Daimler, Mercedes-Benz’s parent company, announced last week a $1 billion investment in electric car and battery production in the US.
As with any new EV investment from a legacy automaker, the media painted it as an “attack on Tesla“, but Elon Musk, Tesla’s CEO and largest shareholder, doesn’t seem too worried about it.
The German automaker is investing $1 billion over the next 5 years to start producing electric vehicles in the US.
The money will go toward retooling for EV production at theirTuscaloosa factory in Alabama and build an adjacent battery factory to produce the packs for those vehicles and to export them for other electric car production.
It’s a rare commitment to volume electric car production in the US, but Musk argues that it’s actually not that big of an investment relative to Daimler’s size.
He added that he’d like to see them add a zero to their investment in electric vehicles – make it $10 billion.
Daimler’s biggest bet on electric vehicles actually used to be Tesla. The German automaker invested $50 million into Tesla back in 2009 – an investment that Musk said likely saved the startup from going bankrupt.
Mercedes also contracted Tesla to make the electric powertrain for a BEV version of their B-Class hatchback.
But in 2015, Daimler sold their shares for a more-than-healthy profit and they discontinued their contract with Tesla. They started to work on their own electric vehicle programs and we are now starting to see the results with the first vehicle, the Mercedes-Benz EQC, an all-electric SUV, coming to market in 2019.
Musk is not wrong. Daimler generated over $180 billion in revenue last year. So $1 billion is nothing for them.
But that’s not their only EV investment. That’s just what they are investing in the US.
Earlier this year, Daimler announced that they will spend $11 billion on 10 new electric car models by 2022. Here’s Musk’s missing zero. They also recently built their own new battery Gigafactory for electric vehicles in Germany and they are investing $740 million in another battery factory in China.
At this point, there’s very little doubt in my mind about Daimler being serious about producing electric vehicles, but Musk still has a point.
Daimler’s main business and most of their assets are still linked to gas-powered cars and therefore, they are being very cautious about any investment plans, like volume electric car production, that could hurt that business.
Mercedes-Benz likes to remind everyone that they invented the internal combustion engine, which it makes it even more difficult for them to admit that it is a dying technology. Hopefully, they can admit it soon and at that point, we should start to see even more EV investments from them.