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A year ago, investors had virtually abandoned the world’s major automakers. Shares of Daimler, General Motors and Ford Motor were at a 10-year low. Electric vehicle starts without any sales were sometimes worth more than traditional automakers with tens of thousands of employees and factories around the world. The pandemic seemed to seal the fate of the dinosaurs.

But it turns out that the old behemoths may not be doomed just yet. The results reported by Daimler on Thursday underscored a remarkable comeback from some mainstream automakers. These companies have been successful in surviving the pandemic, shifting their focus to electric vehicles and convincing stock investors that they won’t let Tesla take their customers without a fight.

Daimler shares have tripled since reaching a low point in March and rose again on Thursday after the company announced that net profit for the year rose nearly 50% to € 4 billion , or $ 4.8 billion, compared to 2019.

General Motors shares have also nearly tripled since March. The company beat analysts’ expectations last week, reporting fourth-quarter net income of $ 2.8 billion, from a loss a year earlier.

In addition to making more money than investors thought possible in a turbulent year, the two companies, which date from the turn of the 20th century, have made decisions that show they grasp the technological changes that are shaking the world. industry.

GM changed perceptions of its commitment to electric vehicles when it announced last month that it would phase out fossil-fueled vehicles by 2035 with its own list of actions. Daimler, based in Stuttgart, Germany, manufactures luxury Mercedes-Benz cars and Freightliner trucks.

Ola Källenius, CEO of Daimler, said the decision to dismantle the company was intended to give managers more freedom to react to technological changes.

“As the speed of transformation of the automotive industries accelerates,” Källenius said in an interview, “the speed of decision-making is crucial.”

GM’s promise to give up fossil fuels, but not for 14 years, has sparked a chain reaction in the industry. Ford said on Wednesday that by 2030, all of its passenger cars sold in Europe would run solely on batteries. Jaguar Land Rover said on Monday that all of its Jaguar luxury cars and 60% of Land Rover luxury SUVs will run solely on batteries by 2030.

Mr Källenius avoided making a similar statement. In many markets where the company is active, there is no infrastructure for electric cars, he stressed. Therefore, a vow of abstinence from fossil fuels “is not something we should be doing just to make headlines,” he said.

But all future Mercedes-Benz models will be designed to be electric, Källenius said. “Our technological path is clear,” he said. “We will take a leadership position. It’s a bit too early to pick a date for the world when the last combustion engine will leave the production line.

Investors seem to be rewarding automakers who show they can build electric cars. Shares of Ford, whose Mustang Mach-E has garnered good reviews, have doubled since hitting their low in March. Shares of French automaker Renault have also more than doubled since; its affordable subcompact Zoe was the best-selling battery car in Europe last year.

Daimler will start selling several new electric vehicles this year, including the Mercedes-Benz EQS, an equivalent of the company’s premium S-Class car. The EQS will go on sale this summer for a starting price probably over $ 100,000.

“Little by little, the financial market starts to look at our technology portfolio and everything we have in the pipeline,” said Mr. Källenius.

So far, electric cars are nowhere near as profitable for Daimler and other mainstream automakers as gasoline models. Battery systems are more expensive than conventional engines and transmissions, and automakers are still learning how to efficiently build electric cars. It will take time to reach the profit margins “to which we are used to on the internal combustion side,” said Källenius.

Daimler’s surprisingly healthy profit in 2020 was the result of old-school cost cutting rather than a technological breakthrough. The company reduced its workforce by 7,000, or 4%, and cut research and development budget, which Källenius said was still large compared to its competitors.

When the pandemic hit, Daimler quickly cut production so as not to be stuck with unsold vehicles, Källenius said.

Even after the sharp rises in their stock prices, Daimler and GM are still only about a tenth more on the stock market than Tesla, which is only a tiny fraction of the number of vehicles. Investors are dazzled by Tesla CEO Elon Musk and have more confidence in a company that only makes electric cars.

As Källenius conceded, dinosaurs still have a long way to go before investors believe they have so much potential.

“The financial market will wait and see a bit,” he said. “How is it going to be?”


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