The boss of German car giant Mercedes-Benz has said it will make petrol cars “well into the 2030s” as it watered down its targets for electric vehicle (EV) sales.

Ola Källenius, the group’s chief executive, said the era when EVs would cost the same as an equivalent petrol car was still “many years away”.

Mercedes had previously promised that its whole car line-up would be battery powered by 2030, but has since walked back that ambition.

The car company, which develops upmarket saloons such as the S-Class and the electric EQ range, said it expected electric vehicles and plug-in hybrids to make up 50pc of sales by the late 2020s, but that it will keep building petrol hybrids into the next decade.

“The company plans to be in a position to cater to different customer needs, whether it’s an all-electric drivetrain or an electrified combustion engine, until well into the 2030s,” Mercedes said.

The decision comes amid declining demand for electric vehicles as high costs deter many drivers. Meanwhile, Western carmakers are battling fierce competition from Chinese entrants which offer cheaper alternatives.

Car giants including Ford, Toyota and Volkswagen have all trimmed their expectations for electric sales in recent months.

Changes to net zero targets have also put off potential buyers. In September, Rishi Sunak pushed back the deadline for a UK ban on petrol car sales by five years to 2035.

The EU, meanwhile, watered down its own ban on petrol sales from 2035, allowing so-called synthetic “e-fuels”, which can be used to power an internal combustion engine, after fierce lobbying from Germany.

Mr Källenius told Bloomberg on Thursday that cost equivalence between EVs and petrol “is many years away… you can see that in the pricing”.

Mercedes said it expected its sales during the first half of 2024 to be below 2023 levels, while the share of electric and plug-in hybrids sales would remain static at between 19pc to 21pc of new sales.

It has recently added electric vehicles such as the eSprinter electric van to its line-up.

The group added the wider economic prospects for the car sector were “characterised by an exceptional degree of uncertainty”, with trade tensions simmering between the US, Europe and China, now the carmaker’s biggest market in terms of sales.

The European Commission has launched an investigation into China’s subsidies for electric cars which are now flooding European markets.

Mercedes also warned of potential disruption from the ongoing war in Ukraine and fighting in the Middle East.

The group reported full-year revenues of €153.2bn (£131.2bn) for 2023, up 2.1pc, while it recorded a profit of €14.5bn, a 1.9pc drop.

Its shares climbed 5pc in Frankfurt on news of a €3bn share buyback.

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