- Mercedes-Benz experienced a drop in shares on Thursday as it disclosed lower profit and revenue figures, along with highlighting pricing difficulties within the electric vehicle industry.
- According to Reuters, CFO Harald Wilhelm referred to the EV market as “an exceptionally ruthless place.”
- This occurs as some traditional automakers sell EVs at reduced prices in spite of higher production costs associated with combustion-engine vehicles.
The Brussels Expo in Brussels, Belgium will exhibit the Mercedes-AMG GT 43 4Matic+ on January 9, 2020.
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Mercedes-Benz’s share value incurred a sharp decline on Thursday after the German car manufacturer announced a decrease in profit and revenue due to diverse challenges, ranging from competition in the electric vehicle sector to complications in the supply chain.
At 10:56 a.m. London time (5:56 p.m. ET), Frankfurt-listed shares plummeted by 5.8%, making it the company’s worst day since May 4, according to LSEG data.
The company admitted that it faces a “market environment dominated by intense price competition,” particularly within the EV domain.
During an analyst call concerning the financial results, CFO Harald Wilhelm described the EV market as “a considerably brutal place,” as reported by Reuters. This scenario is unfolding as some conventional automakers sell EVs at prices lower than those of regular combustion-engine cars, despite higher production expenses.
According to the news agency, Wilhelm said, “I can scarcely envision that the current status quo is entirely sustainable for everyone.”
In the third quarter, group earnings before interest and taxes (EBIT) decreased by 7% to 4.8 billion euros ($5.06 billion). Revenue shrunk by 1.4% to 37.2 billion euros, below consensus expectations, as passenger car sales suffered a 5% decline, partially due to challenges in the supply chain.
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Mercedes-Benz share price.
Inflation, along with complications encountered in the supply chain and foreign exchange losses, represented significant obstacles for the company.
The results demonstrated that total car sales remained relatively stable during the first nine months, experiencing growth in Germany but a decline in China.
Mercedes-Benz aims to achieve 50% hybrid and EV global sales by 2025, and has committed to exclusively launching electric models from that point onward. The company reassured its dedication towards these objectives on Thursday.
Legacy automakers, despite encountering a slow start to the electric vehicle transition, have made ambitious announcements in recent years. However, they face fierce competition from Chinese players, such as Elon Musk’s Tesla and Warren Buffett-backed BYD.
The results revealed that Mercedes’ share of all-electric vehicle sales rose from 6% to 11% within the first nine months of the year.
Source: www.cnbc.com
