In order to maintain profitability, Daimler AG is downsizing investments in equipment, new technology, and plants, due to an increase in spending this year. The increase in spending is mostly from creating the EQ electric-car brand.
The company “is fighting” to get investments, research and development costs down to 13.2 Billion from the current 15 Billion in 2016.
Zetsche says spectrum of investments is the biggest challenge.
Carmakers’ development costs are growing as the business faces pressure to lower vehicle emissions and focuses on advanced technology.
Daimler and BMW AG, their main rival, are planning to have electric vehicles make up about 25% of deliveries. Switching production from conventional cars to battery-operated vehicles is also increasing the demand to cut spending. Daimler has a goal to keep returns on sales at 10%.
This year, Daimler’s Mercedes-Benz badge is set to take over BMW’s namesake image as the world’s greatest luxury-auto distributor. It is already within reach for accomplishing Daimler’s 2020 goal of being No. 1 in the premium section of both delivery and profits. It’s also “well on track” for growth earnings in 2016 following sales at the Mercedes-Benz division growing 12 percent.
Daimler’s Smart city-auto unit and Mercedes luxury brand are making at least ten battery-controlled vehicles in the coming years. The development includes over $1 Billion in battery technology.
A month ago, Zetsche presented an SUV model. The Mercedes EQ brand was at the Paris auto show to underline the organization’s commitment to electric autos. The action doesn’t mean Daimler will quit creating new motors using regular gas efficiently.
He announced that they can’t stop advancing engine technology, even if 25% of vehicles sold in 2025 are electric vehicles.