‘Demand for EVs way slower than was anticipated in India’
The trend mirrors what Mercedes has seen in its 118 overseas markets, says co’s regional head
Mercedes Benz, which recently joined a growing chorus of automakers who have delayed their internal combustion engine (IC-engine) phase out plans, said that the pace of customer demand for electric vehicles has been much slower than anticipated in India, mirroring a global trend seen in Mercedes Benz’s 118 otherwise diverse and “heterogenous” overseas markets.
“It (the demand growth) certainly hasn’t gone the way the automotive industry wanted,” Sagree Sardien, head, Region Overseas, which comprises markets such as India, Australia and South America, said, adding that the company will look to provide an IC-engine variant for every EV offered in the market to cater to this slow pace of adoption and offer customers the flexibility to choose a solution that works for them. India is the fifth largest in Mercedes Benz’s overseas regions outside of North America, China, and Europe, and has the potential to become the third largest market in the region over the next 2–3 years, she told reporters in New Delhi on Tuesday.
India falls behind countries such as Japan,
Korea, Australia, and Turkey in terms of sales for Mercedes Benz. “Over the coming years, I expect to see India in the top three markets at least, so it’s a significant contributor to our overall business itself. Year-on-year we have been reporting double digit growth in our top-end vehicle sales and I can see the trend continue in 2024 and even beyond. Of course we need to have a lot of strategic patience and resilience to observe this in the market. India is a market of strategic relevance but you have to be patient to see this growth,” she said. “We’ve brought only 3 BEVs to India so far and this year we will introduce three more BEVs, including the Mercedes Benz EQS Maybach. As you may evidence, customers’ preferences are obviously at a much slower pace and demand than we anticipated. So we will go according to the preference of our customers. We do not change our strategic direction—it is clear the future is electric for us, but we ensure we cater for our customers’ changing preferences. We are at 4% EV penetration for Mercedes Benz in India and I am confident we will see doubledigit growth in electrification for our product range in this market,” Sardien explained.
Further, she added the degree of electrification is very different across markets globally. “Our purpose is to create the right foundation and fundamentals to foster electrification in the future and we have to go at this pace according to the way in which our customers are adopting and how their preferences are changing,” she said. A key observation for Mercedes in the last few months is that customer adoption is not as high as anticipated, for various reasons like technology, range anxiety, and charging.
Mercedes Benz says it aims to get to a double digit EV penetration and then monitor the EV transformation in the market. There is no defined date (for phasing out IC-engine vehicles) in India. Mercedes Benz is also looking to expand its network to 10 new cities, primarily in tier-2 and tier-3 markets in India. The Stuttgart-based luxury carmaker expects the luxury EV market, which is close to 50,000 units in annual sales, to double to 100,000 units only by the end of the decade.
The company, however, ruled out immediate plans to expand capacity at its Pune facility, or even explore exports from India as the region overseas is well-catered to by various assembly plants in those markets, Sagree said.
Tier 2, tier 3 cities where Mercedes will spread network
Number of BEVs Merc is to launch in India this year