Mercedes-Benz plans electric passenger van, factory-upfitted RVs

Mercedes-Benz is steering toward the tony end of the light commercial vehicle segment with a fleet of new electric models, mirroring its high-margin strategy with passenger cars.

On Tuesday, the German luxury marque said it would debut a midsize passenger van and a range of factory-upfitted midsize and large camper vans.

Mercedes will build the models on a new electric platform it calls VAN.EA, for Van Electric Architecture, starting in 2026.

Mathias Geisen, head of Mercedes-Benz Vans, said this push into the profitable luxury segment of the passenger van business is needed to help finance the automaker's pivot toward an electric future.

"We will target premium segments in regions, channels, products and industries with the highest margins," Geisen said on a media call.

Mercedes-Benz Vans aims for a "double-digit return on sales" through the end of the decade and will trim fixed costs by 20 percent by mid-decade.

Targeting the consumer luxury end of the light commercial vehicle market is a quick path to profitable growth.

"Fleet buyers cannot spend extra money on these vehicles as they must make their business trim all superfluous costs," said Sam Fiorani, vice president for AutoForecast Solutions. "Consumers, however, see the benefit in spending money on niceties that come with a personal-use van, multiplying the margins for the manufacturer."

The electric midsize minivan will fill a luxury hole that the rear-wheel-drive Metris passenger van, soon to be discontinued, failed to do, said Jeff Aiosa, owner of Mercedes-Benz of New London in Connecticut.

"When the Metris launched, dealers told Mercedes, 'You really have to put luxury into it, you have to make it all-wheel drive,'" Aiosa said. "That didn't happen."

Although dealers did well with the cargo Metris, "the passenger version was really just a people hauler," Aiosa said.

Mercedes-Benz is tapping a different luxury consumer segment with a portfolio of factory-customized campers. 

Doing more of the upfitting work in-house is a "huge win" for both dealers and customers, Aiosa said.

"There's friction in having these vehicles fitted from third parties because of the time it takes," he said. "The vehicle is sometimes transported directly to the upfitter; sometimes, it comes to us and then goes to an upfitter. So eliminating all that is logistically a real benefit."

The electric RV market is likely a long-term play. Given today's battery technology, weight and towing requirements will limit the driving range.

Fiorani said the current market is likely limited to wealthy early adopters.

For electric RVs to take off, "consumers need to see that the charging infrastructure exists and that these new products have durability and reliability over the longer term," he said.

While Mercedes Vans will target high-profit segments with its future EVs, the automaker is taking the scalpel to costs.

Geisen said that consolidating future products on a single vehicle architecture reduces complexity and increases economies of scale. VAN.EA can accommodate "applications mid to large, private or commercial, on only one architecture," he added.

Mercedes is also simplifying its EV portfolio — reducing the number of variants by more than half compared with its current gas-powered range. A leaner lineup and greater factory automation would cut production hours per vehicle by up to 25 percent mid-decade, the company said.

Initially, VAN.EA production is set for Mercedes' factories in Jawor, Poland; Vitoria, Spain; and Düsseldorf, Germany. Geisen declined to say when production will begin at the company's van assembly plant in North Charleston, S.C.

"You don't have to wait too long," he teased. "[Charleston] is crucial for us because the U.S. is one of our core growth markets."

While Europe accounts for 60 percent of Mercedes van sales worldwide, U.S. demand is accelerating.

The automaker said it sees significant growth potential for premium large commercial vans in the U.S., where share doubled in the past five years to 16 percent in 2022.

After Germany, the U.S. is the second-largest market for Mercedes' workhorse Sprinter van. A Charleston-made electric version of the Sprinter will debut in the U.S. this year.

"The more vehicles we can get out of Charleston, the more economic sense it makes," Geisen said.