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Combustion engines to get more expensive as EV tech gets cheaper, says Mercedes-Benz

Combustions engines are about to get more expensive

If you’re waiting for electric vehicles to be as cheap as conventional powertrains are right now, then we’ve got bad news for you.

While electric-vehicle price parity is still be years away, it will be the cost of traditional engine technology increasing, as well EV technology getting cheaper, that eventually closes the gap.

That’s the word from Mercedes-Benz research and development chief Ola Kaellenius, who will take over as head of the company next week.

The soon-to-be Benz boss says that while the cost of producing electric vehicles is significantly higher than petrol or diesel engines, ever-stricter emission regulations will see the price of conventional powertrains increase, too, led largely by the introduction of mild-hybrid systems designed to increase efficiency.

“As we sit here, the product cost structure for electric vehicles is significantly higher than what we have been used to in a combustion engine vehicle,” he says.

“With tightening regulation all around, the cost of combustion-based vehicles will go up in the future as well. We have made a very conscious decision on the road to 2025 that there will not be a combustion engine that is not electrified. 48-volt mild-hybrids is the minimum entry.

“To say when, on a profit-cost basis, that crossover point is, is too early, but it’s several years away.

“From a total cost of ownership point of view, depending on prices of petrol and diesel and electricity, and of course depending on tax regulations in individual countries, the total cost of ownership point is much quicker.”

Mercedes-Benz also says that EV popularity has reached a tipping point in which government regulation and incentives has ceased being the key lure for electric vehicles - good news for Australian sales, then, where no such incentives exist.

The EQC might be the brand’s first full production EV, but it is far from last, with 10 battery-electric vehicles now poised for production.

“You can fell now that it is building momentum,” Kaellenius says. “On the one hand, you have regulatory-driven momentum, through taxation and incentives that can steer demand.

“But we’re now on the cusp of natural demand. You can feel like there’s a pull, if you have the right vehicle.”

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