New Mercedes-Benz EQE SUV aims to tackle Tesla’s Model Y

Mercedes-Benz is broadening its battery-powered lineup with a sport utility vehicle that will take on Tesla's Model Y in another step toward the carmaker’s goal to go all-electric by the end of the decade.

The EQE SUV, unveiled on the eve of the Paris car show, will edge out the cheaper Model Y with 590km of driving range and start at around €70,000 (roughly R1,244,175) when sales begin late this year. It’s the fourth model to use Mercedes’ dedicated EV platform, which also underpins the flagship EQS sedan.

“It’s the latest proof we’re consistently executing on our strategy to go all-electric,” said Mercedes CEO Ola Kallenius.

Mercedes plans to offer electric siblings for all combustion engine models in its portfolio by the end of the year, then introduce three new platforms to underpin its cars, AMGs and vans by 2025. By 2030, it will only sell EVs in markets where phasing out engines entirely is possible.

To help fund this ambitious rollout, Mercedes plans to weed out lower margin vehicles in favor of more profitable G-Wagon SUVs and performance models.

Chinese competition

The EQE SUV, which will be manufactured at Mercedes’ US plant in Alabama, debuted at the Musée Rodin in Paris ahead of a show lacking many western carmakers, including Volkswagen and BMW . Among those filing the void will be Chinese manufacturers led by BYD , the country’s biggest EV maker.

China’s EV manufacturers are increasingly seeking to make inroads into Europe. Nio . this month announced plans to start sales in Germany, Denmark, Sweden and the Netherlands after modest success in Norway. Great Wall Motor and Seres are also part of the Chinese contingent exhibiting at the Paris show.

After many false starts by Chinese brands over the years, the transition to EVs could pry open the door to competitive European markets. British brand MG, owned by China’s SAIC Motor Corp, last year sold 40,000 vehicles in Europe.

‘Robust’ sales

The carmakers proffering shiny new models in Paris are contending with low consumer confidence amid surging inflation and rising interest rates.

While its archrival BMW recently warned orders have started to slow, Mercedes said last week sales jumped by 21% during the third quarter, with China leading a strong showing of growth across all key regions.

In an interview with Bloomberg Television, Kallenius called the third-quarter deliveries “robust” and said while the economy “might cool down,” Mercedes will be prepared.

“We’re also looking at finishing this year in a robust fashion, and then we’ll see what next year brings,” he said.

More stories like this are available on bloomberg.com