Daimler Fears That Switch to Electric Cars Will Disrupt Supply Chain

Daimler is worried that suppliers may have trouble making the transition, report says.

Mercedes-Benz

Most major automakers are gearing up for a major influx of electric cars. Pressured by stricter emissions standards and talk of outright bans on sales of new internal-combustion cars, automakers claim they're ready to go electric. But Daimler believes its suppliers may not be.

Reuters reports that Daimler is warning investors that transitioning from internal-combustion to electric cars could cause problems for suppliers. The shift could decrease business for certain suppliers, forcing Daimler to prop them up, the automaker said. Daimler did something similar during the 2008 financial crisis.

The automaker is also worried that electric cars will be less profitable than its current range of gasoline and diesel models. Earlier this month, the company said profit growth would be curtailed because of increased investment in new technologies, including electric powertrains and autonomous-driving systems.

Daimler is also concerned about political crosses and other issues driving up the cost of raw materials. Analysts have noted the difficulty in sourcing materials for electric-car batteries. The supply of metals like cobalt will be taxed by increasing demand for electric cars. Most Cobalt is also mined under inhumane conditions in the Democratic Republic of the Congo, and processed in China, creating ethical and political issues for Western automakers.

Nonetheless, Daimler is committed to electric vehicles. Last year, it announced that its Mercedes-Benz brand will offer a hybrid or all-electric version of every car it makes by 2022. The company also recently unveiled electric versions of the Vito and Sprinter vans and is marketing the Fuso eCanter electric truck to commercial customers.