Mercedes invests in making electric cars in China

On September 4, Mercedes announced its intention to invest $2 billion with local partners to expand its product line in China. Starting in 2025, Mercedes will start producing the electric CLA long-wheelbase model exclusively for this market, the GLE SUV also in a long-wheelbase version, and a new luxury electric MPV based on the VAN.EA platform.

The announcement comes amid concerns about Volkswagen's possible plant closure in Germany, new EU tariffs on Chinese electric vehicles, and two huge investments announced by German automakers BMW and Volkswagen in April.

More than $1.4 billion will reportedly be spent on passenger cars, while about $550 million will be invested in light commercial vehicles. The new models will be produced by Mercedes’ existing joint ventures Beijing Benz (with BAIC) and Fujian Benz.

Beijing Benz will start producing new models based on the MMA (Mercedes-Benz Modular Architecture) platform next year. The first model to be produced could be the new long-wheelbase electric CLA. The vehicle uses an 800V platform and can reach a range of 400 km after 15 minutes of charging. Energy efficiency reaches 12 kWh/100 km.

Another major focus of the investment is the research and local production of the GLE SUV specifically for the Chinese market. Already the best-selling imported car in China, the new GLE will be the first model developed by Mercedes’ R&D team in China, focusing on rear seat comfort and smart technologies tailored to the market.

The localized CLA and GLE will further enrich Mercedes' China-made lineup. The German automaker launched its first model specifically for the East Asian country, the long-wheelbase E-class, in 2010, followed by the GLK-class SUV in 2011. Mercedes has gradually expanded production since 2019, with a total of 11 models produced here, including six SUVs.

Another part of the investment will support Fujian Benz in producing a new luxury electric MPV based on the VAN.EA platform. All future medium and large light commercial vehicles will be built on this platform, which is scalable. Currently, Mercedes' main light commercial vehicle in China is the V-class.

Fujian Benz was established in June 2007 as a Mercedes light commercial vehicle manufacturing facility, specializing in the V-class. The joint venture is one of the largest industrial companies in Fuzhou, the capital of Fujian Province. Mercedes and BAIC are the two largest shareholders. In June, Fujian Benz began laying the foundation for the production of the VAN.EA platform in Fuzhou.

Mercedes also revealed information about the new MB.OS operating system that will be launched with new domestic models. The system will feature a new virtual assistant as well as a "comprehensive" intelligent driving system. "Comprehensive" intelligent driving is a popular term used by domestic manufacturers to describe autonomous driving solutions, and Mercedes has already begun to adopt it.

"The Chinese market is one of the key pillars of Mercedes' global strategy and a key driver of our electrification and technological innovation," said Ola Källenius, Chairman of the Board of Management of Mercedes, during his fourth visit to China this year. "Mercedes is committed to long-term investment in China, deeply involved in and contributing to the upgrading of the Chinese automotive industry." According to Mercedes' statistics, the company has invested more than 14 billion USD in China between 2014 and 2023, of which 1.4 billion USD was spent on R&D in the past 5 years.

Mercedes is not alone in ramping up investment and production in China. Other German auto giants are doing the same. Volkswagen has invested $2.7 billion to expand its Volkswagen Anhui operations. It is also in the process of building two new electric vehicles in partnership with Xpeng. BMW is investing another $2.8 billion in its Shenyang manufacturing facility, bringing its total investment in the plant to $14.7 billion.