(Bloomberg Opinion) -- When Mercedes-Benz Group AG unveiled a luxury electric sedan called the EQS in 2021 managers boasted about the radical aerodynamic design, billing it as the German automaker’s most significant launch in decades. Film director James Cameron and singer Alicia Keys were on hand to add their own superlatives for a vehicle that cost in excess of $100,000.
Three years later, the electric version of the flagship S-Class risks becoming one of the biggest flops in Mercedes’ storied history, and its shortcomings have contributed to the company’s decision to ditch a goal of selling only electric vehicles by 2030.(1)
The German automaker’s stumble shows the dangers premium carmakers face as they try to take on Tesla Inc. and persuade their conservative clientele to get a plug. It also underscores the need to better protect EV resale values.
₹ 59,900
Offers Expiring soon
₹ 74,000
Offers Expiring soon
₹ 77,250 - 1 Lakhs
Offers Expiring soon
₹ 99,999
Offers Expiring soon
₹ 1.3 Lakhs
Offers Expiring soon
Capacious S-Class limousines have chauffeured political and business leaders for decades, and are especially popular with Chinese elites. However, Mercedes opted for a less boxy design for the EQS, which was built on technical underpinnings developed specifically for EVs. Not only would the curved silhouette — which the company immodestly compared to a bullet train and critics dubbed a jellybean — reduce air resistance and thus boost efficiency and driving range, the EQS would also be clearly distinguishable from vehicles that have a combustion engine. Mercedes even sacrificed the traditional standing three-point star on the hood, instead integrating the badge into a sleek black radiator panel.
In hindsight, these were poor design choices. Mercedes’s pampered clientele aren’t as bothered about driving range and aerodynamics as they are about opulence and having sufficient room to relax in the back seats, which critics say the coupe-like rear fails to provide.
And notwithstanding some impressive electronics — the front “hyperscreen” spans the entire width of the dashboard — I tend to agree that the car doesn’t look as stately as the regular S-Class.
Sales of the luxury electric sedan declined 40% to just 14,100 units last year, according to Mercedes’ annual report. Price cuts in China and heavily discounted US lease deals failed to revive demand while undermining the company’s strategy of prioritizing high values over sales volumes. Combustion engine S-Class deliveries were more than six times higher.
Chief Executive Officer Ola Källenius has put on a brave face, telling investors in February that customers were very happy with their purchase. But the company’s recent announcement of extensive upgrades to the vehicle speaks volumes. Along with a larger battery, these “status-conscious” improvements include a more traditional radiator grille featuring chrome-plated slats, a standing star on the hood, plus new seating options so rear passengers feel less impinged. Costs associated with these updates contributed to a steep decline in the Mercedes’ car unit’s profitability in the first quarter, when its fully electric car sales declined 8% compared with the prior year.
The tweaks may help a bit, but there’s little the company can do about the sedan’s much-criticized shape — while not to my taste, a bulbous seven-seat EQS SUV is proving more popular. And the EQS still doesn’t come with the800-volt fast-charging system available on EVs at lower price points.
I’m certainly not suggesting that Mercedes and its peers lessen the pace of innovation — given the rapid advances of Chinese rivals, they need to move faster if anything — yet they should tread carefully when electrifying popular models to avoid turning off hesitant customers and compromising their heritage.
Sensibly, Mercedes chose not to market the electric G-Class as the “EQG” when it was unveiled last month, and its classic off-road silhouette remains instantly recognizable. Jaguar Land Rover Automotive Plc appears to be taking a similarly conservative approach with the forthcoming electric Range Rover which will include only “subtle” hints that it comes with a plug. Meanwhile, Ferrari NV has emphasized that its first EV, expected next year, will sound like a true Ferrari.
Automakers also need to remain as flexible as possible to adapt to fluctuating demand for EVs. BMW AG’s electric vehicles not only look much like its gasoline ones, they’re built on the same platform. So far, its cautious approach is paying off, with its EV sales outstripping those of Mercedes.
However, premium carmakers won’t persuade more consumers to go electric unless they also fix their horrible residual values. The cost of purchasing a one-year old EQS is almost 48% lower than the average new price, according to a study by US auto search portal iSeeCars. That’s the worst of any vehicle it analyzed.
Indeed, I found almost-new EQSs selling for less than $50,000 on US listing sites, while in the UK they are available for less than £60,000 ($75,000), far below the UK new price of around £105,000 (before optional extras). To be fair, Mercedes is far from the only premium manufacturer struggling with residuals: Porsche Taycans and Audi etron GTs are also faring poorly in the second-hand market.
Consumer worries about technological obsolescence, high repair and insurance costs and establishing the condition of the battery are part of the problem. Another issue is pushing polarizing, expensive EVs to early adopters. Mercedes is now feeling the impact with the full force of a bullet-train.
More From Bloomberg Opinion on EVs:
(1) In fairness, Mercedes always had a get out: the 2030 target included the caveat 'where market conditions allow'.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Chris Bryant is a Bloomberg Opinion columnist covering industrial companies in Europe. Previously, he was a reporter for the Financial Times.
More stories like this are available on bloomberg.com/opinion
©2025 Bloomberg L.P.
Catch all the Auto News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.