Executive Briefings

Daimler Warns of Supply Chain Risk From Switch to Electric Cars

Daimler AG, owner of the Mercedes-Benz brand, warned that a fall in demand for diesel cars and a switch to electric vehicles could force it to prop up its supplier base.

Carmakers face increased legal and regulatory scrutiny over pollution levels produced by their diesel-engined vehicles after Volkswagen in 2015 admitted to cheating emission tests using engine management software.

To avoid a total ban on their diesel vehicles, Daimler and other carmakers have stepped up development of electric cars and agreed to update their engine management software to cut down pollution levels.

Daimler’s suppliers are being forced to invest to help electrify the entire Mercedes-Benz range by 2022, prompting the carmaker to use unusually frank language to warn about the impact of the shift to electrified cars in its report.

“Due to the planned electrification of new model series and a shift in customer demand from diesel to gasoline engines, the Mercedes-Benz Cars segment in particular is faced with the risk that Daimler will require changed volumes of components from suppliers,” the carmaker said in its annual report.

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Carmakers face increased legal and regulatory scrutiny over pollution levels produced by their diesel-engined vehicles after Volkswagen in 2015 admitted to cheating emission tests using engine management software.

To avoid a total ban on their diesel vehicles, Daimler and other carmakers have stepped up development of electric cars and agreed to update their engine management software to cut down pollution levels.

Daimler’s suppliers are being forced to invest to help electrify the entire Mercedes-Benz range by 2022, prompting the carmaker to use unusually frank language to warn about the impact of the shift to electrified cars in its report.

“Due to the planned electrification of new model series and a shift in customer demand from diesel to gasoline engines, the Mercedes-Benz Cars segment in particular is faced with the risk that Daimler will require changed volumes of components from suppliers,” the carmaker said in its annual report.

Read full article