In an effort to keep up with the growing competition from Chinese manufacturers and reduce the difference with the leading U.S. giant, Tesla, BMW and Mercedes have entered the electric car market more aggressively than ever before. They recently revealed electric concept cars and introduced new platforms for their upcoming electric vehicles during the IAA Mobility motor show in Munich, Germany.
European automakers, once seen as lagging behind Chinese competitors like BYD and Tesla, have had to quickly show their readiness to play important roles in the electric vehicle era.
Last Sunday, Mercedes-Benz introduced the Concept CLA Class, an electric vehicle built on a new architecture that will serve as the foundation for future battery-powered cars. According to the company, this concept car offers an impressive range of 750 kilometers (466 miles) and can cover 400 kilometers with just a 15-minute charge.
Mercedes CEO Ola Kallenius expressed great excitement for the car, calling it a groundbreaking advancement for the German company.
On Saturday, BMW revealed the ‘Vision Neue Klasse,’ an electric concept car that represents the company’s strong commitment to electric vehicles (EVs). This new approach, called ‘Neue Klasse,’ is a fresh architectural direction for BMW’s EV lineup, with the first vehicles based on this platform expected in 2025.
BMW CEO Oliver Zipse announced plans to double its EV sales this year and aims for 15% of its global sales to be battery EVs by the end of 2023.
Both Mercedes and BMW have shifted from adapting combustion engines to creating dedicated EV platforms, indicating a significant shift towards adopting the electric vehicle era.
Analysts acknowledge that these announcements from Mercedes and BMW are substantial steps forward, but they may still lag behind Tesla in the electric vehicle market.
Impact of New Electric Vehicle Platforms
The new platforms introduced by Mercedes and BMW provide a preview into the capabilities that European original equipment manufacturers (OEMs) will have in the electric vehicle market. Although these cars are likely a year away from market availability, their specifications suggest that European OEMs have the potential to produce highly attractive products, according to Daniel Roeska, a senior research analyst at Bernstein Research.
Daniel Roeska also noted that these innovative platforms will significantly reduce the difference between European automakers and Tesla and their Chinese competitors, though they may not completely close it.
There is a strong focus on a pricing battle among these automakers.
BMW and Mercedes are deepening their involvement in the highly competitive electric vehicle market, which is mostly led by Tesla and various Chinese companies. In the second quarter, Tesla held a 20% share of the global EV market, while BYD secured 15%, according to Counterpoint Research. Tesla initiated price reductions in 2023, increase the competition and placing a higher priority on market share over short-term profit margins.
Both Mercedes and BMW operate in the premium segment of the market, where they compete with vehicles like Tesla’s Model S and Model X. As they prepare to introduce more electric vehicles in the coming years, Mercedes emphasizes that its primary focus is on delivering value rather than pursuing high sales volumes.
Volkswagen Strategy and Tech-Centric Shift in the EV Market
Meanwhile, Volkswagen’s strategy revolves around launching vehicles at different price points to target various market segments. The company announced plans to introduce eleven new all-electric models by 2027, with the ID. 2all, an electric vehicle priced at less than 25,000 euros ($26,942), set to debut in 2026. Volkswagen also showcased the ID. GTI Concept electric vehicle at the IAA show, with a production version scheduled for 2027.
Technology takes center stage as Tesla and China lead the electric vehicle market. In this era of battery-powered cars, it’s no longer just the car’s design or engine that attracts consumers but also the technology it incorporates.
Counterpoint Research noted that premium electric vehicles now need to emulate smartphones more than traditional cars to offer a similar experience to Tesla, the industry leader with its vertically integrated platform.
Tesla’s success is based on controlling both the car’s hardware and the software within it. Tesla’s Autopilot features, which enable autonomous driving, along with its large internal touchscreen and apps, create an experience similar to using a smartphone.
Many Chinese automakers, including newcomers like Xpeng and Nio, also market their semi-autonomous driving features.
At the IAA conference, established automakers are showcasing their technological capabilities to prove they can compete with Tesla and the emerging Chinese startups. For example, BMW introduced its Vision Neue Klasse EV with a heads-up display projecting information onto the driver’s windshield.
BMW CEO Zipse emphasized that the Vision Neue Klasse represents the company’s largest investment in the digital side of the car, including semiconductors. This approach aims to provide a thoroughly digital experience to the vehicle.
Conclusion
BMW and Mercedes are working hard to catch up with Tesla and Chinese rivals in the electric car market. They’ve introduced new electric platforms, but it’s uncertain if they can surpass Tesla. Volkswagen plans to release various electric models with different price points. Technology is crucial, with established automakers trying to compete with Tesla’s advanced features.
