Mercedes-AMG GT 43 4MATIC+ on display at the Brussels Fair on January 9, 2020 in Brussels, Belgium.
Sjoder van de Waal | Getty Images News | Getty Images
Mercedes-Benz shares fell sharply Thursday after the German automaker reported lower profits and revenue as competition from electric vehicles created supply chain challenges.
London Stock Exchange data showed that Frankfurt-listed shares fell 5.8% at 10:56 a.m. London time (5:56 a.m. ET), putting the stock on track for its worst day since May 4.
The company said it faced a “sluggish market environment with intense price competition,” particularly in the electric vehicle segment.
On an analyst call about the results, Chief Financial Officer Harald Wilhelm described the EV market as a “pretty cutthroat space,” Reuters report. At the same time, some traditional automakers are selling electric vehicles for less than regular internal combustion engine cars – despite higher production costs.
“It’s hard for me to imagine that the current situation is completely sustainable for everyone,” William said, according to the news agency.
Group earnings before interest and tax (EBIT) fell 7% in the third quarter to 4.8 billion euros ($5.06 billion). Revenue fell 1.4% to 37.2 billion euros, below consensus expectations, partly due to supply chain challenges that led to a 5% drop in passenger car sales.
Mercedes-Benz share price.
Inflation, supply chain issues and foreign exchange losses are the major challenges faced by the company.
result Data showed overall car sales were broadly stable in the first nine months, with growth in Germany and declines in China.
Mercedes-Benz aims to achieve 50% of global sales of hybrid and electric vehicles by 2025 and said it will launch only pure electric models from then on. The company said Thursday it remains committed to those goals.
Despite a slow start to the transition to electric vehicles, traditional automakers have announced ambitious goals in recent years but face stiff competition from Elon Musk Tesla and Chinese companies such as BYD backed by Warren Buffett.
Results show that in the first nine months of this year, Mercedes’ share of all-electric vehicle sales rose from 6% to 11%.
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