An electric G-Wagon is coming.
Daimler had forever and a day been a conglomerate with two main industrial businesses. Everybody knows Mercedes-Benz is a luxury tech car company, and Daimler Trucks is the world’s biggest commercial vehicle producer. It comes from the history of the company. Gottlieb Daimler didn’t just invent the car, he invented the truck and all other things that were propelled by a combustion engine back then.
You said you had to reinvent the whole product, the whole car, which is obviously a reference to electric vehicles . There is one more split you could do, and Ford just did something along these lines. They said, “We are going to have an internal combustion business and an EV business. They are going to be different. We are going to split those up so the EV people can focus and our legacy car business can focus.
Let’s look at this in more detail, especially the industrial footprint and the R&D footprint. You are absolutely right that our high-tech, electrified, combustion-based vehicles will continue to produce positive cash flows and delight customers around the world for many years to come, but the destination that we are going is an all-electric destination. Look at production for a second. We have plants where we build the cars, and we have plants where we build the powertrain.
None of us have a crystal ball, so we don’t know exactly what the dynamics in the big market are going to be in 2030. What is Europe going to look like? What is North America going to look like? Is China going to be the biggest market? What about other important markets like Japan, Korea, and so on? At this stage we have to take a little bit of a guess. You have to strategically decide who you want to be, and if you are going to try to make the market or wait for the market.
How do I make decisions? I can’t just pull a manual out of the drawer and read the steps. I would say I gather a lot of information. I am curious and listen to a lot of people, and I like differing opinions so that I’m not just talking to a bunch of yes-men. If you are at the top of a company in a hierarchy, people have a tendency to tell you what they think you want to hear. I try to go through that challenge of speaking to people I know will say what I don’t want to hear.
I think we have come to the end of that era now, and it is almost like you start with a white sheet of paper. We call it MBOS, the Mercedes-Benz Operating System. “Let’s stand back here and see if this is going to work as we get more processing power, better sensors, and better software. We can use artificial intelligence; we have a learning vehicle.” We said, “No, that American quilt of ECUs that you have to sew together is not going to work. It is going to be too complicated.
This is the thing with automotive, it is not something that you have sitting still on your desk at home in ambient temperature at all times. This is a moving machine that can go from -40 degrees Celsius to 60 degrees Celsius, shaking and moving all the time. It is a bigger challenge to take that computer into automotive grade, but it is one that we have been working on for 100-plus years.
Apple is a really good comparison. Actually, all the smartphone makers are really good comparisons. I have often heard of the modern EV described as a cell phone on wheels. Now that you have the car in the field, where is the potential for recurring revenues? I see good potential for this. One of the most obvious domains is getting from A to B. As we add more autonomous functions to the vehicle and through software updates, it becomes more and more capable. We have a supercomputer processor in the vehicle and enough storage space so that we can make the car better over the years. I definitely think that we can monetize that. Smart charging is another domain.
Yes. I think you need to offer customers both. Some customers don’t look at the price, they just want the best, most desirable product. “Whatever it costs, just let me pay now and that’s it.” You have to have that option, but I think you can add functionality as you go along. You let people choose what they want through the app store. We have the app store today. When I get the financial report every month, I look at how much money we generate through the app store.
I was just at WWDC a couple days ago, and Apple showed a vision for the future of CarPlay that would take over all of those screens. They were very aggressive about it. They said, “This is the future of CarPlay. We are going to take over all these screens, including your instrument cluster and your speedometer. We are going to take over the entire hyperscreen.” They then said, “We are working with our partners,” and showed a Mercedes logo.
Let me ask that question more directly. Apple wants to create a version of CarPlay where you plug in the phone and it takes over all the screens. Are you going to let them do that? We have mostly been talking about EVs. You said they are the future that the company is transitioning to, but they are still at the very beginning stages. You have the EQS and the EQE out as gas prices around the world are skyrocketing. I am curious. Are you seeing buyers’ interest shift to EVs more aggressively because of gas prices, or has that just been happening on its own?
No. I didn’t want to suggest that our customers are not economically aware or economically astute. They usually are very much so. I just said that it may not be their number-one buying criteria, but it is a criteria. I think that trend will accelerate the positive shift towards EVs throughout this decade.
I am absolutely saying there is going to be an electric G-Wagen. It is only 24 months away, so it is coming soon.Its aerodynamics are ever so slightly worse than the EQS sedan. I agree with that, but the iconic shape is in a class of its own. I recently joked that it’s like the Birkin bag of Mercedes. Everybody wants one and the waiting time is really long. It may even be the most desirable car in our portfolio.
I do, but I think we may have a market development from a consumer demand point of view that goes in two directions. I definitely see batteries coming with higher energy density. Even in the lithium-ion technologies that we are in now, that gets better and better, there is still some legroom for energy density improvement there.
As charging infrastructure proliferates — we will have it in more places and more public fast charging available — I think many customers are going to realize that you don’t need that range. Ninety-nine percent of your trips are below 100 kilometers anyway. If it is not the commuter car going from New York City to LA every other week, you are going to be fine with a range that is somewhere between 200 and 300 miles, or perhaps even less than that.
Most people don’t need a massive range. On the flip side of it, sometimes you do. Even if you buy the smaller car, sometimes you may want to go on the trip. That is when the charging network becomes really important. I would say Tesla’s main advantage is the Supercharger network. We have seen other car companies come to the realization that their charging networks are not up to snuff to compete with Tesla.
So what does Plug & Charge mean? You go up to that charging station, you plug in, and then you leave. The whole payment and everything is frictionless. The car recognizes it’s this specific charging. It could be anybody from any provider. That makes the convenient thing even better than if you just have a proprietary charging network, because you can go anywhere and everywhere. Having said that, is that enough? No. I kind of agree with Jim here, we need to do more.
I am on LinkedIn, which I guess is Instagram for adults. That is as far as I have dared to venture in social media. I am quite active there, and use it as a communication tool to attract talent for Mercedes and to tell the world what is going on. I have not yet become a Twitter person. Who knows? If I have something meaningful to say, maybe I will do it, but LinkedIn has worked quite well for us so far.
If you watch and benchmark the competition and try to run in 10 different directions and be somebody you are not, you are definitely going to lose. You have to take a step back and ask, “What is my brand promise? Who am I? What is the soul of Mercedes-Benz? What do Mercedes-Benz customers expect? What have we given them over the decades?”In its absolute core, Mercedes is a blend between a tech and a luxury company. We stem from innovation.
I usually don’t comment on any one competitor. You will not draw out a review from me of any one competitor. I will talk about Mercedes, and Mercedes is a blend of both. I want to end talking about autonomy. We have talked around it a bunch, but not about it. It is the future. Mercedes has very advanced driver assistance features in the cars today. Some cars claim they even have level three autonomy when it comes to parking garages, where you push the button and it can drive through the parking garage to park itself.
Do you have a timeline? You have level three and level four. Level five is the last level. These definitions are fuzzy. Do you have a timeline in your head for the last disruption, where most people will get in their car — steering wheel or not — and not have to operate it?
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