Mercedes-Benz CEO says luxury drivers will help spur the transition to electric vehicles

Mercedes-Benz CEO Ola Kallenius told CNBC’s Jim Cramer that while he thinks there will be a market for vehicles with internal combustion engines for a while longer, consumers – particularly in luxury segments – will insist on purely electric cars and SUVs sooner rather than later.

In fact, he said, it’s already starting to happen.

“Step by step, we see the market turning,” Kallenius said in an interview as part of CNBC’s ESG Impact conference on Thursday. “I really believe that in this decade, we will flip from being based upon high tech internal combustion engines to going dominant electric, if not all electric, in the luxury segment.”

Mercedes’ corporate goal is to be carbon dioxide neutral by 2039. The company has said that it will have fully electric versions of all of its models by 2025, and that all of the new vehicle architectures it develops after that date will be electric-only.  

“We’ve all realized that climate change is real, the CO2 problem needs to be solved,” Kallenius said. “And where does that problem end? It ends on the desks of our engineers.”

It’s a somewhat surprising message from the company that literally invented the internal-combustion car over 130 years ago.

“We do it because we think it’s right,” Kallenius said. “But we also do it because we think it’s going to be the better business. I don’t think there’s any question for a modern company, a forward-thinking modern company, that we need to decarbonize.”

Mercedes plans to sell its electric vehicles alongside internal-combustion models for at least several more years.

But Kallenius expects that most of Mercedes’ affluent customers will favor the electric versions in time.

“As long as you give the customer a superior product to what they had before, they’re open minded for a switch” to electric models, he said. “The experience for the customer in terms of the torque, the performance, everything is fantastic.”

In the very near term, making that switch might be a challenge. Although Mercedes is ramping up EV production as quickly as it can, Kallenius acknowledged that “pretty much everything is sold out” for the year right now.

Mercedes delivered about 31,000 EVs in the first half of 2022.

“I think maybe it’s a good problem to have,” he said.