Daimler Plowing $3 Billion into Diesel Development

Maker tells shareholders EVs, diesels part of product plans.

by on Apr.06, 2016

Dieter Zetsche, CEO of Daimler AG, told shareholders the company plans to invest nearly $3 billion into diesel technology.

Daimler AG plans to invest 2.6 billion euros, nearly $3 billion, in a new line of diesel engines even as it prepares to launch a new battery-electric vehicle that can go 300 miles on a single charge, chief executive officer Dieter Zetsche told the company’s annual shareholders meeting in Berlin.

“The more cars and commercial vehicles are on the road, the more efficiently each one of them must be operated. Here too, the spirit of invention is required more than ever also in this field,” he said.

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Zetsche added Daimler is moving ahead with the investment even as Volkswagen AG has been caught up in a massive scandal for trying to evade the emission standards for diesel engines now in place in the U.S., as well as countries such as South Korea and Mexico.

Despite the current discussion about emissions, Zetsche said Daimler will continue to develop its diesel technology. “At Mercedes, we believe in the diesel engine – and in our engineering skills,” he said.

If traffic-related carbon dioxide emissions are to continue to fall in the short term, diesel engines are essential. That’s why Daimler is investing billions in a new generation of highly efficient diesel engines.

“Our vehicles are certified and approved on the basis of applicable laws and regulations in the various regions,” said Zetsche. “At Daimler we believe in diesel engines,” added Zetsche, who said the new diesel will be used first in Mercedes-Benz E-Class sedan

For many years, Daimler has actively supported the introduction of new measuring methods with the aim, among other things, of converging as far as possible cars’ fuel consumption in test conditions and in real driving, as deviations can occur between measurements in these two driving modes, he added, noting the company will face both higher standards and more difficult tests in the years to come.

In addition, China, which has now emerged as the single largest market for Mercedes-Benz cars, also has been reluctant to adopt diesel engines for passenger vehicles.

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Zetsche, however, said Daimler is “systematically working” on the further development of alternative driver systems. The company is investing approximately 500 million euros, or nearly $570 million, in the construction of a second battery factory in Germany.

“This is a commitment to electric mobility, and to Germany as a production location,” he said. In the new factory, batteries will also be produced for stationary use, for energy storage in private households or for industrial purposes for example. But the batteries will be mainly used in the group’s electric and hybrid vehicles.

All models from smart will be available with electric drive; market launch is planned for the end of this year. Mercedes-Benz also sees a future for the plug-in-hybrid as the successful technology of the coming decades, Zetsche said.

In 2017, the company will have 10 plug-in models on the market. Before the end of this decade, Daimler plans to launch an electric car with a range of up to 500 kilometers, or about 300 miles, he said.

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“(Last year) was the most successful year in the history of Daimler AG,” said Manfred Bischoff, Chairman of the Supervisory Board of Daimler AG, when welcoming the expected approximately 6,000 visitors to the annual meeting.

“This success is no accident: It is based on the long-term planning and strategic decisions of the Board of Management and the Supervisory Board in the past years,” said Bischoff. “Also for the year 2016 the company has ambitious targets and will invest all its energy to maintain at the top position in the premium car segment and to anchor past year’s success on a sustainable basis,” he said.

Daimler achieved new records in 2015 for unit sales, revenue and earnings, he said.

Earnings before interest and taxes increased by 36% to 13.8 billion euros from 10.1 billion euros, and net profit increased to 8.9 billion euros from 7.3 billion euros in 2014.

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As a result of the strong earnings and the successful course of business in the year 2015, the Board of Management and the Supervisory Board have proposed the distribution of the largest dividend in the history of Daimler AG of 3.25 euros per share 2.45 euros in 2014.

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