Mercedes has cut lease prices for its 2016 and 2017 B250e electric vehicle in a course correction that hints at a broader electric vehicle strategy change within the company.
The cuts bring the 2016 and 2017 Mercedes-Benz 250e — formerly known as the B-Class Electric Drive — down below $300 per month at just $289 and $299 per month, respectively.
For the first few years it produced electric vehicles, Daimler struggled to define a clear path forward or a clear identity for its electric vehicles. The B-Class was a complete compromise on just about every level, with Mercedes producing the shell of its petrol-powered B-Class vehicle and Tesla producing and supplying the electric powertrain, batteries, battery management, and charging systems.
The result was a vehicle that looked and felt like the Mercedes customers expected but with a sub-optimized electric system. It achieves only 2.9 miles per kWh, which pales in comparison to the similarly priced BMW i3, which is a model of efficiency at 3.7 miles per kWh. Even the much heavier and larger Tesla Model S achieves 3.0 miles per kWh.
The B250e also lacks fast charging capability, which relegates it to city or commuting duty and all but eliminates the possibility of a road trip. In a curious twist, the documentation on the B250e itself notes that it is capable of fast charging … but with only a J1772 port, it is not physically possible.
Beyond the physical limitations, the B250e only has a range of 85 miles, which pales in comparison to the 238 mile range of the Chevy Bolt and the 200+ mile range of the Tesla Model 3.
With these obvious fundamental challenges with the B250e, the question evolves from “Why did Daimler cut the price?” to “What is Daimler going to do with so many competitors working on 200+ mile range EVs?” To answer that second question to its shareholders and its customers alike, Daimler has two primary avenues of attack in the works.
First, it is bringing EV production in-house. Buying components from Tesla was an early strategy to buy Daimler time to sit back and watch how customers would respond to electric vehicles without having to make an all-in investment to the tune of several billion dollars like Nissan did with the LEAF and BMW did with the i3 and i8.
This move comes at a time when lithium-ion cells have dropped in price significantly, allowing for range that meets customer expectations. With batteries comprising the majority of the expense of electric vehicles, this brings the cost equation down to the point where building and selling electric vehicles starts to make sense, especially for a premium brand like Mercedes-Benz. Daimler announced plans to build its own battery production facility last March. Construction then started in October 2016.
Second, Mercedes has been hard at work on its EQ brand which promises to bring EVs with 300 kilometers and 500 kilometers of range to market. This is clearly the long-term play for Daimler as it seeks to regain the market share it has lost to Tesla over the last few years.
With such deep roots in internal combustion vehicles, stemming from the partnership between the first two men to build an internal combustion vehicle in Germany, the challenge of changing the foundational corporation culture for Mercedes-Benz is real. Pivoting away from its foundations towards completely new technologies rooted in batteries and motors is a change that, until recently, it seemed the brand was not fully invested in. Now that it has finally taken meaningful steps towards EVs (and seems set to take more), time will tell whether Daimler can compete with Tesla let alone regain the market share it has lost.