New Delhi: Luxury carmaker Mercedes-Benz plans to start assembling the electric version of its flagship S-Class sedan, the EQS, in India, the head of the company's local unit said, part of a broader strategy to electrify its portfolio in the country.

Mercedes will be the first global luxury carmaker to assemble electric vehicles (EVs) in India and it expects to start selling the EQS there in the fourth quarter of this year, Martin Schwenk said on Wednesday.

"With the EQS we see a very strong product at hand. It will set the standard for EVs in India. We believe we also have volumes behind it," Schwenk told Reuters in an interview.

The top-selling luxury carmaker in India already offers imported models of its EQC electric sport utility vehicle (SUV).

It has been developing an "EV roadmap" for India over the past two years, though the plans are at an early stage and future launches will depend on demand and government policies, Schwenk said.

Global automakers are planning to spend more than half a trillion dollars on EVs and batteries through 2030, according to a Reuters analysis, in an effort to meet increasingly tough decarbonisation targets.

Mercedes-Benz maker Daimler has said it plans to invest more than 40 billion euros ($47 billion) globally by 2030 to develop battery EVs.

Sales of electric cars in India, especially luxury models, have yet to take off, chiefly due to a lack of local component and battery production, negligible charging infrastructure and high prices.

Further, import duties on EVs are as high as 100%, prompting Tesla Inc to lobby the Indian government to slash the rates ahead of its planned launch in the country this year.

India, however, is incentivising companies to produce vehicles, batteries and other components locally.

Even without the need to pay import duties, Schwenk said the price of the locally-assembled EQS sedan was unlikely be below that of the imported EQC SUV, which retails for around $136,000.

While Schwenk did not say how many EQC models Mercedes had sold in India, he said he expected sales of the EQS to be higher, as the company sees stronger demand for its luxury sedans.

Mercedes sold 11,242 cars in India in 2021, down from a peak of more than 15,500 in 2018.

Schwenk said if pandemic-related issues and supply chain disruptions, including semiconductor shortages, can be contained this year its sales could come close to peak levels.

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