Mercedes EVs Quit China

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Mercedes has ended its last relationship in China, which shows how difficult it is for legacy car companies from Europe, the US, and Asia to remain in the Chinese market while making a profit. According to The Wall Street Journal, “Mercedes-Benz Group unwound a bet on China’s electric-vehicle market, selling its remaining 10% stake in premium EV and hybrid maker Denza to BYD in the wake of disappointing sales locally.” China-based BYD is the largest EV company in the world.

US car companies, notably Ford and GM, have also suffered eroding market shares. Each has fossil fuel-based engine vehicles, which have become less popular in the world’s largest car market based on unit sales. Ford CEO Jim Farley recently commented that Chinese EV companies were an “existential” threat to his company.

Tariff Costs

For China, Mercedes’ departure is occurring just as major Chinese EV manufacturers try to move into the US, Canada, and EU. They would be successful, but tariffs have made them expensive. The US tariff is 100%.

Worldwide Rivals

Based on tests done by third parties, Chinese EVs are well-built and well-featured. They also have price points as low as $15,000. The average price of an EV in the US is $55,000. Mercedes will eventually have to compete with these Chinese vehicles worldwide.

Mercedes will not be the last legacy car company to leave China.