Mercedes-Benz Mulls Scaling Up India EV Assembly

German luxury carmaker Mercedes-Benz is considering assembling more electric vehicles at its plant in India not merely to gain cost advantage but also to meet its zero emission mobility and carbon neutral setup goals, according to a senior company official.

Mercedes-Benz India, which currently assembles its flagship electric luxury sedan EQS at its Chakan unit, is considering localisation of other models depending on demand.

"Our final goal is zero emission mobility and carbon neutral setup, which not only means about tailpipe emissions, but also from the recyclability of the car, to the carbon footprint that we generate by producing these cars," Mercedes-Benz India Managing Director & CEO Santosh Iyer told PTI.

He further said, "We have to look at this holistically and therefore producing EVs was the logical step and we will continue in that direction as the market demand changes." Iyer was replying to a query over Mercedes-Benz India's long-term plans for local assembly of EVs in India.

Mercedes-Benz India had started assembling the EQS from October 2022 at the Chakan plant. It is the only model locally assembled out of the four EV models — SUVs EQA, EQB and EQE; and sedan EQS — that it currently sells in India. These are priced between Rs 66 lakh and Rs 1.6 crore.

Acknowledging the benefits of local assembly, he said, "I think localisation helps us to bring certain cost advantages. Today if you see an EQS is available at around Rs 1.5 crore, which otherwise would have been a bit more expensive. So that really helps us."

Besides the cost advantage, Iyer said, "It also helps us to gain a lot of knowledge on EVs, because that's a long-term setup. Today we are producing EVs in the same line as combustion engines. So we have a very flexible production plant where we are able to produce both. All these, I think are also necessary to build our knowledge level and build up as we do the transition that we have stated globally as well as in India."

Globally, Mercedes-Benz had set a target to make its entire fleet of new vehicles net carbon-neutral along the entire value chain and over the vehicles' whole life cycle by 2039 and its production plants worldwide to run 100% on renewable energy with zero CO2 emissions by the same time.

The company also aims to reduce CO2 emissions per passenger car in the new vehicle fleet up to 50% along all stages of the value chain by the end of this decade compared to 2020 levels under its Ambition 2039 initiative.

When asked if the company is open to assembling more EVs in India, he said, "We are considering I would say but it is a factor of demand also in the market that we see because to localise you also need certain threshold volumes. We are closely monitoring and we will not shy away from any investments if required."

On whether the company has identified a second EV model to be assembled in India, Iyer said "At this stage, I can only say we'll continue to surprise the market, as we did with the EQS, with more localised products in the future as well."

Mercedes-Benz had reported a 9% growth at 9,262 units in sales in India in the first half of 2024, its highest ever half yearly sales in the country and its EVs accounted for over 5% of the total sales volumes. EV sales grew by 60% in H1 2024 as compared to the same period last year.