(Bloomberg) -- Mercedes-Benz Group AG’s top executive sees measures to decouple from China as a risk to healthy competition and global automotive supply chains.
“Open markets is what drives growth and what drives wealth creation,” Mercedes-Benz Chief Executive Officer Ola Källenius said in an interview with Bloomberg Television in New York. “Let’s keep markets open and let market participants fight it out.”
The European Union earlier last week opened an investigation into Chinese subsidies for electric vehicles, highlighting the growing industrial and geopolitical competition between the two economies. In an interview with Bloomberg on Sunday, German Foreign Minister Annalena Baerbock said that the EU must reduce its reliance on China, adding she supports the investigation.
Read more: China Accuses EU of ‘Naked Protectionism’ in EV Aid Fight
The European probe, set to take about nine months, may ultimately lead to import tariffs on Chinese vehicles, drawing sharp rebuke from Beijing, calling the move a blatant act of protectionism. There are also concerns over retaliation to any trade curbs.
“We learned in the pandemic that supply chains can be fragile,” Källenius said, adding Mercedes cars rely on components from all five manufacturing continents. “It would be a complete illusion to think we can divide the automotive world into individual regions that have nothing to do with each other.”
Read more: Why Europe Is Pushing Back Against Chinese EV Influx: QuickTake
Alongside Volkswagen AG and BMW AG, China is Mercedes-Benz’s single most important market, accounting for around a third of sales. Customers in the world’s biggest auto market are increasingly choosing homegrown brands such as BYD Co. and Nio Inc. to purchase electric vehicles that better target local tastes. The German company has a goal to sell only EVs where possible by the end of this decade and plans to set up eight battery factories with partners.
Under Källenius, Mercedes hast started to focus resources on top-end vehicles including the Maybach limousines, AMG performance cars and G-Wagon off-roader, while shifting away from less profitable entry-level models like the compact A-Class.
Källenius said he did not expect any “major impact” for Mercedes’ supply chain from the United Auto Workers’ strike against the legacy Detroit automakers. He added that the company has always kept lockstep with the economy to make compensation adjustments.
“We try to make sure we are competitive, that we’re an attractive employer,” he said. “Whatever pressures we have on cost is going to have to be made up in productivity.”
Asked whether automakers should guarantee that existing workers will have a job as the industry transitions to EV production, Källenius said that the number of Mercedes workers needed for vehicle assembly would remain about the same, while fewer would be needed to make powertrains.
“We will use demography over this 10 year-plus period — our demographics — to make sure that we can get into a position where we do this in a sensible way.”
--With assistance from Matthew Miller, Guy Johnson, Ed Ludlow and Jonathan Roeder.
(Adds Källenius’ comments on UAW strike’s impact from seventh paragraph)
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