Daimler's electric car push dents earnings

A concept Daimler Smart EQ electric car. Ronald Wittek/ EPA

Daimler reported profit that missed estimates in the fourth quarter on rising costs at its Mercedes-Benz cars unit, and warned that higher expenses will continue to dampen earnings growth as the luxury car maker invests in a new line-up of electrified vehicles.

Earnings before interest and tax were €3.47 billion (Dh15.79bn), the German manufacturer said on Thursday. That was well below the average analyst estimate of €3.73bn. Revenue advanced to €43.6bn.

Earnings this year will be in the “magnitude of the previous year,” the company said.

Tightening pollution regulation is putting car makers under strain to spend record amounts developing a fleet of electric vehicles. Daimler plans to invest €10bn to release 10 new electric vehicles by 2022, even as demand for battery models remains low.

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The generational shift will increase development spending, already at a record, for another two to three years, the company has said.

To meet the challenges, and fend off new competitors like ride-hailing company Uber Technologies and Tesla, Daimler has started preparations for its biggest corporate overhaul in a decade.

The manufacturer plans a holding company with three legally separate units, Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and financial services. Shareholders, who favour a spin-off of trucks unit into a separately-listed company, have criticised Daimler’s opaque language about the process that has left vague the benefits the costly exercise.