Mercedes set to lead India's luxury EV market as Tesla stays out

By Aditi Shah

NEW DELHI, Aug 24 (Reuters) - German carmaker Mercedes-Benz plans to take pole position in India’s luxury electric vehicle market, its country head told Reuters, helping cement its title as the top-selling luxury car brand and keep ahead of rival Tesla.

In India, Mercedes-Benz (MBGn.DE) will launch three new electric cars this year, be the first company to assemble a luxury EV, and will set up a fast-charging network nationwide, Martin Schwenk said in an interview. The company might also manufacture batteries domestically in the future, he said.

“Now, we are really starting our aggressive offensive into the EV market. In the next five years, 25% of our sales (in India) will be electric,” Schwenk said. “Our ambition is to lead the market in the electric side as well.”

Mercedes’ inroads come as EV rival Tesla (TSLA.O) recently put on hold plans to enter India due to high import taxes on EVs.

Mercedes will begin its push in India with an imported electric model of its AMG EQS 53 4MATIC performance car that it launched on Wednesday. This will be followed by a locally assembled, electric version of its flagship S-Class sedan, the EQS, and an imported, electric people carrier later this year.

The AMG EQS will have a driving range of 580 kilometres (360 miles) on a single charge and be priced at around $307,000 (24.5 million rupees).

India is largely a small- and low-cost car market, in which luxury models make up 1% of total annual sales of about 3 million. The luxury EV market is even smaller and largely untested.

Mercedes, which already sells its imported EQC sport-utility vehicle (SUV) in India, will be the first to assemble a luxury EV in the country, allowing it to price the car competitively over rivals because of a lower tax rate of 5% on locally built EVs versus 100% tax on imported models.

This will give it an edge over Germany’s Audi and BMW

(BMWG.DE) , and a clear lead over Tesla.

The 5% tax rate is “quite an incentive” for customers to go electric, Schwenk said.

To minimise concerns over range, Mercedes will set up 140 EV chargers nationwide, including ultra-fast ones that can be charged up to 80% in 40 minutes, by year-end, he said.

The company will also consider locally manufacturing EV batteries and other components if it starts selling ‘thousands’ of a model, though current volumes were too small to justify such an investment, Schwenk said.

“You need a certain scale to make sense. I will not exclude that for the future but at this stage, it’s not part of the plan,” he said.

Globally, Mercedes plans to invest more than 40 billion euros ($40 billion) by 2030 to develop battery EVs.

Schwenk expects India to align with the company’s plans of shifting to EVs in terms of speed and product launches.

“We will be in line with the global aspiration of converting to electrification because we believe we can be as fast, or sometimes maybe even faster, than some other markets,” he said.