While the push toward electric vehicles has been roundly hailed in some quarters, it hasn’t been met with applause in others. Indeed, legacy automaker Mercedes-Benz (OTC:MBGAF) is up nearly 2% in Thursday afternoon’s trading thanks to plans to step back on its earlier goals of electric vehicle production.
Originally, Mercedes-Benz planned to make half of its production either hybrid or all-electric by 2025. When it became clear that wasn’t going to happen, Mercedes-Benz pivoted and pushed the goalposts back another five years. Now, its plan for half the fleet as electric in some way is set for 2030. Indeed, Mercedes-Benz made it clear that it was still in a good position to produce full-gas vehicles and would continue to do so.
The Follow-Up Proved Welcome Too
From there, Mercedes-Benz carried on with a series of points that caught investor attention. First, there was a new stock buyback program fueled by $3.3 billion. It also pointed out that its recently softening demand was largely the result of worsening economic conditions worldwide, which are impacting the supply chain. It noted that electric vehicles were going to remain more expensive than their gas-fired counterparts for “years to come,” and that made staying out of them a good move economically. Why make cars you can’t sell, after all?
Is It Worth It to Invest in Mercedes?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on MBGAF stock based on eight Buys, seven Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 4.21% loss in its share price over the past year, the average MBGAF price target of $81.12 per share implies 5.42% upside potential.
