Welcome to the Global Conference Call of Mercedes-Benz. At our customers request, this conference will be recorded. A replay of the conference call will also be available as along demand audio webcast in the Investor Relations section of the Mercedes-Benz's website. The short introduction will be directly followed by a Q&A session. [Operator Instructions]. I would like to remind you that this teleconference is governed by the Safe Harbor wording that you find in our published results documents. Please note that our presentations contain forward-looking statements that reflect management's current views with respect to the future events. Such statements are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made. May I now hand it over to Steffen Hoffmann, Head of Mercedes-Benz Investor Relations and Treasury. Thank you very much.

Good morning, ladies and gentlemen. This is Steffen Hoffmann speaking. On behalf of Mercedes-Benz, I'd like to welcome you on both the telephone and the Internet to our Q1 Results Conference Call. We are very happy to have you with us today. We have with us today, Harald Wilhelm, our CFO. In order to give you maximum time for your questions, Harald will begin with an introduction directly followed by the Q&A session, the respective presentation be found on the Mercedes-Benz IR website. Now, I'd like to hand over to Harald.

And good morning, everybody. And we are happy that you'll find the time this morning despite all of the other news to share the update on where we are in 2022. Especially mean to the war in Ukraine, this has been a very challenging start into the year, it is obvious that the business challenges are nothing compared to the human tragedy. We at Mercedes-Benz try to support the Ukrainian people with several initiatives big and small. This being said, now I would like me to switch over to the Q1 results. What can we say if we look at them on the Page 3, well, I would say these results mean reflect resilience and pricing power. If you look at the revenue, I mean they are up despite lower volumes, and that's exactly pricing power and the shift in mix at work. If you look at the group EBIT at €5.2 billion, the reported one there's obviously solid underlying performance. It also includes the benefits from our restructuring of the comp fee engagement, as well as the sale of our outlet in -- sales outlet in Canada. But we also took some adjustment on our Russia business. And we'll talk about that a bit later. If you look on the underlying performance EBIT adjusted of €5.3 billion, I mean that is a reasonable level of profitability that has been driven by good mix, solid pricing, favorable use car performance, but also effective cost measures across all businesses. We didn't stop to put focus on cash generation continued on that one. And you can see that the nil ended up at 22.7 by the end of the quarter. What were the key highlights on the Mercedes-Benz car side, Page 4, the demand for our products remained extremely strong in the quarter. However, the volume and sales have been impacted on a continued basis by the semi constraints. The semi capacity has been coming back online, but still I mean a high level of volatility and selective bottlenecks among critical components, which did not allow us to mean to push all of the demand in terms of sales, there's still limitation in terms of visibility, when exactly these bottlenecks will ease, however overall we do expect some stabilizations throughout 2022 but probably more in the second half of the year. And obviously we continued our effort to work directly with the suppliers, but also with the semi themselves to make the system more robust and resilient. Maybe a few words on situation in Russia and Ukraine, we strictly comply with all applicable sanctions and embargoes against Russia and personal sanctions in this context. That's why we suspended the export of passenger cars, vans and spare parts to Russia, as well as the local manufacturing activity in Russia. The export freeze was effective immediately. Production sales are shut down in an orderly process. It is obvious that we cannot proceed our usual business activities and therefore we suspended them. Obviously, we continue to monitor the situation on a 24/7 basis. Needless to say that, we all hope for political situation, but I wouldn't wish to speculate further on this. I will come to the Q1 financial impact a bit later on. On Ukraine itself, we are working with the suppliers in Ukraine who supplied some components for our products. We are monitoring the situation here as well very closely and remain in close contact, visit the suppliers to work on solutions to safeguard the supply chain that includes among others to transfer production to other locations, which progress pretty well in the meantime. Again in the first quarter, our plants showed a very high level of flexibility. And therefore we could avoid downtime as much as possible. So due to the current situation, we had adjusted temporarily some shift plans at some plants but didn't have complete shutdown. The other key messages on the Q1, well we see a shift in the top end vehicles. See it on the next slide in a second. We're moving up also on the EV side as our strategy with important milestones in terms of the EV transition definitely with the EQXX record drive of more than 1,000 kilometers from Stuttgart, to Cassis. Well, if you do it with a monster battery, as Marcus or Ola are saying that's not probably a record. But we did as a record as I think the number which really makes a difference here is the average consumption of 8.7 kilowatt 100 kilometers. That is, I think the true news in this experience, we opened the battery factory in the U.S. quite some of you were with us over there, you could also experience the EQS SUV on road and off road. In the meantime, we presented it to the world in April. So a lot of momentum, I would say on the EV side. Early April, we also did the first holistic comprehensive ESG conference. I hope you appreciated that. And the key message over there was, I would say that we aim to slash the CO2 emission by more than 50% by the end of this decade. Moving to Page 5, again, we hope that you appreciate transparency and these KPIs should demonstrate the progress we're making on the strategic front. Whereas the total sales decrease, we can see that the top end vehicles grow and also the electric vehicles. So 5% growth on the top end vehicle side, 19% growth on the electric vehicle side again whereas total sales were in decline due to the semi situation as explained before. How was it possible in particular in the S-Class segment with S-Class but also the EQS that favored the evolution on the test side and on the EV side as well as decent contribution on Maybach. So I would say you can see that the strategy is gaining traction here. We wanted to accelerate this development further. And we should give you more color on that on May 19 during our economics of desire. Page 6 on the financials. Sales were down by 10%. I mentioned that already revenue were up by 8% due to the net pricing and the mix. The ASP average sales price rose by 18% to [indiscernible]. We now calculate that number without the BBAC sales volume and also the BBAC parts-by-parts revenue. So I would say it's a clean comparable number. EBIT adjusted went up by 21% compared to the quarter a year-ago, and on the cash flow side before interest and taxes, that was at 1.7. We see some impact from working capital effects, which were usually due to the semi supply constraints, but also now some logistic chain issues related to Ukraine, Russia and China. As I mentioned China, maybe a word on the situation there. So far, we have successfully managed all COVID and supply chain related risk in China. In the first quarter, there was no major impact on our main operations in China overall we have achieved strong price premium over competitors in China during the first quarter of 2022. Despite COVID and supply chain dynamics, we delivered more than 190,000 passenger cars to customers in China during that quarter. EV saw a steady growth while plug-ins were even setting a record high. The top end vehicles I mean including the AMG, the Maybach, the G-Class reached double-digit growth, among which the flagship S-Class maintains segment leadership. Our sales rate of Maybach vehicles has been at over 1,000 cars almost every month since June 2021. Looking forward we continue to monitor them in the COVID and supply chain risk in China closely and we will react flexibly if needed. Due to the COVID related supply shortages, we have flexibly adjusted our local production program in China for April, end of May. We all know in China, there was a risk of continued but even extended lockdowns if we think so for example about Beijing with potential -- additional mill impacts which could impact local production but also global supply chain. Looking at the EBIT bridge on Page 7. So, even with the lower volume, the bucket volume structure net pricing increased significantly by €1.8 billion in one quarter. There in, the pure volume effect is the negative lower three digit million figure structure. And here in particular, the top end vehicle sales i.e. the S-Class and the Maybach and the net pricing are both significantly positive. On the net pricing, we see the combination of further reduced discounts, but also further list price increases in many countries at work. Used car prices in Q1 had a positive lower three digit million effect for the full-year 2022, we expect the used car pricing impact was a low negative three million digit amount. On the industrial performance, we had to face higher raw material cost on steel, aluminum, copper, lithium, but partly compensated by commercial efficiency. We had some increase in product related expenses. And then in particular the disruption cost in our production network due to the semi situation the stop and go logistic costs. But also the main step up in the energy costs created a headwind. But overall, you can see in the Q1 we could successfully compensate the raw material cost and the inflation by pricing. You can see as well that the fixed cost domain as a whole continue to be under the scrutiny of stricter cost discipline. The other was negative that was Q1 2021 impact from the ChargePoint IPO. The adjustments referred to the restructuring of our comp activities as well as the divestment of the own retail in Canada as already mentioned. And we also took them in an adjustment on the suspension of our industrial activities in Russia in this context, we expense €658 million on the car side in connection with the adjustment of our business activities in Russia. Overall, you can see the EBIT adjusted at 4.2, 16.4% return on sales. Cash flow Page 8, 1.8 and reported, 1.7 on the adjusted as this said already before, we have a working capital charge of close to €900 million. That is due to the increase of semi related unfinished products and logistic chain disruptions causing higher stock. These effects are more expelled than the positive ones from an increase in the trade payables. On the inventory side, we expect that level to continue in the quarter two roughly at that level before then it should start to normalize in the second half of the year. On the investment side, €400 million from the divestment of the own retail as I mentioned, the net investments in PPE and intangible asset equals the depreciation and amortization and impairments. I think that is again an interesting demonstration in this quarter that we can transform our business. I would do not compromise the investments into the future into electric into software. At the same time staying within the ambitious targets we set ourselves. On the other side, you see the payments related to diesel, the BBAC at equity reversal, the outlet -- retail outlet sales and the MBE [ph] company restructuring as already mentioned several times. And on the adjustments you find the usual legal proceedings on diesel and the M&A stuff. Over to the van. What were the highlights on the van side, also very strong market demand for the vans. Here, it was possible despite the semi constraints to keep the unit sales flat year-over-year. And so which I think given the context was a good achievement. The first quarter in showcases the best ever sales of the Sprinter and the Metris. This is U.S. name for the Vito. In North America with more than 17,000 units. We're also progressing on the battery electric van sales, which EV sales being up here almost 60% year-on-year. But the absolute number is still the low one, but great potential there. We have also new products in the small van segment. The T-Class has had its world premiere, the new Citan was strong customer demand is pretty refreshing. And in the course of 2022, the EQT and the T-Citan will complete the portfolio of electric van offerings in all segments. The margin improved also significantly in here as well. We see a healthy mix and pricing looking on the Page 10 on the financials. Sales flat, the revenues up by 9%. The profitability demonstrating a good product mix and net pricing. So EBIT adjusted is at €466 million cash generation well executed. Here we were successful to keep the inventory at a low level. If you look at the bridge on the Page 11. Here the bucket volume structure and the net pricing obviously the volume is stable. So, you can see that the structure and the pricing provided basically €200 million of benefit here. The used car business mainly also have a favorable impact on the industrial side, you see as on the car side that the raw materials and the disruption caused in the production network, triggered some headwind, but despite that the overall EBIT adjusted is at €466 and return on sales of 12.6%. Adjustment are €51 million in particular related to the business adjustment in Russia as explained already on the car side. Page 12 on the cashflow, here cash flow is at €380 reported more than €400, adjusted working capital favorable, I said already that despite the same related issues, we could maintain it at a flat level. Investments, we had also a share here from the sale of the sales outlet. The depreciation and amortization here on the van side is higher than the net investments. That is, I would say somehow cyclical effect, we should see further in the year that the investment side is coming up as we are progressing with the development of the van EA platform. Over to mobility Page 13 key highlights over there. Supply constraints and also lower market penetration also had an impact in terms of the new business volume. The interest margins remained on the very solid level, net credit losses are at a very low level. The new business in Russia has been stopped, and we adjusted the credit reserves on the Russian portfolio. At the same time, we continue to the strategy execution in the first quarter. Looking at the financials Page 14, the new business decreased by 13%. The trucks spin off ahead further to the issues I mentioned on the page before an impact here. The portfolio increased by just 1% and EBIT adjusted increased by 6%. How was that possible Page 15. On the positive side, we have mobility services and fleet business performances, which have improved in the quarter. The margin also benefited from lower refinancing costs in the first quarter, and a bit of a favorable effects of development. On the negative side, the volume reduced to the trucks spin off. And the lower sales, the lower vehicle availability and the penetration rate as commended with some higher expenses due to project related costs. And a bit of dis-synergies from the truck spin. And we adjusted for the credit reserves on Russian business. All in all the charges sitting in that number here is around €100 million. Maybe as you see 20% return on equity that for the full-year we expect the performance to remain strong, but somehow normalizing in the course of the year. Cost of credit risk should return in come back to kind of a pre-bid and then it level. And we should also see some normalization of the interest margin driven by interest rate increases. Looking on the group side, Page 16. Well on the business evolution, I think I commented. So in the recon, we see a slightly negative equity result from Daimler trucks and buses. That is the contribution which we expect in the Q1 on an estimate, has been offset by depreciation of the assets from the PPA as we explained in our full-year release. With this, the EBIT adjusted stands up to €5.2 billion, then we have the net of the adjustments diesel related €280, €700 related to Russia as explained already several times and M&A a bit more than €900. So the book one EBIT book is at €5.2. On the cashflow side again on the business I think I explained leaves me with cash taxes going up compared to 2021. Higher profitability, less tax carry forwards obviously makes me the cash taxes go up to €600 million that makes the free cashflow in the industrial side a 1.2. On the net industrial liquidity based on the cash flow. We debated before €22.7. In that we also have the benefits from the divestment also a bit of a dividends internally coming from Mercedes Benz mobility and a bit of FX effect. I think that is a very strong and healthy level of net industrial liquidity. And I think it's good to have that in such a volatile times. But on very short notice subject to AGM approval on Friday, we will hand over a good part of that net industrial liquidity over to you with a BEV of €5.3 billion. Now, let's have a look for the full-year 2022, so how do we see that on the basis of the first quarter results. First on the divisional guidance, Page 20 really please read the assumption charts carefully. What do we say the macroeconomic and geopolitical conditions continue to be characterized by an exceptional degree of uncertainty. The war in Ukraine was this effect on supply chains, development of prices, and supply of energy and raw materials remains the source of risk. Further effects due to the rapidly changing situation in Russia and Ukraine are not currently known, but could possibly have substantial negative consequences for our business activities, should it escalate beyond its current state. In addition, continuing bottlenecks in the supply of semis and other industrial upstream products, and inflationary pressure on another source of risk. And not at least the further cause of the pandemic. In particular, strict countermeasures in China hold uncertainties for the expected development of the market, supply chain, and production. On that basis, we confirm the forecast for almost all KPIs that were made in our Annual Report in 2021. So what is the guidance for cars, we continue to expect the sales are slightly up. We continue to expect the return sales adjusted for cars to be between 11.5% and 13%. Obviously, the Q1 results of 16% rose gives us confidence for the full-year guidance. On the back of that we see the full-year return on sales adjusted at the higher end of that range. Let me surely walk you through how we get from here to there maybe. We see the price and the mix to stay at a high level. The top end vehicles growth is further targeted to be a 10%. Used car business will impact negatively the tailwind from depreciation, which we had in 2021 should come down. The discontinuing of the non-current provisions. The R&D going slightly up. And finally, with the current macro and the political uncertainties, we want to be prudent and assume a general market environmental protection. For the remainder of the year as we see further risk on raw material increases in inflationary trends. It is definitely our target to compensate that by net pricing. However, I think at this stage it is prudent to keep a risk protection. On the cash conversion rate unchanged €2.81. PPE is now at a prior year level compared to slightly above before. Thanks to the good progress in the first quarter and on the R&D side is unchanged. On the van sales slightly above €21 unchanged it was €8 to €10. Also here I would say we see it rather at the upper end of the corridor things on the Q2 on the basis of the Q1 performance. And on the remain I think that is unchanged. On mobility, we see the range at €16 to €18. So what do we expect in the remainder of the year to happen. Margin headwinds due to higher refinancing costs. We expect lower contract volume and normalization of the credit risk. On the growth guidance or KPIs are confirmed as [indiscernible]. So brings me to the end on Page 2022. We set ourselves strategic priorities on the 24th of February for 2022. So in a nutshell, what is the progress we had been doing so far? On scaling the electric mobility, we increase the EV share by 15% in the first quarter, the best share even increased by more than 50%. We introduced the EQE some of you had the privilege to experience the test drive. We have EQS SUV world premiere. I commented on the EQXX, so I think a lot of momentum not only in terms of numbers and financial results, but really laying the foundation for the EV ramp in the future. On the top end vehicle side, the share is 16%. And stay tuned for our May 19th event for more to come. We have important software development milestones, which are ahead of us in 2022, we know you're curious on it. And that's why we will hold a separate, CMD event in July dedicated on software. On the supply constraints, we continue to mainly work on the semis, as commented before, with risk mitigation, with tangible results. The interruption of the supply chain in Ukraine, I think you can see that was pretty well managed without any mature disruption. And we're making further progress in terms of sourcing and deep sourcing, you could see the opening of the battery factory corporation on the sale in the U.S. and many others in the quarter and more to come. So in summary, on the Q1 I would say you can see the pricing power at work coupled with continued strong mix. Shifting gears towards luxury, supported by continuing cost discipline, translating into reasonable margins. And in particular, a much more resilient business. And I think that's what matters in this days, in this environment, pricing power and resilience. With this being said, over to the Q&A. A - Steffen Hoffmann: Thank you very much, Harald. Ladies and gentlemen, you may ask your questions now. The operator will identify the questioner by name and please introduce yourself with your name and the name of the organization before asking your question, as always, please ask your question in English. And as always, as a matter of fairness, please limit the amount of questions to a maximum of two. Now before we start, the operator will again explain procedure.

[Operator Instructions]

And the first question goes to Tim Rokossa from Deutsche Bank.

Yes, thank you very much. Good morning, guys. It's Tim from Deutsche Bank. I would have two questions, please. The first one is, even when you continue to beat results every quarter and you show these impressive numbers, some market participants just want to be negative. And they will again say this is peak pricing and mix. And to confirm they will obviously point to your guidance, no increase despite a much better result in Q1. What do you say to that? Is that just reflecting the risk protection that you just mentioned, Harald, Russia, China, et cetera or do you actually already see a material slowdown in your EBIT numbers to come? Secondly, when we talk about one of the main ingredients, that is obviously pricing and when we talk about pricing, you already mentioned your view on used cars. I think that's very prudent assumption. What do you think about list prices and discounts? I assume they are basically no discounts currently, when would be a moment of volume decline where you then allow your dealers again, to start moving into discounts? And how much did you increase your list prices already and is there more to come? Thank you.

Thanks, Tim. Yes, on the walk basically from the Q1 and the full-year, I think you could hear it I mean before we see the strong momentum on the demand side to continue. We see the mix to continue. We want to grow the tech share even further, the EV shares as well. And we do expect and we do target the pricing, I mean to continue. So we'll say again, another quarter. Yes and the payers maybe they just need to be patient and wait quarter-by-quarter to see the results coming through. I think that's quarter number six now or so or maybe even seven. Well, not good at counting. So let's see quarter-by-quarter, we will keep going on the pricing side and come back to their demeanor part of your second question in a second. However, in the current context of things, we do believe it is appropriate to be more prudent in the risk section in the assumptions I outlined a few of them. I guess many of you also look very closely to China in terms of the lockdown and what could happen further there? I don't have a crystal ball for that. But in this context, I think it is just more prudent. Our management ambition is clearly to continue to do what we had been doing in the first quarter again, which means using that pricing power to offset the inflationary trends and the raw material increases. Other than that, you have a few technical ones, I alluded to them in the remainder of the year, which is next to the used car pricing and the depreciation, which is probably half a percentage point, a bit of discounting of the provisioning, which we had in the Q1 that is a tailwind. Sorry, that is a headwind over half of point, the R&D is another half of last point, I think that gives you a bit of a color in terms of the size of the risk protection. On your second question, on the list pricing, and on the discounting yet, we had adjusted list prices last year ahead of time compared to what we do normally, and also more expelled in many countries in Europe, in the U.S., in Canada, in China, and again now in April as a function, as a response to the inflationary trends which we see, these have a more expelled impact in 2022, compared to what we expected, even at the end of '21, and at the beginning of 2022. And I don't think that we will walk backwards from here in terms of the list. On the discount, I mean, they're running at the low level is not I mean the discount, I mean the discounts, special discounts we put at work, I cannot comment on the discounts, the dealers, the independent retail and dealers mean put at work, their responsibility, but ours are tight not zero, but they are tight. They are not a function of semi, they are a function of a different approach to market, which is not to push the volume into the market and this is definitely what we started to do in third and fourth quarter 2020, which we still do in first quarter 2022 and what we intend to do moving forward, and we'll talk about that as well more on the 19th.

Thank you.

And we continue with Jose Asumendi from JPMorgan.

Good morning. Jose from JPMorgan. Just a couple of questions please. The first one, Harald can you speak a little bit around the negative bucket of industrial performance, the key drivers in the quarter and how you expect that to evolve in the coming quarters and also if you could remind us when does these GLS Electric when does it hit the market in Europe, U.S. or China? And second question, you have obviously decided to see a meaningful share of electric vehicles now within your portfolio, can you comment on the profitability of these electric vehicles, they exceed or at least match the margin contribution you get from your commercial engine vehicles? Thank you so much.

Thanks, Jose. Yes, industrial performance, if you look at the bridge, the EBIT walk I think you find approximately a billion of overhead went in there, I would say probably you can take a half of that for raw material cost increases. So that is basically on the purchasing side. And the other half is basically split between efficiencies in our own operations due to the stop and go the logistic costs, the higher energy costs, and also some product related, higher product related expenses. On your question on the -- got to write the EQS SUV and this is going to hit the markets in the second half of the year. So probably the contribution to 2022 in terms of volume is not at the full run rate, I mean that we'll see in 2023 the response to the vehicle, which we could see feel ourselves in the U.S. during the battery factory opening when we showed the vehicle and now when we officially presented is extremely strong. So I think this is going to be the true hot seller, hot car in the various markets being basically I think I mean the only two EV platform in that size, in that category. In terms of profitability on the best vehicles, well let me take the EQS, I'll just say looking at now, I mean the sales in the first quarter, what did we have, I think a bit more than 5,000. So it starts to be meaningful, it starts to be I would say as well representative in terms of margin, we positioned the vehicle, I think on the pricing side where it belongs to in the S-Class segment, the variable cost are under control, obviously with the raw material cost that needs to be watched moving forward, the batteries at this juncture are not getting cheaper, are rather bit more expensive. But I can calm you down. I'm pleased with the margin on the EQS. And if you would see me, I think you could see, you could see a smile on my face.

Thank you, I can confirm that Harald was smiling. Next question goes to George Galliers from Goldman.

Yes, good morning. And thank you for taking my questions. The first question I had was just on the working capital and obviously the higher inventory of finished goods and work in progress. Should we expect that to unwind in the second quarter or is this somewhat reflective of the stop start nature and disrupted supply chain that we see today? And so, the results business as usual going forward will require more finished goods inventory and more with, the second question was with respect to Maybach, you mentioned that the monthly sales have been exceeding 1,000 units a month and obviously at Q1, it looks higher than that. What should we think about as the kind of annualized target for Maybach going forward is 12,000 units per annum the right number or actually given what we saw in Q1 and the unit will be EQS variants [indiscernible] better than that. Thank you.

Thank you, George. On the working capital side, well the inventory increase, which we could see in the first quarter probably we will hold that level roughly in the second quarter. How do we get there? Well, in the first quarter, we decided to build vehicles even with some critical components lacking as we do expect them to be delivered over in the second quarter and then over in the third quarter. So basically there is quite a high number of blocked vehicles. A part of that will then be turned around i.e. in the second quarter but there will be new ones coming i.e. blocked vehicles as the semi constraints continue to apply in the second quarter. So that is one of the reasons for the step-up in the first quarter, and why we see that still being at that level in the second, the other one we cannot ignore is that logistic chains are impacted by the Geo and macro political implications, transport long chains, you need trains and the trucks and the ships and the harbors. It may just take longer and each and every day is millions of inventory in a second, right. So, that is as a matter of fact right now, I find it I mean honestly quite incredible as we've been using, for example, a train via Russia before that within a few days that has been rerouted without coming to a halt. And therefore, we just have to accept in a more expelled inventory level at this stage. But we definitely target the inventory to normalize and would rather see that in the second half of the year at least with regard to the semi situation on the other constraints obviously, geopolitically I mean, I cannot make a prediction on that one. On the Maybach, we're happy with the momentum. And we think with the current versions of the Maybach, there is solid ground for that. I think interesting stuff in mind, on what to do on the Maybach and we're happy to give you more color on the 19th of May on that.

Great, thank you very much.

And we continue with Daniel Roska from Bernstein.

Thanks, good morning gentlemen. It is Daniel from Bernstein. Let me start with a question maybe following on the profitability, some of your peers have started to announce that they will increase the transparency on the EV versus high side of the business kind of looking at breaking up revenues, contribution and investments more clearly. What's your thinking on this and maybe more specifically, what's the timeline on this do you consider kind of giving some more detail on a regular basis? And then secondly, we're going to talk about premiumization in Monte Carlo. But could I ask for a short update on your digital services business? If I'm not mistaken, the last time you talked about this was late in 2020 with about a €1 billion EBIT target for '25. So just what have you learned so far? What are you most excited about? And also here, kind of what's the timeline for the next update on your digital service business plan?

Maybe on the second question, the €1 billion we still see it today. And ahead of the update we want to give you in July, on the subject matter. The learning is, I think our conviction that if we look what is happening around us, it's even more important to accelerate on that side. And that is what happens with important milestones this year in the corporation with NVIDIA, but many others. So I happy to talk about that, when we're getting to that main event in July. In terms of the EV KPIs. We started to give in some color in with the chart on BEV and EV and the share of the plugins and the best over there. I would also invite you to have a look into our EU taxonomy reporting. We're on a voluntary basis, we report basically, already for 2021 and obviously we'll do so for 2022 as well. How many vehicles being compliant with the future EU taxonomy rule, i.e., 50 grams per kilometer. And you can see the numbers there. In particular, on the investment side, we can see the capitalized R&D, which I actually the platform's already mean 40% of the investment today, and that number will definitely go up. So I think that provides all of the transparency in where we allocate the capital too.

I'll push back and follow-up right, because given that you're required to do this under EU taxonomy that clear. But have you had any discussions in the board, whether you want to kind of go down and more with a formulaic route where you really provide transparency between two sides of the business or give us some update on the profitability of the two sides? I'm sure you're aware of, what peers are thinking about. Just wondering where your thinking is in that process?

Yes, I'm happy to elaborate on that. Before I respond, do we break up the profitability on the bayfront on the ICE side. I want to state very clearly, very intense debate on how we want to transform Mercedes moving forward. And I can say, the board, the management board, and the supervisory board have exactly one opinion. This is one team. This is one Mercedes team, this is one company, and we're transforming the whole company into it. We are not pursuing the strategy to break up the company into an ICE part, and into a best part or call it into a bad part and the good part or an old part and the new part. Now we're transforming the whole company and transforming it into the electric world. This is what we had been saying last year in July. This is what we're doing. Why -- does it make sense? And then let me just give you a few data points. Sales of vehicles on ICE and on BEV are coming from the same sales force from the same team from the same network. The industrial side of things are in common, if you look on the assembling parts of the plants they do both. So we have the flexibility in the transition. Yes, the power plant is a separate industrial undertaking plant. Even on the powerplant side, it's one team managing, the ICE, the engine world, and the gearboxes as well as the battery and the EHS. The engineering side, suspension of the vehicle is different on the best compared to an ICE. No, sorry, in terms of this synergies this functioning, it would be absolutely been devastating. And the strengths of this company of more than 130 years to build luxury vehicle, the leading luxury vehicle, you need to take these ones into the future. And don't put it in a shell company and call it a bad asset. So this is where we are going. Now, where we spell out what is the profitability on individual vehicles. Now, I think you will understand we're not doing it. But I think we give you a lot of color, how we want to address the transition, how we want to address the margin evolution on the EV vehicles was they had the question already before, and we will continue to do so moving forward. I hope that answers.

Perfect. Thanks for that.

Thank you. And we continue with Harald Hendrikse from Morgan Stanley.

Yes, thank you so much for taking my question this morning. And thank you so much for that answer. Just now. It's very, very helpful to have clarity in that split conversation. My question I'm afraid is back to my usual concerns, which is, firstly, can you just talk a little bit about what has surprised you in the last maybe even this last three months again. What do you think is fully achievable and sustainable? And what would happen if you had, for example, a normalization of production? Does a full normalization of production and supply chain actually help you? Or do you think it would hinder you? And then sort of the same question, but the strategy is obviously working incredibly well. I think the comparison with your major peer in the next few weeks is going to be super interesting. But are there limits to what you can do with this strategy? Is there a limit in terms of volume that you have to produce? And even on affordability again, your peer has just launched a brand new car. The price of that car is nearly 50% higher than the last generation of the same car. I'm getting a little bit concerned whether there is ever going to be an issue with affordability or are your customers happy to continue to pay these higher prices? Are there any real limits to this strategy, or do you think you can keep going for long time yet? Thank you.

Thanks, Harald. The first question I think was more maybe on the production side. Well, let me take the Q1 numbers 488,000 domain units in terms of mean the group sales on the car side. I would say definitely, we could have sold more vehicles and 488, without deteriorating the mix. And without deteriorating. The pricing, i.e., at the same discount level as we had was €488. So in that respect, it's a shame as a semi situation puts a constraint. As we -- I think the wood have been a bucket of opportunities, which we could have nicely edit them into it without jeopardizing the strategy in terms of the pricing and the mix. Definitely, we want to take and grab these opportunities moving forward. With the full-year guidance here, you can see slightly above the previous year level, thing is a bit more than 4x 488. Where is that going to come maybe more in the second half of the year. Given the current ongoing uncertainties, I would say so that this the perspective we have at this stage. In terms of is there a limit? Well, I think it all goes with the substance of the product and the appeal of the product. In terms of capital being available and the desire of people -- wealthy people to spend the money for exceptional products. I think they're -- I would say there's no worry, there is no limit, at least that's what we can see right now. But it all goes back into the substance of the product and the appeal. And in this respect, the size is not everything. It is the distinguished luxury, which matters, and maybe not the two pronounced one. But I think we'll again, I am repeating that quite often here this morning, wait for the 19th of May, or wait for the July. But maybe that is a good opportunity to talk in more detail about it.

Yes, perfect. Thank you so much.

Thank you, Harald. And we continue with Dorothee Cresswell from Exane.

Thanks for taking my questions. The first one is actually around your distribution strategy. So you've obviously spoken about the plan to move to this agency model? Could you outline a little more where the financial benefits from that comes from? Is it just the fact that you have more control over pricing? And maybe you can generate some synergies by bundling functions? Or is it also that you're going to capture a chunk of the dealer margin? And then a very quick one at the end just on the electrification target. You said you want to increase the BEV volume significantly this year? Can you tell us where you think the BEV mix will be for the full-year 2022? I think you were at 5% in Q1 and I think until 2021. Thank you.

Thank you, Dorothee. Well what is the benefit of the direct sales model. Very clearly better control over the pricing and in the context of the strategy we're talking, i.e., discipline pricing obviously that that matters a lot. And here we see the benefit and that means that we do expect the labs the implementation of that model will help us also in terms of the progression on the pricing side. Next to it, obviously there should be also cost benefit mainly coming out of it as part of that move over time. There should be some consolidation in the network. I don't want to point out only the things which are beneficial it comes with a bit of a bill, which is also in the inventory side, the dealer inventory coming over on our balance sheet. But we'll have an opportunity to improve basically the end-to-end process and probably therefore, mitigate the impact which is coming out from the working capital and the inventory side. In terms of EV and BEV 2022. Well, overall we said we want to be -- I think 15% in 2022. We said we should have around 400 -- more than 400,000 EV vehicles. If you look into the Q1 chart you can see that in the Q1 the progression on the BEV side is definitely much more expelled. We continue on the plugin important transition technology, but the real ramp is now happening on the BEV side. How is it possible EQS I mentioned 5,000 in the first quarter. I think that's a good run rate and maybe hopefully has even more potential, and but then in terms of volume EQE coming in. The sedan and then EQS SUV later in the year and next year obviously the EQE SUV these will be the really the ones pushing the BEV share to another level.

And the last question goes to Stephen Reitman from Societe Generale.

Yes. Good morning. Question quite similar on the BEV subject. Congratulations on the run rate you're seeing already on the EQS. Could you comment now that you will open the order book for the EQE, what preliminary signs you're seeing on that? And if you comment maybe on the cadence you expect for be the penetration just during the course of this year presumably very much weighted towards the second half of the year? Thank you.

Thanks, Stephen. Well EQS as I said good momentum more than 5,000 in the first quarter. Huge appetite for the high end version of the vehicle. Huge appetite for the hyper screen. So we need to see how we can match that level of demand in 2022. That's what would say on in this respect. On the EQE side, the step up in the production will be second half of the year and the tool run right I think there's definitely more 2020 sweetish subject than 2022. However, I think the experience on the EQS and makes us a very, very confident that EQE sedan, but also EQE SUV is going to be really mean a hot car. The EQE basically is just a little sister or sibling or the Frink version of the EQS. Therefore, I think that would be very, very attractive in the market.

Are now there are any semiconductor shortages or other issues that are holding you back on your BEVs at the moment, specifically?

As we speak, I'm not aware of any specific semi constraint on the BEV or on the [1:03:33] side. The constraints here, they are -- I would say more income in between ICE and BEV not specific to BEV.

Thank you very much.

And with that, ladies and gentlemen, thank you very much for your questions and for being with us today. Thanks a lot to Harald for your answers. As always, IR remains at your disposal. In two days on Friday, April 29 our virtual AGM will take place. We hope that you as an investor of Mercedes-Benz will find the time to join us on that day. To all of you have a great morning, great afternoon, and great evening. And we look forward to talk to you soon. Thanks and good bye.