Mercedes-Benz pushes ahead with India EV plans despite short-term bump

Mercedes-Benz launched its second locally made electric vehicle, the EQS SUV, in India on Monday, betting on long-term demand even as varying road tax rates and incentives across states have slowed EV sales.

“The locally produced EQS sedan has been well-received, and we expect this second locally assembled model to follow suit,” Santosh Iyer, managing director and chief executive, Mercedes Benz India, told Mint.

The new electric SUV launched from its Chakan plant makes India the only market outside the US where the German luxury carmaker assembles its flagship electric vehicle.

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“[When] we launched the EQS sedan, we were the first to do the localization in India,” he said. “In 18 months, we have done more than 500 cars. Remember, these cars are ₹1.6 crore-plus EVs.” 

Mercedes-Benz has garnered significant interest for its EQS SUV. “We already have more than 50 orders on that car costing more than ₹2.25 crore, and we are sure within a couple of weeks we will be sold out for the year as well, crossing the three-digit mark,” Iyer said.

India's EV policy

Still, lack of consistent EV policy across India can be a temporary bump. The reintroduction of road taxes on EVs in Delhi, for example, has disrupted purchasing decisions.

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“Some customers have residences in areas like Gurgaon and Noida, where taxes are different,” Iyer said. “But it’s too early to say how much the reintroduction of the road tax in Delhi has impacted sales.”

However, Iyer is optimistic about the broader EV road map in India: “There is a clear push by the government, and as responsible corporate citizens, we are introducing more car lines,” he said. “This is our sixth EV in India now, and we are seeing growth from 2.5% last year to 5% penetration on EVs in the first half of this year.”

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Mercedes-Benz's long-term view is backed by confidence in the country's energy transition. “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 added.

Local assembly

Mercedes-Benz's bet on local assembly stems, partly, from the fact that India is a high-tax market for built-up imported cars. The second is that flexible local assembly lines can mitigate short-term challenges better. “Our plant in Chakan is highly flexible. We can produce EVs, hybrids, and more, all under one line. This allows us to introduce new car lines as needed,” Iyer said.

“We have been strategically patient in India for 30 years,” Iyer said. “One reason we lead in the luxury market is because we take a long-term view and continue to innovate.”