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(Bloomberg) — Mercedes-Benz Group AG is placing major bets on wind projects to keep its operations buoyant in the midst of Europe’s energy crisis.
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The luxury-car maker is signing up with an energy company to tap a massive wind park in the Baltic Sea starting in 2027. This follows an announcement last month that Mercedes plans to build a wind farm at its Papenburg test track in northern Germany.
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“Those two projects alone, in mid to long term, will cover 40% of our electricity needs,” Chief Executive Officer Ola Kallenius said in an interview with Bloomberg Television, referring to the company’s German operations. “There’s a lot of activity to deal with this short to mid term challenge.”
European carmakers could see output drop by more than 1 million vehicles per quarter starting late this year and continuing through 2023, as soaring energy costs weigh on the supply chain, S&P Global Mobility said in a report this month. Parts shortages and supply bottlenecks are likely to weigh most heavily on automakers from November through the spring of next year, particularly if energy is cut during the colder winter months, S&P analyst said.
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Mercedes has been stockpiling parts that it makes using natural gas in an effort to keep production going for several weeks even if Germany introduces drastic fuel rationing in the coming months. Russia has effectively halted gas flows in response to the continent’s support for Ukraine, leaving Europe’s powerhouse economy looking to fill storage sites and find alternative supplies before winter.
“I like to believe that we will get over this energy crisis situation in the next couple or three years,” Kallenius told Bloomberg TV. “If you look at some of those wind projects I mentioned, if you take just the cent per kilowatt-hour that it costs to produce, that is actually some of the cheapest energy that you can have in the world. For the mid to long term, I’m quite optimistic about this.”