Mercedes-Benz Is the Only Legacy OEM Launching an Independent Charging Network, but Don’t Expect It to Stay Around

By Dylan Khoo | 3Q 2024 | IN-7488

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Mercedes-Benz is pushing ahead with its own U.S. Direct Current Fast Charging (DCFC) network, breaking ranks with its partners in IONNA. As discussed in a previous ABI Insight, "North American OEMs Launch Their Own Charging Network to Fight Against a Tesla Monopoly," IONNA is a partnership between eight leading North American Original Equipment Manufacturers (OEMs) with plans to install 30,000 DCFC systems across North America. Mercedes-Benz, however, is also launching its own branded charging network that aims to operate 2,500 ultra-fast chargers across 400 North American hubs.

This is a fairly tempered iteration of Mercedes-Benz's "own everything" instinct, as it will be working extensively with its partners for this charging network. Renewable energy company MN8 Energy will supply carbon-neutral electricity and work alongside Mercedes to operate the stations and deploy the €1 billion investment in a roughly 50:50 split. ChargePoint will provide the charging platform and software solutions; it has supplied charging hardware for some locations, but Alpitronic will be the primary supplier going forward. So far, Mercedes has announced location partnerships with several major U.S. retailers: it will build 30 hubs at Buc-ee's gas stations, 55 at Simon Property Group malls, and over 100 Starbucks stores.

As Mercedes-Benz is not supplying any technology itself, its network will be differentiated primarily through branding and station design. The first hub to open in North America was in Sandy Springs, Georgia, in November 2023. The station boasts a charging lounge with beverage machines, lights indicating charger availability, and a roof equipped with solar panels and Light-Emitting Diode (LED) lighting. The entire hub shares its design language with the Mercedes-Benz EQ range, and it is clear to see how this high-tech and luxurious station supports the brand.

This is just the flagship station, however. At the Buc-ee's locations where the Mercedes-Benz network already operates, there is no actual "charging hub," just a row of chargers that are seemingly identical to ChargePoint's DCFCs with the addition of a silver coat of paint and a badge. This is likely to be the case for all of the partnership locations, where there will not be the funding, available space, or desire for Mercedes to operate a complete charging hub with its own amenities.

Mercedes-Benz does not really care about charging and it does not want to be a Charge Point Operator (CPO). The 2,500 chargers planned are negligible compared to IONNA's target of 30,000. Its network is there for advertising and to create additional brand touchpoints with its customers, with the intention of selling more cars and additional follow-up contracts. It is unclear how effective this will actually be, because the way that the network is set up means that Mercedes-Benz is not prominent throughout the charging experience. Partnering with retailers means that the customer will be spending their time in a Buc-ee's or a Starbucks, not in a Mercedes charging lounge. The software used for the chargers' screen interface is not even a Mercedes-branded white-label solution, it is just ChargePoint's software with ChargePoint's branding. This contrasts significantly with Mercedes-Benz's in-car infotainment system, which is considered a core part of the user experience, and that the OEM focuses on as a differentiating feature.

By working outside of the IONNA consortium, Mercedes-Benz has been able to move more quickly. Its network already has chargers in the ground, whereas, over a year after its launch, IONNA has yet to announce any locations and has not publicly confirmed a charging post supplier. Its first charging station is not expected to open until the end of 2024. Mercedes-Benz has already secured partnerships with major retailers to get its chargers in desirable high-traffic locations that should lead to higher utilization rates for its chargers, a crucial part of building a viable network.

In the near term, Mercedes-Benz's North American charging network will build the profile of the EQ range. It will advertise Mercedes-Benz's focus on electrification and, as its customers will soon have access to Tesla's Supercharger network, demonstrate that Mercedes-Benz is just as dedicated to an all-electric future as the EV pure plays. In the long term, ABI Research expects that Mercedes-Benz will exit the charging game and sell on its desirable and high-utilization assets to dedicated CPOs. Using ChargePoint's software and back end means that it will be very easy for another company to take over the chargers and fold the network into its own. Mercedes-Benz is able to use its size and reputation to secure funding and partners at a time when there are few serious players in the North American charging industry, and it will be hoping that these assets appreciate in value as the market electrifies further.

This is not a strategy that ABI Research expects many other OEMs to follow, and not one we would recommend. Legacy OEMs already have enough problems to deal with in their electrification journey without adding another questionably profitable business unit. The IONNA and IONITY consortiums will be enough for OEMs to avoid missing out on the charging industry entirely and take advantage of the subsidies available, while pooling their resources to minimize the costs.