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BMW and Mercedes are launching the biggest electric push to date to catch up with Tesla with new models

BMW presented the Vision Neue Klasse electric vehicle at the IAA in Munich. It underpins BMW’s major push towards electric vehicles.

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Munich, Germany – bmw And Mercedes are making their biggest push into electric cars yet to face increasing competition from Chinese suppliers and catch up with the US giant Tesla.

In recent days, the car giants unveiled electric concept cars and new platforms for their future battery-powered vehicles at the IAA Mobility motor show in Munich.

European automakers, which are said to be behind Chinese companies like Warren Buffett-backed BYD and Elon Musk’s Tesla, have had to act quickly to show the market they are poised to play a major role in the electric age.

On Sunday, Mercedes-Benz unveiled its Concept CLA-Class, an electric vehicle based on a new architecture that will underpin future battery cars from the German auto giant. The company said the concept car has a range of 750 kilometers (466 miles) and can achieve a range of 400 kilometers with just 15 minutes of charging.

Mercedes boss Ola Kallenius commented on the car and called it a “revolutionary development” for the German company.

“With these efficiency figures, this range, this type of fast charging, I don’t know of any vehicle in this class that can keep up with it,” Kallenius told CNBC’s Annette Weisbach on Sunday.

Competitor BMW presented the “Vision Neue Klasse” on Saturday, another electric concept car that underscores the company’s electric ambitions. New class is the new architecture from BMW for its electric vehicles. The first vehicles based on this platform are scheduled to go into production in 2025.

“In just two years, these cars will be on the road, and with that we are leading BMW into a new era of innovation and sustainability. That’s the purpose of our show here at the IAA,” BMW CEO Oliver Zipse told CNBC’s Arabile Gumede.

Zipse said BMW will double its electric vehicle sales this year. By the end of 2023, 15% of BMW’s global sales will be battery electric vehicles, he added.

Mercedes and BMW’s dedicated EV platforms represent a departure from the previous architecture, where they adapted internal combustion engine or hybrid models and added batteries. This is the company’s largest push yet towards a new platform for the electric vehicle era.

Analysts said the announcements from Mercedes and BMW are big steps, but they may still lag behind Tesla.

According to the BMW boss, the “Vision Neue Klasse” concept car represents the beginning of a new era of innovation

“The new platforms at Mercedes and BMW show for the first time what the European OEMs offer.” [original equipment manufacturers] will be able to do this. These cars will likely be a year away, but their specifications show that European OEMs will be able to create compelling products,” Daniel Roeska, senior research analyst at Bernstein Research, told CNBC via email.

Roeska said these new platforms will “fill a big chunk of the gap” with Tesla and Chinese players, “but not all of it.”

Price war in focus

BMW and Mercedes continue to push into an increasingly competitive electric vehicle market largely dominated by Tesla and various Chinese players.

According to Counterpoint Research, Tesla dominated 20% of the global electric vehicle market in the second quarter, followed by 15% for BYD.

And competition has grown tougher thanks to a price war largely fueled by Tesla. The US automaker began slashing prices in 2023, pledging to sacrifice margins in the short term to gain market share.

Mercedes and BMW both play in the premium segment of the market, where cars like Tesla’s Model S and Model X compete. As Mercedes prepares to launch more electric vehicles in the coming years, it remains true that its focus isn’t on promoting volume.

“We’re not pushing for volume, we’re focusing on value rather than volume,” Kallenius said.

Mercedes will launch a

Meanwhile, Volkswagen’s strategy seems to be to launch cars at different price points to conquer different market segments.

The company announced on Sunday that it will launch 11 new all-electric models by 2027, underscoring its penchant for electric vehicles. In 2026, Volkswagen wants to launch the ID. 2all, an electric vehicle that sells for less than 25,000 euros ($26,942).

The German car giant presented the ID. GTI concept electric vehicle presented at the Frankfurt Motor Show and said that a production version of the car should hit the road in 2027.

Tesla and China dominate with a focus on technology

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