Mercedes CTO: ‘EVs as cheap as ICE cars? Not in the near future.’

Mercedes’ Chief Technical Officer Markus Schäfer, talking to the American magazine Road&Track, says, “there’s still a significant initial cost penalty to a battery-electric vehicle over an internal combustion car.” According to Schäfer, that’s not going away anytime soon. EVs may not get much cheaper over the next few years, and batteries could even increase in price again.

“Coming to a battery price of 50 dollars per kilowatt, which would lead to a comparable cost basis to an ICE engine, I would say this is far out there,” Schäfer thinks. “I don’t see that with the chemistry we have today.”

No price parity yet

“Reaching so-called price parity, Schäfer continues, “isn’t possible with any current commercially available battery technology. The kind of affordable, high-density batteries required to make it possible either doesn’t exist or only exists in tightly-controlled lab settings.”

“Even once we know which one will work, adapting it for the automotive industry will be a years-long process with high volumes and extremely challenging durability requirements.” Moreover, while we wait for a breakthrough, Schäfer says they can’t promise that EVs will get any cheaper in the near term.

“It’s a crystal ball thing to answer. And it will very much depend on mining capacity [for raw materials] and the global ramp-up of EVs. So these are the two main factors,” Schäfer explains. “But we will see headwinds on the raw material side for quite a while.”

Scale is the problem now

While increasing demand for large battery packs has helped through manufacturing advancements and economies of scale, this scale poses a significant challenge. Thanks to both the increasing popularity of EVs and continued growth in consumer electronics, the demand for lithium batteries is on pace to far outstrip the capacity of current rare-earth metal mines.

The earth has more lithium deposits, but bringing mines online is complicated and expensive. As of now, analysts don’t expect the lithium shortage to be over by mid-decade.

“So the anticipated decrease well below 100 (US dollars or Euros) per kilowatt might take longer than expected,” Schäfer concludes. “The chemistry, honestly, if we’re staying with the ingredients we have today… there’s not that breakthrough foreseeable.”

Electric Software Hub

Nevertheless, Mercedes-Benz aims to be a leader in electric driving and vehicle software. To accelerate this development, the company has invested more than €200 million in the ‘Electric Software Hub’ at the Mercedes Technology Center (MTC) in Sindelfingen.

Numerous software, hardware, system integration, and testing functions are brought together. With this step, Mercedes-Benz is intensifying its approach to cross-functional collaboration.


The Electric Software Hub is an epicenter of our research and development and, at the same time, closely networked with the worldwide production sites. This is where critical aspects of the future of Mercedes-Benz become a reality – especially our own MB.OS operating system,” Schäfer explains.

“Cars are among the most complex products in general. The hardware and software are decoupled and must work together perfectly. We ensure this in the Electric Software Hub. It is our software integration factory.”

Integration of increasing importance

In its press release, Mercedes gives the following comment: “With increasing digitization, the control units in the vehicle are taking on ever more complex tasks – from infotainment and driving assistance systems to the electric drive. The integration of all components is thus increasing in importance.”

“This process is highly complex. This is all the more true as vehicle development is no longer finished at a certain point. Cars in customers’ hands also receive continuous software updates with new and improved functions. The Electric Software Hub offers decisive advantages in this new vehicle world: some 1 100 experts from 19 cross-functional departments work together in closer physical proximity than ever before.”

“Together with the expansion of digital testing procedures, this increases the pace and the quality of the integration processes. Furthermore, the intensive interlinking of the disciplines in one building makes the Electric Software Hub exceptional. It stands for simultaneous engineering and seamless integration at its best,” Mercedes concludes.


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