With EQA, Mercedes challenges Tesla, VW in compact EV segment

FRANKFURT -- Mercedes-Benz hopes to rekindle interest in its slow-selling full-electric vehicles with the EQA, which will compete with battery-powered compact cars such as the Tesla Model 3 and VW ID3.

Mercedes described the EQA as an "urban entry model" targeted toward young, urban customers, Mercedes said.

Marketing and sales chief Britta Seeger touted its "sustainability, versatility and fresh look."

The EQA can accelerate from 0 to 100 kph (62 mph) in 8.9 seconds and has a top speed of 160 kph (99 mph).

The car is being launched as the EQA 250 with a 426 km (265 miles) range under the WLTP test standard. Output is rated at 140 kilowatts or 188 hp.

Further variants including all-wheel-drive models with higher outputs and longer ranges will follow, including a version with a range of more than 500 km, Mercedes said.

The EQA 250 will go on sale in Europe on Feb. 4, with prices starting at 47,541 euros ($56,300) in Germany, excluding government EV incentives.

Mercedes did not disclose when the car will go on sale in other markets such as the U.S. "We are concentrating our focus initially on Europe," a spokesman said.

The EQA is based on the GLA combustion-engine crossover.

"The EQA proves that, by using a tried and tested architecture, it is possible to achieve an excellent compromise between performance, costs and time to market," Mercedes-Benz Cars operations chief Markus Schaefer said in a statement on Wednesday.

The EQA joins Mercedes's other full electric vehicles -- the EQC midsize crossover and the EQV minivan, which had global sales of 20,000 units and 1,700 units respectively last year.

Mercedes modified the underpinnings of its GLA crossover to reduce upfront investments and save time compared to building an electric hatchback from scratch. It's a trade-off that often comes at the expense of battery range and cost efficiency in production.

EV sales took off in Europe last year as automakers scrambled to meet European Union CO2 emissions targets. Sales received a boost from subsidies included in economic stimulus measures rolled out in France and Germany, in particular.

The first generation of Mercedes's lower-priced electric cars likely will drag on profitability until the company develops EV-specific underpinnings and battery prices drop further, said Michael Dean, a Bloomberg Intelligence analyst.

Still, the company's mass-market EV push will help it meet emissions rules in Europe and China, he said.

The EQA is being built at Mercedes compact car factory in Rastatt, Germany, as well as in Beijing. The battery systems are supplied by Daimler's subsidiary Accumotive in Kamenz.

The EQB compact SUV will go on sale later this year as Mercedes expands its EV offerings.

Mercedes also plans to launch the flagship EQS sedan, a sibling to its S-Class flagship and smaller EQE sedans that will be built on a dedicated EV architecture.

Bloomberg and Reuters contributed to this story