Mercedes-Benz walks back EV sales target on waning demand

Mercedes-Benz Group AG warned that electric vehicles will remain more expensive than their combustion-engine siblings for years to come as the luxury-car maker braces for cooling demand for cars with a plug.

The manufacturer on Thursday forecast lower returns in 2024, citing challenges from a slowing economy. Mercedes also pared back its outlook for EV sales, with demand mainly in the small and medium segments where it’s not as present.

Variable cost parity between EVs and traditional cars “is many years away,” Chief Executive Officer Ola Källenius told Bloomberg Television. “You can see that in the pricing.”

Mercedes still rose as much as 5.4% — the steepest intraday gain since November 2022 — after announcing a €3 billion ($3.2 billion) share buyback program. The CEO flagged potential for additional buybacks if Mercedes can keep producing free cash flow like it has in the past years.

While the company is rewarding shareholders, its push to sell more top-end cars like the S-Class to bolster profits and fund the costly transition to battery technology is running into first roadblocks.