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Mercedes Sales Drop As Supply Chain Issues Take Hold

Lockdown orders and computer chip shortages hit hard.

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A photo of a Mercedes factory line with an SUV being constructed.
Photo: Jade Gao/ AFP) (Getty Images)

Mercedes Benz saw its sales drop 16 percent in the three months between April and the end of June, Ford recalls 100,000 trucks due to fire risks, and Tesla boss Elon Musk tries to back out of his Twitter buyout. All that and more in The Morning Shift for July 11, 2022.

1st Gear: Supply Chain Issues hit Mercedes Sales

It might feel like things are starting to get back to normal, but the automotive industry is far from out of the woods when it comes to the lasting impact of Covid-19. Now, Mercedes Benz has announced that lockdowns due to the pandemic and a shortage of certain essential components hit its sales for the three months to the end of June 2022.


According to Bloomberg, the German automaker saw its sales drop 16 percent between April and June. The firm said its deliveries were down 25 percent in China and 10 percent in Europe. Sales in North America were down three percent during the period. Bloomberg reports:

“Ongoing supply-chain problems could jeopardize Mercedes’s plan to cut back on entry-level vehicles in order to focus on higher-end cars that deliver bigger profits. Mercedes said a dearth of chips contributed to a 16% decline in sales for the top-end luxury category.

“EV sales were a bright spot in Mercedes’s report, with its EQ sales nearly doubling to 23,500 units compared to the same period last year. The first half of the year saw the brand’s EV sales rising to 45,400 units – an increase of 134%.”


In a statement shared by Mercedes Benz, Britta Seeger, a management board member responsible for marketing and sales, said: “The electric ramp up is gaining traction: Sales of our fully electric vehicles increased by more than 90% in Q2 and even 134% in the first half of 2022. It shows that we offer compelling electric vehicles that our customers desire.”

In total, Mercedes sold 490,000 during the three-month period.

2nd Gear: Ford EV Sales are Booming

It isn’t just Mercedes that has seen its sales of electric cars go through the roof. According to Automotive News, Ford’s rollout of its Mustang Mach-E and F-150 Lightning EVs mean it could soon challenge Hyundai for the silver medal in U.S. EV sales.

According to the Blue Oval’s second-quarter sales, it sold almost double the number of electric vehicles as it did at the start of the year. So far this year, it has sold 22,979 electric vehicles, which is up 77 percent on the same period in 2021. Automotive News reports:

“That ranks third in the U.S. behind Tesla and Hyundai Motor Group. The Hyundai, Kia and Genesis brands sold a combined 34,518 EVs through June, according to the company.

“Analysts say Ford could overcome that 11,539-vehicle deficit if it continues ramping production of the Lightning and takes advantage of recently increased capacity at its Mustang Mach-E plant in Mexico.”


The site suggests that Ford’s early success in the EV space has come by sticking to familiar nameplates and popular segments here in the U.S. Names like the Mustang and F-150 are easily recognizable for buyers who may be hesitant about switching to a plug-in lifestyle.

But while the American firm has been winning favor with its F-150 Lightning rollout, its Korean rival has also found success with its latest models – the Hyundai Ioniq 5 and the Kia EV6. Automotive News suggests that the rising popularity of these two cars may make it harder for Ford to leapfrog Hyundai into the second spot, behind Tesla.


3rd Gear: Musk Makes Meme

And speaking of Tesla, it’s time to talk about CEO Elon Musk and his impulse purchase of Twitter. The Tesla and SpaceX boss announced he wanted to buy the social networking app earlier this year. But on Friday, he said he would try to back out of the deal after claiming that Twitter failed to supply him with data on spam accounts on the site.


But the two parties had signed a binding contract for Musk to buy Twitter for $44 billion, and the social media platform is keen to stick to the terms of that deal. Twitter will likely take Musk to court to enforce the terms of the deal. Musk’s newest response? A few slightly unhinged posts on Twitter of course. Reuters reports:

“Elon Musk on Monday mocked Twitter Inc’s (TWTR.N) threat to sue him following his move to abandon the $44 billion takeover deal, tweeting the social media firm would need to disclose more information on bots and spam accounts.

“The series of tweets on Monday was Tesla Inc chief’s first public response since he made public his intention to ditch the offer on Friday because Twitter had breached multiple provisions of the merger agreement.”


As has been a theme through this whole debacle, the meme relates to Twitter and its disclosure of bot accounts on the site.


This is all just the saddest plea for attention.

4th Gear: Ford Recalls 100,000 Trucks

Ford is recalling more than 100,000 hybrid Escape, Maverick and Lincoln Corsair vehicles over a fire risk. Reuters reports that the recall affects certain 2020 to 2022 models that are fitted with a 2.5-liter hybrid or plug-in hybrid engine.


The firm says its latest recall relates to a risk of fire under the hood in the event of an engine failure. Reportedly, in the event of an engine failure oil and fuel vapor may be released and could gather near sources of ignition, which could lead to a “potential under-hood fire”.

There have so far been no accidents or injuries associated with the issue, which can be fixed by dealers modifying the engine shield and grille shutter.


Reuters also reports that Ford is expanding an earlier recall of Ford Explorer and Lincoln Navigator models. According to the site:

“Ford is separately expanding its recall of 2021 Ford Expedition and Lincoln Navigator SUVs for under-hood fire risks by another 27,000 U.S. vehicles after five additional fires were reported after its recall of 39,000 vehicles announced in May following 16 fire reports. One injury has been reported.”


The firm is advising owners to park these vehicles outside until they can be fixed. It says it has the parts to repair models with an 800-watt cooling system, but warned that it would have the parts to fix models fitted with the 700W system until September.

5th Gear: US is Nearing Mass EV Adoption

With Mercedes, Ford and Hyundai all posting strong EV sales so far this year, you might be wondering when we reach the EV adoption tipping point. Well, according to Bloomberg, we’re now past that point here in the U.S.


A report from Bloomberg suggests that the point of no return when it comes to EV adoption comes when electric vehicles make up five percent of sales. And the U.S. has now joined China and Europe in passing that point. According to Bloomberg:

“This threshold signals the start of mass EV adoption, the period when technological preferences rapidly flip, according to the analysis.

“For the past six months, the US joined Europe and China — collectively the three largest car markets — in moving beyond the 5% tipping point. If the US follows the trend established by 18 countries that came before it, a quarter of new car sales could be electric by the end of 2025. That would be a year or two ahead of most major forecasts.”


Bloomberg suggests that once EVs make up more than five percent of new car sales, buyers are no longer early adopters eager to get their hands on the latest tech. At that point, they’re more likely to be mainstream buyers just out to get their hands on a new car.

In theory, this should mean that the first five percent of EV buyers have struggled through the poor infrastructure, lack of charging support and mediocre range to pave the way for a bright battery-powered future that should soon follow.


This includes large-scale investment in improving charging infrastructure in the U.S. and greater research and development into new battery tech. With those almost in place, the snowball of EV adoption could continue to grow as EVs could make up half of new vehicles sales here long before president Joe Biden’s target of 2030.

Reverse: Space Station Crash


Neutral: How Are You?

Happy Monday, did you have a nice weekend? Mine was pretty quiet after a few busy weeks. I bought some new brake cables and pads for my bike, which I’ll try and fit soon so that it’s less terrifying whenever a Silverado turns into the New York bike lanes without looking.