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With $1 Billion U.S. Electric Push, Mercedes Plots Tesla Attack

With $1 Billion U.S. Electric Push, Mercedes Plots Tesla Attack
Setting the world’s largest luxury-car maker up to battle with battery-car specialist Tesla Inc. on its home turf, Daimler AG plans to spend $1 billion to start production of Mercedes-Benz electric vehicles at its Alabama factory.
The company said in a statement that more than 600 jobs in the region would be created by the German automaker as it builds its fifth battery plant globally there. Making Stuttgart-based Daimler the first European company to assemble plug-in autos in the U.S. and taking on Tesla’s Model X, the Alabama factory will assemble electric sport utility vehicles.
“We’re celebrating our 20th anniversary at our production facility in Tuscaloosa, Alabama, and we’re taking this as an opportunity to expand the operation and further fuel growth,” production chief Markus Schaefer said in a Bloomberg TV interview. “We’re very confident for future growth in the U.S. in the long-term.”
The real target is certainly the intensifying rivalry with Tesla, even while the investment could ease tensions over President Donald Trump’s claims that too many German cars were being sold to Americans. Putting pressure on the brands to defend their image as automotive innovators, last year, the Palo Alto, California-based carmaker’s flagship Model S sedan outsold the BMW 7-Series and the Mercedes S-Class.
The carmaker’s shift to electric vehicles is taking shape is shown by Daimler’s investment. Chairman Wang Chuanfu told a group of reporters in the southern Chinese city that in order to expand its Denza joint venture with BYD Co. in China with additional models, the German manufacturer is also holding talks.
Sales battery-powered vehicles are estimated to take off in the near future and Daimler is preparing for such a time like other automakers. According to estimates by Bloomberg New Energy Finance, denoting about 4 percent of the U.S. auto market, U.S. sales are projected to grow fourfold from last year to 643,000 in 2021. More than one-third of sales in 2030 is expected to be accounted for by the segment.
But the shift is proving costly. As global automakers accelerate efforts to roll out cleaner vehicles amid tightening emissions rules across the globe, in order to compensate for weaker margins from electric cars, Daimler laid out a plan last week to slash 4 billion euros ($4.8 billion) from spending by 2025.
This month at the Frankfurt auto show, Mercedes unveiled an electric hatchback as part of a 10 billion-euro green-car rollout. The manufacturer will add electrified versions across its model range in addition to the new EQ line of battery-powered cars. As of 2020, offering models with combustion engines would be gradually stopped by Daimler’s Smart city-car brand.
Mercedes started assembling vehicles in Alabama 20 years ago after it had topped BMW as the top luxury auto brand in the U.S. last year. With some 70 percent of assembled vehicles slated for export to global markets, the factory has since emerged as one of the brand’s main manufacturing hubs worldwide.

Christopher J. Mitchell

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