Mercedes-Benz Continues Construction Of An Electric Car Factory, Despite The Disruption Of Raw Materials By Russia's Invasion Of Ukraine

Mercedes Benz is still continuing the project to build an electric car factory. (photo: doc. pixabay)

JAKARTA - Mercedes-Benz AG will not cut spending on future electric vehicles. Even when coping with supply chain cost pressures exacerbated by the Russo-Ukrainian conflict,

The German automaker's chief executive, Ola Kaellenius, spoke on Tuesday, March 15 during the opening of its first US electric vehicle (EV) battery factory, also reiterating the company's 2022 financial prospects remain despite the conflict.

"We have always protected investments into future technologies and future products," Kaellenius told Reuters. "That is the seed that we will harvest. Even in the year of COVID 2020, we are not cutting back on R&D for important projects."

"Mercedes is working with suppliers in Ukraine whose operations have been disrupted," he added. "But it's too early to say what the broader consequences will be."

Soaring gasoline prices since Russia's invasion of Ukraine have magnified the challenge for established automakers that still rely on fossil-fuel-powered vehicles to make a profit. Soaring prices for materials used in EV batteries such as nickel, which is heavily mined in Russia, are also hurting the industry.

Kaellenius is trying to speed up Mercedes' shift from a combustion car technology company to one whose products don't emit carbon and rely on software and computing power.

Mercedes and other established automakers are trailing Tesla in EV sales and in developing computer systems and software to keep up with the US company's stream of new features and updates.

Daimler Truck, which split from Mercedes in December, and Kaellenius said on Tuesday that they see no reason for Mercedes to further separate EV from combustion engine operations. Some investors have been pushing established automakers to make pure EV units.

"There is only one Mercedes-Benz and that one company sooner than many people think will become an electric company," Kaellenius said in an interview.

Mercedes also said on Tuesday that Japanese battery maker Envision AESC will supply battery modules for the US-made Mercedes EV from a new US factory by the middle of this decade.

Along with the launch of the battery plant in Bibb County, Alabama, Mercedes is also previewing a large electric SUV that will be built at its Tuscaloosa, Alabama, assembly facility this year.

The EQS SUV and the smaller EQE electric SUV, also set to be built in Alabama, join a growing lineup of electric SUVs looking to challenge Tesla in the United States, China, and Europe.

The battery factory, which will employ 600 workers, and assembly facilities are part of Mercedes' 40 billion euros ($40 billion) effort to switch to electricity by 2030, where the market allows.

Mercedes, which plans to manufacture EV batteries in Europe, North America, and Asia, aims to have eight cell factories with partners around the world with the capacity to produce 200-gigawatt hours per year by the end of the decade.

The Mercedes Alabama assembly plant, which turns 25 this year, can build electric and combustion vehicles, and is one of the largest Mercedes vehicle manufacturers in the world.