Mercedes is building an electric SUV — and that should worry Tesla

Mercedes-Benz made a brilliant move when it unveiled its intention to corner the EV market by first offering an all-electric SUV.

The German automaker showed off its electric SUV concept, the EQ, at the Paris Motor Show on Thursday. The concept is expected to get a range of up to 310 miles, and Mercedes said the production model of the car is expected to hit the streets in 2019.

Mercedes said the electric SUV will fall in the same price range as its GLC Crossover, which currently starts at $39,150.

Mercedes’ impending EQ roll-out should scare Tesla for one main reason: the EQ is an SUV.

Mercedes eq
The interior of the Mercedes EQ. Mercedes-Benz

Business Insider’s Matt DeBord recently called attention to the fact that interest in small cars is waning. Edmunds, a consumer-oriented auto site, unveiled a report in August noting that it’s a great time to buy smaller vehicles at used car shops because “there is so much more demand for used trucks and SUVs.”

In fact, passenger-car sales fell over 12% in August, while truck and SUV sales rose 2%, according to the firm Autodata. That stat fits into the larger trend of passenger-car sales declining over time.

Now keep in mind that EVs as a whole have yet to have their time to shine. Electric cars make up roughly 1% of global auto sales. It’s likely a big reason for that is the limited range potential for electric cars.

So if you’re going to try and corner the electric car market, it makes more sense to invest in a solid, all-electric SUV because at the very least you’re giving consumers some semblance of what they want. Considering electric cars have yet to garner real traction, pushing electric sedans at a time where smaller car sales are already falling is a tough hill to climb.

Tesla model x
The Model X comes with a hefty price tag of $100,000. Tesla Motors

Dieter Zetsche, the head of the Mercedes-Benz car division, made note of this reality during the EQ’s unveiling at the Paris Motor Show.

“We chose to launch our EV family with an SUV for good reasons. Key among them is the ever-rising popularity of this class of vehicles, particularly with our Mercedes customer base,” Zetsche said at the event. “Since we want customers to love electric cars we will start with the cars they love most.”

Now, to Tesla’s credit, it does offer the Model X SUV. But with a hefty price tag of $80,000, the Model X really only appeals to those in the luxury car market.

Tesla does have plans to bring an affordable, compact SUV, the Model Y, to market, but there’s no timeline on when we can expect to see it. Considering Tesla is ramping up production to get the consumer-friendly Model 3 sedan to consumers on time in late 2017 or early 2018, it’s safe to say we won’t be seeing the Model Y soon.

Mercedes is taking that window of opportunity to release its own electric SUV with a competitive price tag of roughly $39,000. The automaker is also promising a range that can exceed 300 miles, which currently is only available in select (read: pricey) versions of the Tesla Model S and Model X.

That means Mercedes is also aiming to tackle the range issue that has plagued the EV market we mentioned earlier.

Chevy Bolt
The Chevy Bolt. Chevrolet

Now, Mercedes is in no way the only automaker looking to corner the electric SUV market.

Chevy is releasing its all-electric SUV crossover, the Bolt, at the end of 2016, which boasts a range of 238 miles. By 2019, we would be surprised if the Bolt didn’t cross the 300-mile mark.

Audi and Hyundai are also both planning on rolling out an all-electric SUV by 2018. Volkswagen is planning to roll out five electric vehicles by 2020, with more than one of those likely to be a crossover or SUV of some kind. And Volvo aims to offer at least two all-electric vehicles by 2019, one of which is expected to be a crossover or SUV.

So Mercedes is one of many looking to dominate the EV space by offering a competitive, all-electric SUV within the next three years.

But considering Mercedes has released one of the more detailed plan about making an affordable, electric SUV with a solid range in the near future, Tesla may want to ramp up its Model Y timeline.

NOW WATCH: Mercedes unveils its first all-electric SUV concept at Paris Motor Show