Autos

Mercedes-Benz US chief says word of mouth the best way to sell electric vehicles

Key Points
  • Mercedes-Benz USA CEO Nicholas Speeks says electric vehicles will grow in popularity as more people talk about their positive experiences with them.
  • Manufacturers also need to make quality cars that people want to drive, Speeks tells CNBC.
  • "So you have the advantage for yourself in terms of performance but also you have the advantage of benefiting the environment around us," Speeks says. 
VIDEO3:0603:06
Mercedes-Benz USA CEO Nick Speeks on electric vehicle push

Mercedes-Benz USA CEO Nicholas Speeks said sales of electric vehicles are getting a boost from owners spreading the word about their performance to other drivers.

"It's a question of experience. I think it's getting cars on the road and having people speak of their experience positively," Speeks said on "Squawk Alley." 

For a decade, EVs have primarily been produced to meet government fuel economy standards with more eco-friendly alternatives to fossil fuels. But as automakers attempt to bring EVs into the mainstream and compete against industry-leader Tesla, they're touting the performance more than their environmental benefits.

Speeks, who took over the German automakers' U.S. operations in September, said federal and state governments can also help boost sales by offering incentives and access to charging stations. 

"I think also it's a question a little bit of pull from a legislative standpoint. Locally, city access," Speeks said. "Some incentives at the beginning I think are important."

There are differing types of incentives for buying a new electric vehicle, including a federal income tax credit that some lawmakers are trying to extend. There are also statewide and city-level initiatives, as well as some directly from electric utility companies.

There are more than 1.18 million electric vehicles on U.S. roads as of March 2019, and sales of EVs last year were up 80% compared to 2017, according to the Edison Electric Institute.

They still represent a tiny amount of overall automobiles in the U.S., below 2%. In the first quarter of 2019, they totaled 1.5% of all new vehicles sales.

Speeks' made his remarks at the Los Angeles Auto Show, where a slate of new electric vehicles were on display as auto companies seek to compete with rival Tesla, which is responsible for more than three-quarters of EV sales so far this year.

As many as 100 electrified cars are scheduled to come to market by the end of 2020.

A Tesla Model S (L) and Model X are displayed at a shopping mall in Hong Kong on March 10, 2019.
Vivek Prakash | AFP | Getty Images

Yet questions still persist about when significant portions of drivers will give up their gas-powered vehicles and switch to electric models. Greenhouse gas emissions from transportation represent nearly 30% of U.S. emissions, establishing the sector as the largest individual emitter.

The cost of electric vehicles, as well as the charging infrastructure, are two barriers to adoption, Ralf Speth, CEO of Jaguar Land Rover, told CNBC.

Speth said its on the manufacturers to "make sure we get better batteries, with a higher density and lower price."

"But on the other side, also developing an infrastructure with the quantity and quality of charging points," Speth said, arguing that doing so would provide drivers with the "convenience" they are used to with gas-powered cars.

Speeks agreed with Speth, saying that automakers also share responsibility for increasing EV adoption.

"I think it's being able to provide great cars that people like, not because they're electric but because they're great cars and they happen to be electric," Speeks said. "So you have the advantage for yourself in terms of performance but also you have the advantage of benefiting the environment around us."

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