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Thursday, November 11, 2010

Daimler CEO Calls on Governments to Offset Electric-Car Costs

Daimler AG Chief Executive Officer Dieter Zetsche said governments should offer consumers financial incentives to buy electric vehicles to help offset the extra cost for manufacturers to build the cars.

“Even in the best case, the cost of electric autos might run several thousand euros more than conventional vehicles for the foreseeable future,” Zetsche said today in a speech in Stuttgart. “In other words, we need appropriate sales incentives.”

Daimler, the maker of Mercedes-Benz cars and trucks, is developing battery-powered versions of the gull-wing SLS sports car and two-seater Smart city car, to meet regulatory demands to reduce carbon-dioxide emissions and compete with rival Bayerische Motoren Werke AG. Daimler, which targets producing more than 10,000 electric cars by 2012, is building a factory in eastern Germany to produce lithium-ion power packs.

Manufacturers will struggle to make a profit from electric vehicles, which will likely account for less than 10 percent of the cars on the road in 10 years, Zetsche said, adding that the growth of electric car sales will occur “in many small steps.”

“We won’t earn high returns from electric vehicles for years to come,” said Zetsche, who heads the world’s second- largest maker of luxury cars. “That is the optimistic way of putting it.”

Government incentives for electric cars should be linked to technological advances such as battery performance, Zetsche said at a company event on sustainability, which also included a discussion of ethics.

Zetsche, who plans to add an executive to oversee ethical and legal issues to Daimler’s board, halted the company’s business in Iran this year because of the government’s political positions.

“Not every deal that’s legal is legitimate,” said Zetsche, noting that neither Zimbabwe’s President Robert Mugabe nor Sudan’s President Umar Al-Bashir were Daimler customers. “No deal in the world is worth risking our good reputation.”

Two Daimler AG units pleaded guilty to violations of the U.S. Foreign Corrupt Practices Act earlier this year. The pleas from the Russian and German units were part of an agreement with prosecutors to resolve allegations the German carmaker paid bribes to foreign officials.

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