Mercedes US CEO: 2023 is starting 'pretty well,' confirms using EV lease tax credits
With a corporate slogan that beams “the best, or nothing,” Mercedes-Benz (MBG.DE) better deliver. And it appears to be just doing that.
With U.S. sales up 6.5% in 2022 compared to a year ago, and a whopping 21% in Q4, Mercedes says much of that growth came at the “top end,” or its higher priced models, which the German automaker wants to focus on given the juicy high margins those models enjoy. And so far in 2023, that luxury-buying trend is rolling on.
“I think the year started pretty well with high demand on our top-end vehicles — so our AMG products, our S-class, our SL, which is new in the market, was launched only in summer of 2022, plus our electric vehicles,” Mercedes-Benz USA President and CEO Dimitris Psillakis said in an interview with Yahoo Finance. “So these are products which are in high demand, and we see that the start of '23 was good to have a back order for these products.”
In addition to a strong order book, Psillakis says new product launches coming in 2023 will keep demand levels high. Of note is the upcoming EQE electric mid-sized SUV and the continued roll-out of the EQB compact EV SUV. These EQ electric products join Mercedes’ other EV stablemates, the EQS and EQS SUV, and EQE sedan.
But in order to get clients to switch over and buy electric vehicles, Mercedes needs to make the experience a strong one — from end to end.
Lately that experience has been a poor for EV owners, as many EV charger locations have been clogged with more EV drivers, malfunctioning chargers have been increasing, and charging speeds have been affected by seemingly high demand.
It’s what led the company to begin creating its own, bespoke charging network, which when combined with the Mercedes dealer and buying experience, creates “a holistic approach for electric vehicles and giving the customer the convenience of driving a clean (EV) car, at the same time being able to charge his vehicle,” Psillakis said.
The Mercedes charging hubs will allow special privileges for Mercedes EV owners. “They can book, they can reserve the space on the charging station, they can plug the car in and it will offer them also convenience of spending time waiting for the vehicle to charge in a nice secure place,” Psillakis said. “It's taking away the frustration, the worry of charging the car.”
On the purchasing front, Mercedes for the most part has not been able to take advantage of IRA EV tax credits for its customers due to the MSRP caps in place ($55K for sedans, $80K for SUVs) and country of origin requirements (currently only the EQS and EQS SUV are built in the U.S.), as well as some income limitations.
But a big loophole remains — the commercial lease exemption. This allows commercial lease operators, banks, and automaker finance divisions to take advantage of the $7,500 credit, and potentially pass the savings onto consumers, without limitations imposed by the law’s purchasing requirements.
Psillakis confirmed the automaker is taking advantage of exemption, though it isn’t moving the needle for them, yet.
“So at the moment, the vehicles are eligible for the credits as far as they're electric, and, obviously, we're taking [that] on, using that for vehicles which are commercially leased, but this is not a big volume,” Psillakis says concerning the lease exemption.
With more and more automakers looking into this leasing loophole, it’s likely a rising contingent of Mercedes clients will be acquiring those top-end, higher-trim EVs — and pocketing around $7,500 in savings.
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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