Daimler will likely phase out combustion-engine cars ahead of its internal target of 2039 thanks to growing demand for the German automaker’s Mercedes electric models, chief executive Ola Källenius said.

“Do we intend to pick up speed? Yes, we do, ”said the Swedish boss the FT’s Automotive Future Summit. The transformation into a zero emission business, he added, “was going to be faster, and probably this 2039 scenario is the most conservative scenario that we are considering in the various plans that we are discussing.”

The Stuttgart-based group set a goal in 2019 to deliver a new range of fully carbon-neutral cars within 20 years, but competitors such as General Motors and Ford have since unveiled more ambitious targets.

In February, Daimler told investors it would not prematurely phase out sales of gasoline and diesel vehicles, calling them a “cash machine” that would help fund future electric models.

But Källenius, who would not name a specific date for the end of combustion engine models, said “market dynamics”, along with regulatory pressure and falling battery costs, would make the economic case compelling for a faster switch to electric vehicles.

Since taking the reins of Daimler two years ago, the former F1 executive has overseen the deployment of Mercedes’ first luxury electric vehicle, the EQS, which was designed from the ground up as a battery-powered alternative to the brand’s flagship S-Class sedan. Four more electric models based on the same architecture are expected to follow in the next 18 months.

Sales of existing electrified cars are also accelerating. In the first three months of the year, Mercedes sold some 43,000 plug-in hybrid vehicles worldwide and more than 16,000 pure-electric cars, together accounting for 10% of global sales. Last year, these vehicles only accounted for 7.4% of deliveries.

Källenius also welcomed the EU’s plans to refine its CO2 targets for the transport sector. “It’s an ambition we say yes to,” he said, but warned the bloc should “have an honest conversation about jobs”.

“Everyone knows that it takes more man hours to assemble and build a combustion powertrain compared to an electric powertrain,” he said.

“When a new technology takes over and we have this overarching goal of tackling climate change and making the CO2 load go down, it is politically the highest priority and also for our company, the highest priority.

In recent months, Daimler has benefited from a dramatic recovery in the auto market, led by China.

But the current semiconductor crisis has forced the automaker to cut production as demand increases, a development Källenius warned was a sign of things to come.

“There is an underlying pressure on the chip side as vehicles become more and more sophisticated. . .[and]also volume manufacturers that add content in vehicles that may only have been found in high-end and luxury vehicles before, ”he said. “There you have an extra layer of pressure that can affect us beyond resolving this immediate chip shortage situation.”

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