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Daimler's (DDAIF) Mercedes-Benz Set for Major EV Breakthrough

·4 min read

Mercedes-Benz, owned by the German auto giant Daimler AG DDAIF, is geared up for a tight race in the electric vehicle (EV) domain. It plans to set up production facilities by the second half of the decade to make EVs exclusively. The company has several new EV models, the latest being Mercedes-AMG EQE, an electric luxury sedan, which will give Tesla TSLA stiff competition.

Over the past year, Mercedes has announced an onrush of new battery-powered vehicles, debuting with the EQS, its six-figure flagship, followed by the AMG EQS, a sportier version of the car developed by its performance division. However, the company does not intend to build EV-only plants but keeps its plants flexible with market demand.

Mercedes will begin producing its EQE model at the IAA Mobility show later this year. The initial production is scheduled to start at a facility in Bremen, Germany, followed by Beijing and Tuscaloosa, AL.

The EQE promises to be extremely quick and can deliver as much as 677 horsepower and 738 pound-feet of torque in short bursts. The car also has AMG-specific brakes, and its battery management system is fine-tuned to optimize performance in Sport and Sport+ settings and range in the Comfort setting. It comes with an optional feature, the Mercedes's Hyperscreen, an array of displays that span the entire width of the dashboard.

The AMG EQE's range is pegged to be somewhere between 275 and 321 miles, but its EPA rating will likely put it on the lower end of the spectrum.

Slated for sale in 2023, the model has the potential to win back some of the lost ground from Tesla. The auto bigwig has pitched its bets on the model to bolster the sales of its EV units as it looks to invest more in electric-only production platforms and aims to ramp up volumes as well.

Presently, Mercedes' existing models are manufactured in factories that also produce internal combustion engine vehicles where batteries are transported by rail from the main plant in Sindelfingen to plants in Germany and Hungary. Efforts are underway to bring the battery assembly, and production could be closer to car plants in the near future.

Last year, though only a mere 2.3% of all new Mercedes cars sold were battery-electric vehicles, it rose 11% when plug-in hybrids were included, which have both an engine and a battery. But the company now aims to boost production and investment in EV platforms and targets a 50% sales coverage by hybrid electric cars by 2025, with all-electric cars to account for most of that.

Shares of DDAIF have rallied 7.2% over the past year against the industry decline of 1.6%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Zacks Rank & Other Key Picks

Currently, DDAIF has a Zacks Rank #2 (Buy).

Other top-ranked players in the auto space include Dorman Products DORM and Standard Motor Products SMP, each carrying a Zacks Rank #2 currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Dorman has an expected earnings growth rate of 15.9% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 0.2% upward in the past 60 days.

Dorman’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and met the consensus mark in one. DORM pulled off a trailing four-quarter earnings surprise of 10.41%, on average. The stock has declined 8.5% over a year.

SMP Motor has an expected earnings growth rate of 5.5% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 0.2% upward in the past 60 days.

SMP Motor’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 67.27%, on average. The stock has also rallied 17.2% over a year.


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