Mercedes misses fuel economy targets in U.S., China

FRANKFURT -- Daimler's decision to prioritize Europe for low-emissions Mercedes-Benz electrified vehicles led to the automaker failing to achieve fuel economy and emissions reduction targets in the U.S. and China.

Daimler focused on Europe for sales of full-electric cars and plug-in hybrids in 2020 to meet its European Union CO2 reduction target and so avoid fines.

In the U.S. and China, Mercedes fell well short of regulatory targets, according to Daimler's annual report published on Feb. 18, forcing the automaker to spend money on regulatory credits.

To meet U.S. government targets on cutting greenhouse gases in vehicle fleets, Daimler needed to achieve 196 grams of CO2 per mile for its Mercedes passenger car fleet and 265 grams of CO2 per mile for light trucks. The Mercedes car fleet achieved 256 grams per mile and the light truck fleet's figure was 289 grams per mile.

In its annual report, Daimler said it closed the gap and met its targets by taking advantage of the flexibility measures allowed by legislation, including the purchase of external credits.

In China, targets are separated between local manufacturers' fleets and importers. Since the bulk of Mercedes vehicles exported to China are heavier models such the U.S.-built GLE crossover and the German-manufactured S-Class sedan, its wholly owned subsidiary, Mercedes-Benz China, also fell far short. Instead of meeting the 6.27 liters of fuel per kilometer, its fleet only achieved 8.02 l/km.

"We will purchase external credits at short notice in order to close consumption gaps in the fleet's achievement of the target," Daimler said.

The company said it would aim to meet Beijing's emissions targets in the medium term with its local Chinese joint venture Beijing, Benz Automotive Co. by expanding its range of electrified vehicles.

A Daimler spokesperson declined to comment on the size of its carbon compliance costs or from where it purchased offsetting regulatory credits.

Daimler had not yet received data on whether it met its Corporate Average Fuel Economy (CAFE) targets for the United States, the spokesperson said. The automaker also does not have official data with regards to BBAC.

In Europe, Daimler expects the Mercedes passenger car business came in comfortably below its EU target of 107 grams per km for 2020 at an estimated 104 g/km.

Models such as the Mercedes GLC 300 e plug-in SUV helped to lower the automaker's average CO2 emissions. Last year, the brand sold more plug-in hybrids in Germany, Europe’s largest market for the powertrain, than Audi and BMW combined and controlled a share of about 27 percent.

This year Daimler expects the number of Mercedes and Smart electrified vehicles it will sell as a percentage of its overall global total to reach about  13 percent, up from 7.4 percent in 2020, thanks to the launch of new battery-powered models such as the EQA and EQB compact EVs.

CEO Ola Kallenius said he expected Daimler meet this year's WLTP-based goal of 125 g/km in Europe without using regulatory supercredits. Since WLTP is more reflective of real consumption and emissions than the NEDC test it has replaced, Daimler's equivalent for last year's NEDC target would have been 137 g/km once converted.

Rival German automaker, Volkswagen Group, whose brands include Audi and Porsche, said last month it faces a fine of more than 100 million euros ($121 million) for missing its 2020 EU target for CO2 emissions.