Mercedes-Benz rallies after backing off 50% EV target, unveiling new buybacks

Mercedes-Benz Group AG (OTCPK:MBGAF) pushed back an electrification target by a full five years on Thursday. The German automaker now expects all-electric vehicles and hybrids to make up 50% of its fleet by 2030, instead of the initial target of 2025.

CEO Ola Kaellenius has been cautious in general on the electrification target, with battery-powered cars currently making up just 11% of total sales, and 19% including hybrids. Notably, Kaellenius has made it clear to both customers and investors that Mercedes-Benz (OTCPK:MBGAF) is still well-positioned to carry on producing combustion engine cars.

The EV pullback and the announcement of a $3.3B stock buyback program took the sting off of soft guidance issued by Mercedes-Benz (OTCPK:MBGAF) for 2024. The company pointed to slower economic growth in Europe, continued supply chain bottlenecks, and global trade tension as negative factors.

During the earnings conference, CFO Harald Wilhelm discussed the outlook for M&A moves by the Stuttgart-based company.

"Some might think about M&A, that, at least on my side, I'm not a big fan of large scale M&A. But maybe M&A also consists of not only acquisitions, but to divestitures. And over time, that means we could consider after the lockup period to divest from the Daimler Truck stake. I said when we could and didn't say we do, but we could, obviously that would support the free cash flow and take it even to a higher level on which than the new policy would apply."

Mercedes-Benz (OTCPK:MBGAF) ADRs traded 1.85% higher in the U.S. on Thursday afternoon after the auto stock ended the day up 4.70% in Frankfurt. The solid gain for the auto giant came on a day that Rivian Automotive (RIVN) fell 25%, Lucid Group (LCID) dropped 14%, and NIO (NIO) shed 3%.