The Reason Behind the Failure of Mercedes' $100,000 Electric Jellybean

Customers of the German automaker's limousines value luxury and prestige just as much as protecting the environment. They should now also be concerned about residual values.

(Opinion from Bloomberg) -- Managers at Mercedes-Benz Group AG gushed about the EQS's revolutionary aerodynamic shape when the premium electric sedan was introduced in 2021, claiming it was the German automaker's most important introduction in decades. James Cameron, the director of the movie, and Alicia Keys, the singer, were available to add their own accolades to a car that cost more than $100,000.

Three years later, Mercedes' flagship S-Class electric variant runs the risk of being one of the biggest failures in the business's illustrious history. As a result of its flaws, the company decided to abandon its plan to offer entirely electric cars by 2030.(1)

The German carmaker's misstep demonstrates the risks premium automakers face when attempting to compete with Tesla Inc. and convince their conservative customer base to switch to electric vehicles. It also emphasizes how important it is to better safeguard EV resale values.

For many years, corporate and political leaders have been driven by spacious S-Class limousines, which are particularly well-liked by Chinese elites. But with the EQS, which was based on technology created especially for EVs, Mercedes chose a less boxy form. In addition to lowering air resistance and increasing efficiency and driving range, the EQS's curving silhouette—which the firm mockingly likened to a bullet train and detractors called a jellybean—would also make it easy to identify it from cars with combustion engines. Mercedes even gave up the traditional standing three-point star on the hood, instead integrating the badge into a sleek black radiator panel.

These were bad design decisions in retrospect. Mercedes's affluent customers are more concerned with luxury and having enough space to unwind in the back seats than they are with driving range and aerodynamics, which detractors claim the coupe-like rear does not offer.


Additionally, I tend to agree that the car doesn't appear as dignified as the standard S-Class, even with some great technology (the front "hyperscreen" takes almost the full width of the dashboard).

According to Mercedes' annual report, sales of the high-end electric vehicle fell 40% to just 14,100 units last year. The company's approach of putting high values ahead of sales volumes was undermined by price reductions in China and steeply discounted lease agreements in the US, which failed to boost demand. Deliveries of S-Class combustion engines exceeded six times higher.

Ola Källenius, the CEO, put up a bold front in February when he told investors that clients were thrilled with their purchases. However, the company's recent announcement of significant improvements to the car says it all. These "status-conscious" upgrades include a larger battery, a standing star on the bonnet, a more conventional radiator grille with chrome-plated slats, and different seating options to lessen the impact on rear passengers. When Mercedes' completely electric car sales fell 8% from the previous year in the first quarter, the costs of these improvements contributed to a sharp drop in the car unit's profitability.