Welcome to the Global Conference Call of Mercedes Benz. At our customers' request, this conference will be recorded. The replay of the conference call will also be available as an on demand audio webcast in the Investor Relations section of the Dana website. The short introduction will be directly forwarded by a Q and A session. I would like to remind you that this teleconference is governed by the Safe Harbor wording that you'll find in our published results documents.
Please note that our presentations contain forward looking statements that reflect management's current views with respect through future events. Such statements are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect, Then actual results may be naturally different from those expressed or implied by such statements. Forward looking statements Speak only to the date on which they are made. May I now hand you over to Stefan Hofmann, Head of Daimler Investor Relations.
Good afternoon, ladies and gentlemen. This is Stefan Orfmann speaking. On behalf of Mercedes Benz, I'd like to welcome you to the Investors and Analyst Q and A Our virtual Mercedes Benz strategy update, Electric Drive. We are very happy to have with us today Ola Kiellenius, our CEO Harald Wilhelm, our CFO, Markus Schafer, responsible for Group Research and COO, Sabjad Khan, CTO and leading the case organization. Ladies and gentlemen, you may ask your questions now.
We have approximately 45 minutes With your name and the name of the organization that you are representing before asking your question. As always, a few practical points. Please ask your question in English. As a matter of fairness, please limit the amount of questions to a maximum of 2. Now before we start, The operator will again explain the procedure.
Thank you very much.
And the First question goes to Timurukasa from Deutsche Bank.
Yes. Good afternoon, gentlemen, and thank you very much for taking my questions. And thank you for making this Such a short list, very clear message. I think a lot of people on this call had doubts whether that would make any sense to host this event at all. And I think you've done a very stringent follow-up from last year.
Thank you for making that very shortlist. I have two questions, please. The first one is really, Ola, I think we had this discussion a couple of times actually, but I'll try my luck again. Since Harald said that you cannot really manage to close the cost gap between an ICE and the BEV even until the end of this decade, why do you still have fully electrify the compact models. Why can you not use this way to electrify the Mercedes Benz portfolio And really focus more on the luxurious higher end market.
And secondly, when we think about battery cells and electric motors, Will the vertical integration for VEV in the end be somewhat higher compared to what you see on the ICE side today? Are we talking about similar levels or still a slightly lower level like it was previously planned? Thank you.
Yes. Hello, Tim. Thanks for those questions. When it comes to portfolio, I think I've indicated as we have been having this Within the segments that we are serving, we are either looking up than looking down. And compact is, of course, a relative word.
There's not a car in that series that is smaller than 4 meters 50. So you will see how that portfolio development unfolds here over the next years. And rest assured that the positions that we're looking for In what we call contact, we're looking for the most attractive positions there. I still feel for overall scale And Economists of Scale benefits to the company. To completely step out of that segment would be ill advised Since it also provides the entry point for many of the younger customers into the brand.
But it has been a very, very clear Strategy shift from, let's say, going for volume and expanding in that segment to being very selective. And you have to bear with us. You will see how that unfolds over the years. But of course, we believe that we have more to come on the upper end. And I
think particularly
the strategy in and around the sub brands, and I think we indicated in this film here as well That we're looking at increasing the average revenue per unit, as Harald said in his piece. So we're very mindful of what you're saying, and that is indeed the cornerstone Of the strategy pillar to profitable growth. Vertical integration, maybe, Markus, you want to say a few words about that?
Yes.
So as we announced today, so we will step up and be more integrated in the value chain here For several reasons. We want to control cost here. We want to control performance. We want to control the system performance as Ultimately, all the components make up one system. When it comes to vertical integration of the motor, I think, yes, we go deeper into the system.
We care about the components, mainly for cost reasons and performance reasons. But I don't think it will be as deep as in the conventional powertrain when it comes to stamping, casting and forging activities. That's not on our list But when it comes to batteries, of course, we need to understand the battery chemistry here in-depth. So we are increasing also our engagement here in the battery side, including caring about raw materials.
Very clear. Thank you.
And the next question goes to Dorothy Creswell from Exane.
Hi, there. It's Dorothy from Exane. Thanks for taking my question. My first one is around the platform strategy. So if I understand you correctly, and the new NDEA platform is just the medium and large vehicles and it won't underpin smaller vehicles.
Should we expect you to team up with another OEM to use maybe their Smart Car EV platform? And then my second question is, I wondered whether you could give us a little bit more detail on the battery partnerships that you referred to. Are they going to be structured as joint ventures? And is any required investment already included in your CapEx reduction target? Thank you.
So Dorothy, if we talk about architectures, yes, MBEA is the large centerpiece of our your strategy going forward from 2025 and onwards, and it will cover all medium to large vehicles. As you remember from our strategy day in October, we will already in the second half of twenty 24 be in the market with what we call the electric first MMA platform. So if you marry MMA with MBEA, You have the field covered. And the 2 others that we showed today is really to make We have the other two bookends of our complete portfolio under control with the performance side and the light commercial vehicles. And there you more or less have the whole Mercedes world.
Our partnerships, battery partnerships, Markus said it in his presentation that beyond the very strong that we have already that are continuing to develop and are certainly part of the industrialization strategy for the Gigafactories. We're adding at least one European angle to this. I'm going to have to leave you hanging here a little bit with more details, so bear with us. But in due course, Not too far from now. You will get much more detail on that.
And Dorothy, any investment in that Spectamine would come in over time, not as a bullet. And yes, that is included in the profile.
So the next question would go to Jose Asumendi from JPMorgan.
Thanks very much, Jose, JPMorgan, and thank you very much for the presentation. That was very interesting. A couple of questions, please. Ola, can you comment a little bit just around your Chinese best strategy. There is one region that I think where I see an urgency to roll out of vehicles, we will see China in the light of the market share That some competitors are taking.
Can you comment a little bit around which vehicles have you localized, which vehicles do you plan to localize in the next 2 years? Capacity wise, any comments within the two facilities you have? And also, if this direct sales Online sales channel also could be exercised in China as well. We'd love to hear around that topic. Second question for Harald.
200 gigawatt hour capacity is a big number. Would love to hear please any thoughts around What does this mean in terms of investments? Can you share these investments with partners or not? And this and the cadence of the rollout of this CapEx, please. Thank you.
Hello, Jose. The development of Mercedes Benz in China for the last Almost a decade now has been one of the cornerstones of our profitable growth strategy. So China is our biggest market, remains a focus. But as you know, it goes far beyond just capturing the market. It is our home away from home in terms of production, increasingly in and D and many other supply partnerships as well.
So we follow a straightforward strategy to growth in China. It is Localization. So above 80% of our sales will be localized. With our joint venture partner, we have the breathing space as The market develops to grow beyond the numbers that we have now. Last year, we sold more than 700,000 vehicles there and the vast majority of those were produced locally.
So you can expect this strategy to continue. All the relevant volume models, volume from our point of view Will be localized in China, only where it doesn't make sense from splitting CapEx and so on, where The volume of an individual model doesn't allow for localization. We stay with the export model. In terms of direct sales, we have already started with pilot markets, both in Europe and in overseas. And we think that maybe the revolution behind the revolution that is going on, on the technology side in this age of transformation is go to market and marketing Sales.
And I'm sure that we will have a more deeper session on that sometime in the future. But It's clear through digitization, automation and being able to access your directly, we think there is value to unlock. With regard to China, there is no specific plan for this yet, But something we would then discuss with our partners there. And Jose, on the Antoine and Geovit Capacity,
let's differentiate between the systems, the battery systems level, where we have already, I mean, a large existing, I mean, footprint, So not so much to be added in this respect. From the cell production, where today, obviously, we are buying, we're sourcing it. And here what we're saying, we will extend that. We'll go to 8. But the majority of that will still be in partnership, And the type of arrangements we have today, but one or the other might also be in co investment mode.
But I confirm what I said before to Dorothee in terms of any investment in that respect of being part of the plan represented today.
Thank you. Thank you very much.
The next question goes to Georges Galier from Goldman Sachs.
Thank you for the presentation, and thank you for taking my questions. The first question I had was with respect to the direct sales approach. Can you give us a Few more details. Do you plan to go to direct sales with EZYZ only or also with your ICE portfolio? Will you take a direct sales approach Globally in the future or just for certain regions?
And when you talk about direct sales, are you thinking mainly about an agency model approach with your dealers? Or do you also envisage selling cars directly to customers online and delivering them to the customer's house As a big part of this strategy. And the second question I had was around ICE. So by 2025, you will have an electric alternative of every model made. I wanted to really reverse the question.
You show a clear step up in ICE costs with Euro 7. With this in mind, do you plan to develop an ICE version of every model made On the Euro 7 or given the Euro 7 costs and seemingly shortening time horizon for ICE, will there be certain models where you will not develop a Euro 7 I solution and we'll go there for only. Thank you.
Yes. Hello, George. If you talk about direct sales and you look at the markets where we have actually already implemented this, we don't think it makes to do this on EV only because you would get into kind of a strange incentivization situation with your dealers. So that would be like driving on the right hand side and the left hand side of the road at the same time. So for direct We believe the best approach is to go all in.
With regard to your question globally, there is There are very different frameworks, regulatory and legal constraints in the markets around the world. So this is something that we have to discuss market for market with our dealer groups. In general, we think that this is a good idea not just for us, But also for them. And as you rightly point out, it ends up being an agency like model where you as a partner Mercedes Benz can also have very Very healthy business, actually to a degree a risk for your business. So we think this can be a true win win.
In some of the markets where the legal constraints are such that we have to come to agreements with dealers' dealer groups, we will do so and we will have those conversations. It includes the ability to sell cars online directly. And in such an agency model, whether the car whether the customer wants to pick it up At the location, for instance, the dealer have the car delivered to him or her, all of those options will be available, and they will be Rewarded financially accordingly. So this is a model that we have really thought through, and we have taken the first Steps along that road and we will continue.
And Markus, EU7, what's the story? Yes. You're absolutely right. So Euro 7, when it finally comes and still has to be decided, probably it's going to increase cost To some extent, but at the same time, as Harald mentioned, we are decreasing, of course, our variable material costs year by year, and this is also valid for the engines by 1%. So this still continues.
But the essence of the statement is we will reduce the number of engine variants Going through Euro 7 by about 50%. So we are just going to much lighter portfolio of 4 cylinders, 6 cylinders Going through Euro 7.
Great. Thank you for the detailed answers. And we continue with Horst Schneider from Bank of America.
Yes. Tuoh, it's Octi from Bank of America. I have got just some smaller questions left. And but I think they are quite essential, especially regarding this platform issue again. Sorry, I have to ask again about this The platform structure, that's not yet clear to me.
So have I got it right that MMA gets basically merged into this MVEA platform? And that also means that you finish basically early other platforms like the EVA 2. And as a consequence of that also, You're going to stop developing basically the MRA and also the large MRA platform. So here, the GLE, GLS is still on that. I think it will be quite expensive to develop a new platform for that.
Do I get it right that these models will be completely built only on the MBA platform In the future. The other question that I had that refers to battery and battery cell production because you say you want Build up these factories with partners. We had this morning basically the announcement from Northvolt or they said that You were seeking for a partnership with them several months ago, but they were not willing to do that. We had also in the press these statements about tariffs and that the Plant buildup which you plan for 2022 gets delayed into 2024, if at all. So therefore, I'm asking myself, You may be run-in a situation where you don't find enough partners and where we run into a situation similar to the semiconductor shortage, You basically don't get enough batteries, let's say, in 2024, 2025?
Thank you.
Yes. Thank you, Horst. Quite some detailed question on the first one. If I gave you the complete road map of how this Jigsaw puzzle fits together. I'm going to have to hire you because you then know exactly what we're doing.
But I'm
I'm not an engineer, Ola.
Yes. But I'm going to try to give you enough answers to you so you understand exactly how this comes together. Let's take the Mercedes Benz cars. I'll leave AMG and the vans out now. Essentially, with MMA And MVEA, you can cover the complete range of vehicles if you catapult yourself into the year 2000 and 30.
So you would have 2 architectures that can really cover the whole fleet. Now If you have made investments already, such as in EVA, with the fantastic EQS and the family of cars That is coming there now in the next couple of years. I think it's quite obvious that you don't Start there when you then start the MVA platform, but you have a gradual shift. So it's almost like you're running a relay here. And with regard to the combustion based vehicles, this is the beauty of now with MRA 2 having the technically most Sophisticated platform in the world probably where a range of products are now in the market and some are to come here in the next couple of years or so That the cash for that is essentially invested, and we can use that for as long as necessary.
So it's really it's kind of a multilayered relay where every piece in this relay have been thought through. And you have gotten the broad brush gist of it now. But really, if I gave you all the details, you have to come and work for us. On the battery cells, I have not yet met a company In the world that is not willing or able to make business with us, so Marcus is being inundated With marriage proposals, which means we are in a situation where we have strong partnerships That we will further develop, they are working. And we will then complement those partnerships with further ones That we don't and Markus is now shaking his head, don't want to reveal today, but will reveal soon.
So the tariff is
planned is also still there, right? Sorry. Excuse me? Excuse me. The Paradis plant is still there for 2022 or 2024, whatever the date is.
We have Sourcing and Gigafactory plants for all three continents, Europe, China and the United States.
Horst, on the first question, can I bring it back to the bigger picture, not only for you, but for the whole audience? The key message here today Is that following MMA, capital allocation investment goes to best only. What sequence and that's another story, but that is the message here for today.
All right. Thank you.
And we continue in line with Kai Muller from Barclays.
And for the very informative presentation earlier. Maybe just to start up and follow-up from what Horst just asked. How much of the EVA platform that you currently have can actually be carried over into your new platforms? On how much is really new investment that you have to undertake? And then the second point in terms of your chemistries, you briefly mentioned also LSP in addition to the NMC technology you're currently using.
Is that something that you'd be then considering for the entry models? And then just a follow-up on that as well. When we think about your factories, You mentioned that most of your global factories can produce electric vehicles already. How much more investments would have to go into them to bring them to a standard of your Factory 56?
I'll do quickly the 2 first one and then pass over to Markus here. Actually, there was a clue in Markus' presentation when we talked about the architectures that he was talking about the scalable And flexible modular system. So you have to look at architectures in a different way than maybe we did back in the day when we were More talking about the body construction. So you have the drivetrain obviously as the centerpiece, but not only you have a set of modules that can go So of course, we have scale and carryover potential between MMA and MBEA And also, EBA that we have today and MVEA. So everything that can be used together in an intelligent way, Let's do it and everything that needs to be differentiated and or the next generation innovation, we will do that, but that will then carry into the different models.
So it's a network of modular, scalable strategies. On the battery side, we were a little bit coy, but I'll let that cat out of the bag. If we talk about the 3 flavors in the ice cream parlor, High energy density NMC that will continue to develop. Manganese rich NMC, slightly lower on the energy density, but more attractive on the cost. And yes, For certain positions also LFP or should I call it LFP 2.0, so next generation LFP, Which has even more attractive cost position.
So all those 3 Are in the making. And of course, for the future, as was already mentioned, solid state is kind of the next gen when that is When it's possible to industrialize that? You want to say something about factories, Markus?
Yes. So as you rightly mentioned, we prepared did prepare The global factories, especially when you talk about the assembly plants, to run ICE vehicles plug ins And BEV vehicles are the same line. So this investment is done. Flexibility from U. S.
To China basically is all installed. To bring it to a level of Factory 6, so if you look under the in the machine room of Therese, the control levels of these plants already are on one standard globally. That's one of the efforts of digitalizing the plants. So there's one global controlled standard when you just pick this item of digitalization. So this was also executed during the last years.
So we have What level of digitalization already in the plants? We're not showcasing every plant at the moment, and there's some fine tuning Going on in the plants globally, we found finally connecting people, tools and machines finally to one holistic system, which we call AMO 360. So there's minor investment and that's in the plan, but ultimately, most of the job is already done.
Thank you. Very helpful.
And we continue with Stephen Reitman from Societe Generale.
Yes, good afternoon and also thank you for the presentation. I have a question about the Essa acquisition. I came across the company as a supplier to Ferrari for this 790 Stradale. So my question is, Are you going to continue to supply other manufacturers with the eMOSA supply manufactured by IASA? Could you give us some idea of the cost of the acquisition?
And where do you see these axial flux motors? Do you see them being used primarily In the AMG side of the business or do you see a user right across your whole model range? Thank you.
Hello, Stephen. The contracts that are already in place from JASAN, this is a company that was founded back in 2,009. So obviously, they have been developing this for quite some time, and they are already in the market today. Of course, we will honor the contracts that are in place. From this point forward though, we are going to focus the effort of YASA on ourselves.
And it is AMG, that is the primary beneficiary of this, because what can you do with the axial flux technology? If you look at the power to weight ratio of that motor, it's fantastic. So you can create a very high performance vehicle with not so much math in and around these motors. And what you can also do is you can sustain power. So the derating of the electric motor maybe is a phenomenon of electric vehicles very fast from to 100, but can I actually keep the speed?
These axial flux motors can maintain the power delivery for much of the Mercedes cars, I see quite a bit of opportunity there. But beyond that, What Tim Wilmer, who founded this company and his group of people have done, they have created a really strong technology team That dovetails into the team that we have mainly in Germany. So I also see it as an extension of our brain pool To jointly develop the electric future.
Thank you. And with regards to the financial impact, We're not disclosing that. Probably you will see it in the Q3 numbers. But rest assured, I mean, that has been embedded in the guidance For the free cash flow reported, which we gave yesterday in brackets, by the way, which we stepped up.
Thank you. And of course, we have many more ideas for the future technological ideas we can do out of this powertrain, which we're not disclosing today.
And the last question on this call goes to Philippe Houchois from Jefferies.
Yes, good afternoon. Thank you. I've got 2. The first one, for you, Ola, you know Sweden well, you know Geely and Ishu fu well. Recently, Volvo and Geely have pulled their engine capabilities into a joint venture that they want to where they want to open the capital And my question is, as you build up the vertical integration of EV, including 8 batteries, and you haven't told us if they'll be on your balance If you find inspiration on the ability of maybe that move of moving your ICE Vert integration of balance sheet or sharing it with others To maintain scale as ICE, LUDI, share in your business and across the industry.
That was my first question. The other one It's more on the complexity. So when I mean complexity is the extra choice, the variance of different models As you downsize ICE, you will reduce complexity. EVs are structurally simpler. Are you going to recreate the marketing complexity on the EVs to offer the similar choice to customers?
Or are we going to see A net reduction in complexity and wondering if to what extent the direct selling business model actually helps reduce that complexity. Thank you.
On the first question, and it was mentioned in the presentation, We have created one unit that we call MB Drive Systems inside Mercedes already, but this This unit includes both sides, both the ICE business and the electric business. And we will have a gradual migration and do Intelligent conversion. In the piece of Savini Kolais, and she was also talking about, reshape, Rescale and Recharge. And a lot of the work, it's things that you're going to have to do yourself. If there is Economically sensible alternatives to do things with other people.
And in fact, together with Volvo and Geely, based upon one of our engine designs, we are in one of those projects as it's publicly known. So to share capital investments and so on and alleviate financial burden here, We will do so, but we'll only do things that create real economical value, not things that Optically look good for Mercedes, and we think that this transition from Eyes to EV that sometimes maybe the burden of that transition It's a bit over exaggerated. We have put together a plan for how to do it. It doesn't happen overnight, obviously, this decade and probably into the next. And there you have it.
Complexity, great point. And Harald made this point That when you get over the hump of having both to when you're on the other side, when you do essentially have only the one, It's going to reduce complexity, and we will take advantage of that reduced complexity to lower our CapEx And also lower what I think will be our fixed cost. So yes, it comes with a benefit. It's ultimately the other end of the journey, but the decisions that we make now, especially now Deciding from 2025 forward that it's electric only architectures, those are The building blocks of that better complexity on the road to 2,030.
Thank you very much.
We still have time For more question, next one goes to Filipe Huyswar sorry, next one goes to Henning Cosman from HSBC.
Hi, good afternoon. Thank you, Stefan, for taking my question as well. It's Henning from HSBC. I had a first question For, Howard, please. In his prepared remarks, Howard, you said that, obviously, you had healthy demand and Supply constraints supporting your revenue per unit.
But in this chart that you've shown on the slide, you're not showing any dip In 2022 or 2023. So I just wanted to clarify if the message is that really you're seeing no normalization in pricing. And of course, that's in the context of a lot of investors these days having concerns or voicing concerns about peak margin In 2021 and potentially a margin contraction in the near term through to your 2025 target. So I suppose the sub question is can you give us any detail on the trajectory through to 2025? That's the first question.
And then just the other question, a bit similar to what my colleagues asked on the capital requirements on the battery factory side. Ulla, in his prepared remarks, You made a very strong point about the importance of the charging infrastructure. Subsequently, Len, you also talked about Your own ambitions with the 60,000 charges plus 60,000 semi public charges, Can you talk a bit about the capital requirements there? Is that all through ChargePoint and Ionity, which you part own? Or are there direct capital implications Thank
you very much, Henning. I mean on the pricing on the first question, In particular, after the discussion we had yesterday, let me say very clear, loud and clear, it is our very firm Intention to carry on with the pricing policy and conduct within the strategic pillar 2 Of profitable growth, I. E. Not to chase the volume, to go after the quality of the margin and to do that not only in 2021 In the first half of the year, but also carry on with it in the second half of the year. Therefore, I want to take away any misunderstanding which might have been left from yesterday.
So we'll clearly carry on with that. We have set ourselves very clear year on year pricing improvement targets Beyond 2021, and therefore, I mean, I do not see 2021 as the peak margin. No, we want to carry on. You have all of the ingredients for that, and we're clearly determined, I mean, to go that direction. The base for that obviously is a very strong product substance, which we have in the ICE world, And you now see it in the BEV world with EQS and the other fantastic stuff to come, which we showed and discussed here today.
With regard to the charging infrastructure, yes, we are part of the consortium Ionity. And Ionity is now after having successfully completed more or less the first phase, of course, in discussions to look at what's next. I think it's fair to expect that the ambition is not going to stop with the first phase. But until those discussions are concluded, I think now is not the time to be more precise than that. And then we have a set of partnerships.
But charging infrastructure as a main bucket for our investment, no, it's not. It's mostly A partnership model and you can see many players are moving. We have been working very closely with Shell, for instance, and they are making a very big play for this. Where we come in is what Sajjad showed in his piece, plug and charge And the most intelligent roaming model, convenience. How do you make sure that you just take this noise away from the customers and make it easy to go anywhere and charge anywhere?
And I think now with our roaming model under 1 Mercedes me charge account, 500,000 plus charging points, I believe it's probably the biggest charging network already in the world.
That's great. So your investment
is mainly on the back end and Shell will be at the cost of setting up the charging points. Is that right in that partnership?
That's correct. Although we're doing a little bit more with them, stay tuned.
Great. Thank you both very much.
And we continue with Tom Narayan from RBC.
Yes. Tom Narayan, RBC. Thanks for taking the question. So I know you're calling for 50% XEV penetration by 2025. I was wondering if you could share with us the breakout of plug in hybrid and BEVs for 2025 and also if you've changed your mild hybrid strategy.
And then I'm just trying to understand this BV and ICE cost parity by 2,030, if battery costs go far below $100 per Kilowatt hour as you noted in your presentation. I'm just wondering why this cost parity wouldn't happen earlier. I guess the concern is There's a lot of luxury BEVs coming into the space. It's getting a little crowded with new entrants and it could create some price deflation And your ability to offset these higher BEV costs, just love some maybe a little more on that. Thanks.
Maybe I'll start with the penetration here. The majority if The ramp up of EV goes the way we think it's going to go, and we think it's going to go quicker. We believe that the majority of that up to 50% should be BEVs, And that's what we're shooting for. If you look at what we have, apart from that, we have the best Electrified high-tech combustion engines in the world, the 48 volt system mild hybrid, I think we are the ones That have proliferated at the quickest of everybody. So literally everything is electrified.
The plug in hybrids that we have as long as the charging infrastructure is not Everywhere, the plug in hybrids with already now many models according to WLTP with up to 100 kilometers range solves the problem for many customers. Those models are hugely popular. So those will be with us and Don't know exactly when it will peak. It's difficult to predict markets, but it is a transition technology, as Markus said in his presentation. So as we go beyond 2020 5 and we look towards the year 2,030, bev is the name of the game, and that's where it's going to happen.
On the cost side, Harald, maybe you want to pick that up.
Yes. Thanks a lot, Tom. Well, as you can see from the deck here today, we really don't take it easy. We set ourselves very ambitious targets moving forward, I mean, on all of the elements of the BEF as we alluded to. But at the same time, we want to be realistic as well.
And if I pick up, I mean, on your example, I think you mentioned €80 on the battery system level, Just for the sake of the argument for a larger vehicle, men take 80 kilowatt or 90 kilowatt of an hour battery, tells you very quickly what cost of the battery still in 2,030 is going to be. Well, the pity is you don't have a motor yet. So add the motor into it And other features when you need to have take off on the other side the ICE engine and you will find out We have a couple of €1,000 in between. And anybody who is telling you something else, dig deep, deep, deep into it. And I think you will find out that there are assumptions embedded in margin or cost parity, which basically just tell you that the ice cost is going up.
I mean, if I assume that the ice cost is going up, then I can easily cross the I mean, the two lines. It doesn't help me as I'm still not making enough margins. So what we are doing, we're focusing on the margin of the company in the BEV world, taking very objectives and targets, I mean, on best vehicles, working on the top line, I. E, on the revenue per unit as we debated. But at the same time, it's still a lot of variables over the decades to come.
We take an additional challenge on investments And on fixed costs to protect the profitability in the BEV environment. That's how we want to take the company A responsible fashion moving forward and protect the margin targets with our ambition of a double digit margin. In addition to that, just to complement what
Harald said, there is one revenue and profit pool That is growing. That is smallish today, but has the potential to be bigger tomorrow. And that's also the digital side of the business, service side of the business, subscription like model side of the business. So next to all the cost factors and The pricing and mix power that Harald has been talking about in our strategy, profitable growth, There is then one more card to play to put all of this together from a company point of view and keep the ambition that we presented in the
We conclude with a question by Charles Caldicott from Redburn.
Good afternoon. Thanks for taking my questions. I just had 2 left. So firstly, in the U. S, you've been non compliant with the EPA's CO2 regulations, for many years now.
Can you tell us how much you're spending buying credits there at the moment? And then given the EV rollout you've got planned, when you think you'll be compliant without having to buy credits? Then my second question was just going to be if you could give us an update on the order book for the EQS.
So we don't disclose separately regulatory costs around the world, but There are no ifs or buts. We're going to be compliant in all markets, and it's going to happen sooner rather than later. You could see that For 2020, the Herculean task to take on the European standard and looking at where we came from With good effort, we made good progress there and have been progressing in this vein. In our Financial forward looking statements, you can also see that we're saying that we will significantly reduce the CO2 burden year on year also this year. So I think we're on a good path there.
What's the second one? EQS, In fact, actually, what we call the sales release, we haven't had the sales release yet for the EQS. Based upon the feedback that we have received so far from dealers And also customers and fans around the world, it looks like Pharmacy.
So ladies and gentlemen, thank you very much for your questions and for being with us today. And thank you very much to Ola, Harald, Markus, such as being with us today. Now IR remains, as always, at your disposal to answer any further questions.
To all of you, have
a great morning, great afternoon Or a great evening, and we look forward to talking to
you soon. Thanks, and goodbye.