with BMW’s electric car. While the B-Class ED is more spacious than the i3, the latter is estimated to travel further on a single charge, with a range of about 118 miles on the EU cycle. The Mercedes car has a range of around 85 miles, with up to 25-30% more travel distance given by the option of an extended range. Daimler owns a 4.3% stake in Tesla, which provides the propulsion system for the B-Class ED. Mercedes leveraged the technical know-how of Tesla for the development of its own electric car, which could possibly boost sales of the B-Class ED as consumers might be persuaded to buy a car amalgamating Tesla’s technology and Mercedes’ strong brand recognition.
U.S. PEV Market Provides Potential Growth Opportunities
How the head-to-head between the B-Class ED and the i3 unfolds in the U.S. remains to be seen. But despite possibly eating into each other’s sales, both Mercedes and BMW could add meaningful incremental volumes by penetrating the fast growing plug-in electric vehicle market. Demand for electric vehicles is rapidly rising around the world mainly due to a relatively less harmful impact on the environment and lower running costs, as compared to gasoline-powered engines. In addition, governments around the world provide various incentives to boost electric vehicle sales. Moreover, PEVs also have lower battery prices, adding to their appeal. However, sales of these vehicles haven’t picked up as previously estimated primarily due to lower ranges, and lack of infrastructure supporting battery charging.
But with more and more companies developing electric cars with higher ranges and building charging stations, plug-in sales are expected to continue growing at a fast pace. For example, Tesla, which manufactures the Model S having an unprecedented range of up to 300 miles, was recently in talks with BMW to divide costs of building charging facilities and also create a common infrastructure, thereby cutting costs for automakers and encouraging electric vehicle sales. Due to these reasons, the PEV market is expected to sell over 2.7 million units globally by 2018, a massive rise from around 180,000 unit sales in 2013. According to our estimates, this would mean that plug-in vehicles would constitute around 2.6% of the global automotive market by 2018, up from a very small 0.3% last year. As the U.S. constitutes over 45% of the global PEV market at present, both Mercedes and BMW will look for growth in this market going forward. The U.S. PEV market grew by over 85% year-over-year to 97,507 units in 2013, and has further seen volumes rise 30% through May.
U.S. Luxury Sales Lead Could Be Decided By PEV Sales
The Nissan Leaf presently leads the plug-in market in the U.S., with sales of 10,389 units through May, and could sell close to 30,000 units in the country in total this year. Although the Leaf has a much lower price (around $29,000) as compared to both the B-Class ED and i3, the established luxury brand appeal of both Mercedes and BMW could help the automakers attract consumer attention. These premium compact electric vehicles could also eat into the sales of other PEVs such as the Toyota Prius, Chevrolet Volt, and Ford Fusion Energi, heating up competition in the world’s largest plug-in electric vehicle market.
Seeing how BMW trailed Mercedes by only 3,248 unit sales in the U.S. last year, and how Mercedes trails BMW by 2,063 unit sales so far this year, the reception and sales of the new B-Class ED and the i3 could be crucial in the race for the U.S. luxury sales crown this year.
The U.S. remains the largest market for Mercedes-Benz, accounting for over one-fifths of all unit sales for the brand last year. Mercedes fended-off growing competition from BMW to hold the lead in the U.S. luxury auto market last year, however, the company has since posted lower volumes compared to the latter in the first five months of the year in the country. With both BMW i3 and Mercedes B-Class ED launching almost side-by-side, the competition in the U.S. PEV market is set to heat up.
BMW i3 And Mercedes B-Class ED Go Head-To-Head
Led by a 25.5% increase in sales of light trucks, including sports utility vehicles, BMW has overtaken Mercedes in the first five months of this year, selling 127,181 units in the U.S., up 12% year-over-year. In contrast, the brand Mercedes has sold 125,118 units in the country during this period, up 6.5% from 2013 levels. BMW i3 recorded the highest sales for any PEV in its debut month, selling 336 units in May. The Mercedes B-Class ED has a base price of $41,450, around $100 more than the i3, putting it in direct competition with BMW’s electric car. While the B-Class ED is more spacious than the i3, the latter is estimated to travel further on a single charge, with a range of about 118 miles on the EU cycle. The Mercedes car has a range of around 85 miles, with up to 25-30% more travel distance given by the option of an extended range. Daimler owns a 4.3% stake in Tesla, which provides the propulsion system for the B-Class ED. Mercedes leveraged the technical know-how of Tesla for the development of its own electric car, which could possibly boost sales of the B-Class ED as consumers might be persuaded to buy a car amalgamating Tesla’s technology and Mercedes’ strong brand recognition.
U.S. PEV Market Provides Potential Growth Opportunities
How the head-to-head between the B-Class ED and the i3 unfolds in the U.S. remains to be seen. But despite possibly eating into each other’s sales, both Mercedes and BMW could add meaningful incremental volumes by penetrating the fast growing plug-in electric vehicle market. Demand for electric vehicles is rapidly rising around the world mainly due to a relatively less harmful impact on the environment and lower running costs, as compared to gasoline-powered engines. In addition, governments around the world provide various incentives to boost electric vehicle sales. Moreover, PEVs also have lower battery prices, adding to their appeal. However, sales of these vehicles haven’t picked up as previously estimated primarily due to lower ranges, and lack of infrastructure supporting battery charging.
But with more and more companies developing electric cars with higher ranges and building charging stations, plug-in sales are expected to continue growing at a fast pace. For example, Tesla, which manufactures the Model S having an unprecedented range of up to 300 miles, was recently in talks with BMW to divide costs of building charging facilities and also create a common infrastructure, thereby cutting costs for automakers and encouraging electric vehicle sales. Due to these reasons, the PEV market is expected to sell over 2.7 million units globally by 2018, a massive rise from around 180,000 unit sales in 2013. According to our estimates, this would mean that plug-in vehicles would constitute around 2.6% of the global automotive market by 2018, up from a very small 0.3% last year. As the U.S. constitutes over 45% of the global PEV market at present, both Mercedes and BMW will look for growth in this market going forward. The U.S. PEV market grew by over 85% year-over-year to 97,507 units in 2013, and has further seen volumes rise 30% through May.
U.S. Luxury Sales Lead Could Be Decided By PEV Sales
The Nissan Leaf presently leads the plug-in market in the U.S., with sales of 10,389 units through May, and could sell close to 30,000 units in the country in total this year. Although the Leaf has a much lower price (around $29,000) as compared to both the B-Class ED and i3, the established luxury brand appeal of both Mercedes and BMW could help the automakers attract consumer attention. These premium compact electric vehicles could also eat into the sales of other PEVs such as the Toyota Prius, Chevrolet Volt, and Ford Fusion Energi, heating up competition in the world’s largest plug-in electric vehicle market.
Seeing how BMW trailed Mercedes by only 3,248 unit sales in the U.S. last year, and how Mercedes trails BMW by 2,063 unit sales so far this year, the reception and sales of the new B-Class ED and the i3 could be crucial in the race for the U.S. luxury sales crown this year.
