Mercedes-Benz: We Will Challenge Tesla Motors

A concept car unveiled by Mercedes-Benz last week could point the way to the styling of its upcoming battery-electric model. Source: Mercedes-Benz.

It's hard to argue that Tesla Motors has "disrupted" the global auto business at this point. It has certainly enteredthe auto business (a big achievement on its own), but it hasn't forced the incumbent global giants to radically change the way they do business. At least, not yet.

It has, however, done a good job of shaking up one particular corner of the global auto industry: Luxury cars. Tesla's Model S isn't cutting into the sales of big pickups or affordable compacts. But with over 30,000 copies of its Model S luxury sports sedan sold last year, it's certainly stealing sales from the German luxury-car leaders.

Now, they're moving to fight back.

Audi's plans may be on hold, but Mercedes-Benz is stepping upVolkswagen Group's premium Audi and Porsche brands got a lot of attention at last week's Frankfurt Motor Show when they each showed off battery-electric concept vehicles that were clearly aimed squarely at Tesla.

I said last week that both looked headed for production. But maybe not: VW has since been accused of a massive effort to cheat on emissions tests around the world. It has already set aside 6.5 billion euros ($7.3 billion) to recall millions of cars, but its expenditures could ultimately go a lot higher.

That casts a cloud over its expensive future-product plans. But rival Mercedes-Benz is under no such cloud, and product-development chief Thomas Weber confirmed to Automotive News last week that it has an electric car under development.

As described by Weber, the upcoming battery-powered Mercedes sounds like a legitimate rival to the Model S. He described it as "unique" and "emotional," and said it could come to market as soon as 2018. It will have a range of 400 to 500 kilometers, or 250 to 310 miles, he said.

Could the German rivals join forces to produce better batteries? Obviously, it's too early to judge Mercedes' effort -- we haven't even seen a concept version yet. But Mercedes did show off a different concept at the the show in Frankfurt (pictured above), one that was focused on advanced aerodynamics. Weber said some of the features on that concept car could be used on the electric Mercedes to help extend its range.

Mercedes may also be looking to work with its German arch-rivals on aspects of the new technology. Dieter Zetsche, CEO of Mercedes-Benz parent Daimler , said in Frankfurt that he would be open to creating an alliance with BMW and Audi to manufacture advanced batteries for future electric cars.

It's well known that BMW is also making a big push into battery-electric cars. BMW's electric i3 is well-regarded, and its plug-in hybrid i8 sports car has sold far beyond BMW's initial expectations. (In some ways, the $136,500 i8 was arguably the first Tesla rival: It has probably pulled at least a few buyers away from the Model S.)

The three rivals combined to buy Nokia's mapping operation earlier this year. It's entirely possible that they could come together again to develop and produce advanced batteries to rival Tesla.

If so, battery-electric cars could take another big step toward mass-market acceptance. Stay tuned.

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John Rosevear has no position in any stocks mentioned. The Motley Fool owns and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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