Mercedes-Benz Sub-Brand for Electric Models to Start with 310-Mile EV

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With the continued strong sales of Tesla showing that luxury EVs are more than a blip in the market reserved for geeky engineers, tech moguls, and the Hollywood crowd, Mercedes-Benz is now amping up its plans to produce a long-range electric vehicle to compete with the Silicon Valley automaker. And, based on recent reports, that will be only the first of an entire sub-brand of electric cars.

Dieter Zetsche, CEO of Mercedes-Benz’s parent company, Daimler, said in June that the automaker was planning an electric car for the Paris Motor Show in October. This model is expected to be a direct rival to the Tesla Model S, with a 500-kilometer (310-mile) range to meet or exceed what that model can deliver. To built in Germany, it’s also likely to wear whichever new sub-brand moniker Mercedes-Benz has in mind to counter BMW’s i label.

Timing Is Right

With battery costs falling rapidly, and continued strong interest in electric cars—just look at the reception for Tesla’s Model 3 and its 373,000 current reservations—Mercedes-Benz is now looking at EVs as a viable business within the next five to 10 years. “It is very important to get the right timing,” Zetsche said last month in an analysts’ call regarding second-quarter financial results. “As a tendency, and as a trend, we have become more bullish in that regard.”

To get there, the company is investing heavily in its own research and development toward EVs; it’s part of a larger plan to push total research and development spending upward from levels of $6.3 billion in 2014 and $7.3 billion in 2015.

Passenger cars aren’t the only thing that Daimler aims to electrify in the near future. With the recent Urban eTruck prototype, it’s eyeing all-electric distribution and delivery tasks within cities; and it believes that there’s a big future in semi-automated, electric city buses.

The politics and demand for EVs in Europe may be turning, too, with mounting pressure after the Volkswagen diesel emissions scandal—even in Germany, where diesel has been championed by automakers, government, and the market alike such that diesels have made up the majority of the passenger vehicle market in recent years. A high-profile lawsuit filed this past week by the German state of Bavaria, seeking damages from VW, underscored that shift.

Mercedes-Benz Was an Early Tesla Lifeline

It’s worth remembering that Mercedes-Benz hasn’t exactly been unaware of Tesla; rather, it’s been invested in (and somewhat allied with) the company for years. Parent company Daimler owned a nearly 10-percent stake in Tesla Motors beginning in 2010, though its remaining four-percent stake was sold in 2014. It has purchased Tesla batteries for the B-Class Electric, and Tesla developed the entire propulsion system for an early version of the Smart Electric Drive (ED).

That old partnership could be useful if Mercedes-Benz decides to negotiate for access to one Tesla advantage: Its network of Supercharger fast-chargers. BMW (with Nissan) and Volkswagen have made significant investments into installing more fast-chargers in the U.S., but it’s been slow going, and they’re neither as convenient, as ideally spaced, nor as uniform as what users find with the Supercharger network.

One advantage for Mercedes-Benz could be its full network of dealerships, and the sales and support they offer—whereas Tesla’s Apple-like direct-sales methods still aren’t permitted (in their full form) in all U.S. states. We expect that Mercedes-Benz may also get right some of the finer luxury and comfort-oriented points that Tesla missed in the Model S and Model X.

Tepid EV Efforts So Far: Excitement on the Way?

Mercedes-Benz’s efforts with pure electric vehicles in the U.S., thus far, have been tepid. In addition to the Smart Fortwo Electric Drive, the automaker only offers the B-Class Electric Drive, which remains a compliance car only available in ZEV-mandate states.

Mercedes-Benz has, according to Reuters, developed a distinct design for its all-electric models, and that Paris show car will be the first to exhibit that new look. We’re curious to see how it fits into what soon could be a crowded field. The Volkswagen Group is working on a multitude of electric vehicles, and all-electric Audi and Porsche vehicles could reach the market within three years; BMW is planning an all-electric version of the 3-Series; and Jaguar is reportedly working on all-electric models—a fastback sedan and SUV—that would directly rival the Tesla Model S and Model X.

With a product refresh for BMW’s ‘i’ brand put off for nearly five years, Mercedes-Benz is looking like one of several automakers that could potentially leapfrog its rival in Munich and take a spot as a technology leader in EVs, too.

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