Mercedes-Benz advances India EV plans despite short-term hurdles

German luxury car manufacturer Mercedes-Benz has launched its second locally produced electric vehicle, the EQS SUV, in India. This move signifies their commitment to long-term demand, even though differing road taxes and incentives across states have slowed electric vehicle (EV) sales.

Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, expressed optimism about the new launch. “The locally produced EQS sedan has been well-received, and we expect this second locally assembled model to follow suit,” he told Mint.

India is now the only market outside the US where Mercedes-Benz assembles its flagship electric vehicles, starting with the Chakan plant’s new EQS SUV. The company has high hopes, with over 50 pre-orders for the SUV, priced above ₹2.25 crore, expecting to sell out within weeks.

The varying EV policies across India pose challenges, as seen with Delhi’s reintroduction of road taxes on EVs, impacting purchasing decisions. However, Iyer remains confident in the broader EV strategy. “Some customers have residences in areas like Gurgaon and Noida, where taxes are different,” he noted, but emphasized it’s too early to measure the impact on sales.

Despite these hurdles, Mercedes-Benz is encouraged by the government’s push for green energy. “India has 43% of its energy from non-fossil fuel sources, and the government’s focus on green energy transition gives us confidence that EVs are the future,” Iyer said. The company has seen EV penetration grow from 2.5% last year to 5% in the first half of this year.

Local assembly is a strategic choice for Mercedes-Benz in India, a high-tax market for imported cars. The flexible assembly lines at the Chakan plant can handle EVs, hybrids, and more, allowing the company to adapt quickly to market demands.

Iyer highlighted the company’s long-term commitment to India, citing their 30 years of strategic patience. “One reason we lead in the luxury market is because we take a long-term view and continue to innovate,” he said.