Demand, rivals pull eSprinter into U.S.

Mercedes-Benz plans to bring an electric commercial van to the U.S. as early as the third quarter of 2023, according to people familiar with the matter.

The German automaker began selling the eSprinter, a battery-powered version of the boxy Sprinter van, in Europe this year. Mercedes has hesitated to bring the EV to the U.S. because of its limited driving range and the high cost of homologation.

But the competitive landscape is changing. Emerging demand for electric delivery vans from logistics companies, tightening emissions regulation and new products from competitors are spurring Mercedes to bring the eSprinter to the automaker's second-largest market, the people said.

The U.S. electric commercial van market is still a greenfield, but it's likely to become a battlefield in the next few years as industry heavyweights General Motors and Ford Motor Co. bring product. Guidehouse Insights forecasts battery-powered light commercial vehicle sales in the U.S. will reach about 623,000 in 2030, up from about 56,000 this year.

"Given the rapidly increasing interest from commercial fleets in going electric, it would be foolish for Daimler not to offer the eSprinter here," Guidehouse analyst Sam Abuelsamid said. "What it comes down to is making sure the vehicle has a competitive range and performance capability."

The U.S. version of the eSprinter could be powered by up to a 120-kilowatt-hour battery, sources said. That would be a significant upgrade over the 55-kWh battery in the current European version and that of a competing electric van expected from Ford next year.

Dealers are looking forward to the introduction of a "competitive eSprinter product" for the U.S., Mercedes-Benz Dealer Board Chairman Jeff Swickard said.

"It would be attractive to the U.S. market because fleet customers have CO2 and sustainability targets to achieve, and many other customers could benefit from lower operational costs," said Swickard, CEO of Swickard Automotive Group, which operates four Mercedes stores in Alaska, Georgia, Oregon and Washington.

An announcement related to the eSprinter is expected this month. A Mercedes-Benz spokesman declined to comment last week.

The eSprinter would play in an evolving segment for automakers. Commercial vehicles traditionally carry higher profit margins and are typically a source of repeat business.

But the product segment is heavily dominated by U.S. automakers. Ford and GM alone controlled 70.4 percent of the large van segment through September of this year.

Nongasoline powertrains may suit some delivery vehicles, which operate on shorter, usually predictable routes. The onboard battery would also be capable of powering tools used by contractors, turning the vehicles into workshops on wheels.

New demand for electric delivery vans already has emerged in the wake of the country's seismic shift to e-commerce — even before this year's pandemic.

Amazon invested in U.S. EV startup Rivian and has put in an order for 100,000 midsize electric vans by 2030.

"Amazon's buying anything and everything that looks like it might have a battery in it," said Conrad Layson, an analyst with AutoForecast Solutions.

UPS Inc. has ordered 10,000 electric delivery vans from British startup Arrival, which is backed by Hyundai.

Electric vehicles are "poised to revolutionize the commercial fleet world," said Scott Phillippi, UPS senior director of fleet maintenance and engineering.

"We're partnered with smaller disrupters already, and we would like nothing better than seeing more players putting the innovation pedal to the metal in this space."

Automakers are responding to the demand. Ford will offer a battery-electric version of the Transit cargo van in the U.S. and Canada for the 2022 model year. And GM will begin production of an electric van, code-named BV1, in September, according to AutoForecast Solutions.

Ford and GM are Mercedes' largest competitors in the commercial segment, said David Ellis, general manager at RBM of Alpharetta, a major Sprinter retailer near Atlanta.

"So we have to stay competitive and release an electric vehicle that will have longer range and larger carrying capacity," Ellis said. "The future of the auto industry is electric."

Mercedes is embracing electrification to meet stringent emissions targets, primarily in Europe and China. The automaker plans to launch 10 battery-electric vehicles and 25 plug-in hybrids globally by 2025. Last week, Daimler said it will invest more than $85 billion over five years as it pushes forward with electrification and digitization.

The 2023 timing for the eSprinter's U.S. debut hits a sweet spot, said Jeff Schuster, president of global forecasting at LMC Automotive. The Sprinter model line is also due for a freshening in 2023.

"It's going to take a bit of time to convince the commercial vehicle segment that EVs make sense," Schuster said. "And it allows for the marketing efforts to kick in ahead of the launch."

It's unclear whether Mercedes would import the eSprinter to the U.S. or build it at its existing van factory in North Charleston, S.C. Meanwhile, Daimler is in the midst of a $1 billion expansion of its other U.S. plant, in Vance, Ala., to build EVs and batteries.