BMW, Mercedes come out swinging against hot-selling Tesla

A new American power is threatening Germany's historic grip on the premium auto market.

Once the pinnacle of gasoline-powered luxury, BMW and Mercedes-Benz are losing share to electron-powered Tesla.

But now the empire is striking back.

The German luxury stalwarts this month revealed a pair of high-margin EVs as part of a campaign to take the fight to the American upstart.

Mercedes said it will be ready to go all-electric early next decade. BMW promises to offer a dozen new BEVs globally by 2023.

"We are putting pedal to the metal with our expanding BEV portfolio," BMW Group CEO Oliver Zipse said.

BMW Group sales boss Pieter Nota was more blunt: Tesla "had a unique selling point for quite some time. That's over."

Mercedes-Benz has garnered strong demand globally for its electric vehicles in the past 18 months.

"In the first quarter, we've tripled the sales of full-electric vehicles [compared with a year ago]," sales and marketing chief Britta Seeger said. "We see a huge request from customers asking for full-electric-battery vehicles."

Until now, the Germans have been watching Tesla's taillights fade into the distance.

According to data from the financial information company Experian, for the first two months of this year, Tesla had 71,250 new-vehicle registrations in the U.S., while BMW had 54,210 and Mercedes had 40,075.

But the German brands' newly debuted zero-emission variants of their flagships are aimed at the luxury segment's sweet spot.

Mercedes will launch a battery-powered version of its GLS SUV in the U.S. in late 2022. The Alabama-assembled EV is the third model built on Mercedes' new Electric Vehicle Architecture, or EVA platform.

Seeger described the EQS SUV as the "perfect fit" for truck-crazed America.

"The product substance is here," she said. "It's luxury. It's tech. It's the right answer to the question: How is Mercedes moving [toward electrification?]"

Available in rear- and all-wheel drive, the EQS is powered by a 107.8-kWh battery that delivers more than 373 miles of range, based on the WLTP testing cycle.

The single-motor rear-wheel-drive EQS 450+ delivers 355 hp, while the dual-motor EQS 580 4MATIC pumps out 536 hp, Mercedes said.

BMW, meanwhile, is electrifying its top-of-the-line 7-Series sedan in the fourth quarter.

The i7 xDrive60, propelled by dual motors, delivers 536 hp and up to 300 miles of range. The large sedan can hustle, capable of a 0-60 mph sprint in about 4.5 seconds.

The i7 is awash in luxury accoutrements befitting its six-figure sticker price, including Swarovski crystal headlights, leather and cashmere seats and a 31-inch, 8K-resolution touch display that drops from the headliner for rear-seat entertainment.

BMW National Dealer Forum Chairman David Sloane referred to the i7 as "a showpiece" for BMW technology.

Zipse highlighted the i7's spaciousness — one of the "mandatory needs" for luxury segment customers. The seventh-generation 7 Series has grown in length, width and height. The wheelbase is longer, creating roomier rear seating.

"It's about sweet spots," Zipse said, "not about making a compromise."

Unlike Mercedes, which launched its next-generation EQ models on a new electric architecture, BMW chose to build the i7 on the same platform as its newly redesigned 7-Series combustion-engine model.

All drivetrains of the new 7 Series are based on the latest evolution of the rear-wheel-drive/all-wheel-drive CLAR platform and have similar body styles.

Guidehouse Insights principal analyst Sam Abuelsamid said a flexible architecture that supports combustion engines, plug-in hybrids and BEVs is pragmatic given the uncertainty around the pace of EV adoption.

"In the lifetime of this model generation — over the next eight to 10 years — there's still going to be a significant percentage of customers that want an ICE, and it's hard to make the business case for a dedicated electric architecture for this," Abuelsamid said.

Unlike some of its European rivals, BMW is hesitant to go electric-only because charging infrastructure in many markets remains underdeveloped.

Zipse believes demand for combustion engines will continue alongside the growing adoption of electric vehicles.

"This is the decade of diversity, the decade of flexibility," he said. "We feel, with our approach, we are well prepared for a not-so-predictable future."

But a common platform is not without sacrifice.

"You're probably not going to be able to pack as much battery," Abuelsamid said. "You're going to have less range than [an EV-only platform]. The packaging on the i7 is compromised — there's no front storage, and you still have the center transmission tunnel."