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Is Tesla Motors (TSLA) About to Lose the Lead in the Premium EV Market, to Mercedes?

Tesla Model 3 (TSLA)

Dieter Zetsche, chairman of Daimler AG and head of Mercedes-Benz, acknowledged that Tesla Motors Inc is the leader in the premium electric vehicle (EV) segment. Talking to media at the Paris Motor Show, Zetsche admitted that Tesla is the main competitor in the premium electric cars market. However, he is confident that Mercedes will beat the U.S. car maker in next 10 years to become the top maker of premium electric cars, Teslarati reported.

In addition to Mercedes, BMW, Audi and other luxury automakers are also planning to challenge Tesla with a slew of high-end electric vehicles.

Tesla Motors Inc. (TSLA) Store in Southern California

Mercedes Plans To Launch 10 Electric Cars by 2025

Mercedes’ EQ electric sub-brand plans to develop 10 electric cars in the next few years. The brand will be launching 10 new pure-electric vehicles between 2019 and 2025.

“We have set for ourselves a target five years ago to become the number one car premium manufacturer. That was supposed to be reached in 2020, but it seems that we are awful close already,” Zetsche said. “So we can set a new target to ourselves and that is equally to be the leader in electric premium vehicles as well… this includes not just our current competitors, but new entries as well, including Tesla.”

The first vehicle will be the Generation EQ Concept crossover SUV, which the automaker displayed at the Paris show.

EQ Concept is a 5-door sport utility vehicle that is set for production in 2019. The SUV will feature dual motors, a 70 kWh battery. The vehicle will 310 miles or 500 km of zero emissions driving range.

Talking about batteries, Zetsche said that his company has “big plans that will require a lot of batteries.”

Accumotive, which is a division of Daimler, will produce batteries for Mercedes’ electric EVs. Accumotive is planning to offer residential and grid storage products in a bid to compete with Tesla’s Powerwall and Powerpack.

Tesla produces lithium-ion batteries to power its environmentally friendly electric cars. But, a new report from The Washington Post suggested that those batteries may be harming the environment.

Among others things, Mercedes will need to build its own network or join hands with with existing charging providers to provide free charging like Tesla.

Tesla To Feel Some Pressure From Luxury Automakers

According to a report in CNBC, BMW plans to launch an electric version of every model it makes. Another automaker Audi is planning for 25% of its sales by 2025 to come from electric vehicles.

UBS told investors that the coming wave of electric cars from established luxury brands is a “tsunami.” The firm noted that “Tesla is highly likely to lose its dominant position.”

Stephanie Brinley, senior auto analyst for IHS Markit, believes that Tesla Motors Inc will feel some pressure from those luxury brands.

He said: “The mainstream luxury brands can really reach beyond the early adopters in a way Tesla cannot. They have the dealer network, strong brand recognition and strong customer loyalty.”

Last year, Tesla sold almost 26,000 Model S and Model X vehicles in the U.S., according to Inside EVs. The company is followed by BMW, which sold just over 13,000 i3 and i8 electric cars, according to the research firm Autodata.

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