Mercedes Says EVs Aren't Going To Get Any Cheaper

Mercedes-Benz is investing in electrification through new models and has been spending billions on new battery plants and other EV infrastructure. The company is currently restructuring how its EV charging network operates in Europe and is starting to churn out more and more fully electric models, but it is still being brutally honest about one thing: electric cars are still significantly more expensive to manufacture than cheap gas cars, and according to Mercedes-Benz' chief technology officer, EVs may not get much cheaper in the next few years. Bummer, but what did we really expect when a car like the AMG EQS starts at almost $150k?

According to Markus Schafer in an interview with Road & Track, the significant initial cost of manufacturing an electric vehicle is still massive, despite significant reductions in the cost of lithium-ion battery packs in recent years: "Coming to (a battery price of) $50 per kilowatt, which would lead to a comparable cost basis to that of an ICE engine, I would say this is far out there. I don't see that with the chemistry that we have today." Schafer believes that with our current battery technology, reaching a price parity equal to or greater than that of the production cost of major ICE components is still years away and that the battery tech needed to reach this level does not yet exist, or exists only in tightly controlled laboratories.

"It's a crystal ball thing to answer," he said. "And it will very much depend on mining capacity [for raw materials] and the global ramp-up of EVs. So these are the two main factors. But I would say, for quite a while we will see headwinds on the raw material side," he says. It's simple really: while economies of scale will naturally bring down costs, the sheer explosion in demand for EVs and other electronic products that use the same raw materials has created such a big demand, that the physical act of getting Lithium out of the ground has become a bottleneck.

"So the anticipated decrease is well below 100 US dollars or Euros per kilowatt, that might take longer. The chemistry, honestly, if we're staying with the ingredients we have today... there's not that breakthrough foreseeable." Currently, the most affordable Mercedes-Benz EV is the EQA SUV which carries a price tag of $55,300. Not exactly pocket change.