‘We have to reinvent what we invented 132 years ago’

At a time when the car industry is undergoing a massive shift and with firms like Tesla, Google and Apple becoming the new competitors for Daimler, member of the board of management of Daimler AG Ola Källenius says the firm is betting big to be the most technologically advanced premium car manufacturer. Mr. Källenius is responsible for group research and Mercedes-Benz cars development at the world’s largest maker of luxury vehicles. Edited excerpts:

With autonomous driving, electrification and shared services, the car industry is going through a massive shift. How do you see Daimler in this new future?

We think that the interaction of these technological mega trends has the power to transform the whole industry, and we are in the middle of that transformation already. In the next five to 15 years... we have to reinvent what we invented 132 years ago. So we’re investing heavily into all of those areas. To start with battery electric vehicles, we are investing €10 billion into creating a family of battery electric vehicles for Mercedes-Benz under the product name EQ. The first one, the EQC, is going to be introduced this year. In the next three to five years, we will have a whole range of products, in terms of fully battery electric vehicles. We will also have plug-in hybrids in all the segments where Mercedes-Benz is represented in. So you could say we will have electrification across [complete Mercedes-Benz portfolio].

For autonomous driving, we have a two-way approach: On the one hand, the driver assistance systems that we have been pioneering for many years now, are becoming more and more sophisticated. We are on the cusp of introducing a level 3 system, which will come in the next S-Class in 2020. In parallel to that, we are working intensively on a scenario with level 4, level 5 autonomy. We believe that the first commercial use case for such a technology is most likely the so-called Robotaxi — a mobility service. The car in the past used to be an island. But today it is the ultimate mobile device, connected to everything. So with all of that coming together, it gives us so many more opportunities now to create solutions with technology, that were just not available 10 years ago.

What role is the India team playing in these future bets?

We have been here now for more than 20 years. It started with a group of 10 people. By the end of this year, it’s going to be well over 5,000 people, making it the biggest research and development as well as IT centre outside Germany for Mercedes-Benz. So, MBRDI [Mercedes-Benz Research and Development India] is an integral part of our engineering network. But it’s not just that technologies are being developed here in cooperation with engineers in Germany, it’s really part of a global network. Other international tech centres in China, U.S. and so on are also connected to MBRDI. A lot of the development is happening here in terms of connectivity, because this is a place where you can access a lot of digital talent. Much of the programming that we need for the next generation of connected car systems, as well as working on the topic of autonomous driving, is happening here.

What stage have you reached in autonomous driving?

With regard to level 4, level 5, we’re doing full series development. We’re running prototypes in Germany and in the U.S. One of the most important parts is the development of the software stack. The different pieces of the software stack, whether it is perception software, the fusion of the perception from the different sensors, or the software that makes the driving decisions, is an in-house development that we code ourselves together with our development partner Bosch, [with whom] we have a joint venture to write the code. As far as the sensors like radar, camera, lidar are concerned, Bosch is our main partner. On the vehicle side, we’re adapting our vehicles to cope with autonomous driving functions. The chipset, the computers and the high definition map you need, they are all pieces of the puzzle. With regards to the map, we made vertical integration through the acquisition of the mapping company HERE.

How do you view the competition not only from electric car maker Tesla, but also tech companies like Google, Apple and Baidu which are building cars?

If you look at the technical development of the car, I call it the ultimate mobile device. Some of the companies you mentioned are companies we have been working with for years, as partners and suppliers of ours. We work together with them to get the technology to the next level. Should a company like that decide to build a car on their own then fine, that will be another competitor in the market and we welcome competition. We focus on our strategy to be the most successful and the most technologically advanced premium car manufacturer.

How are you diversifying your portfolio in terms of investing in start-ups. Would you invest in Indian start-ups?

Over the last years, we have made large investments in mobility services. Some we have started from the ground up, some we have bought into and in some cases, we also have taken a majority stake. So, there is a range of mobility services, from Daimler car2go... mytaxi, Blacklane and so on. So, the whole space of mobility services is part of our strategy to be there ourselves or to cooperate and be a partner to other large mobility services providers. In addition, we put some venture capital into funds, as well as making direct investments in smaller and medium-sized start-ups...where we see here’s a technology that we think has a future and that fits in our technological strategy. And of course, we are open to investments in India as well. As a matter of fact, we are bringing something to Bengaluru what we call Startup Autobahn, [an innovation platform that focuses on scouting local start-ups].

With new tough European emission norms on diesel vehicles and India moving to adopt Bharat Stage-VI norms, what impact would it have on Daimler?

We think the banning of a certain technology is not the right way to go. The right way to go is technological innovation. For example, look at the latest generation diesel engines that we have put in the markets in the last couple of years and are now rolling out in rapid succession across our fleet.

For the NOx emissions, we have reached a level that it is a fraction of what it was only a few years ago. But we are not going to rest on our laurels and say we have done our job.

So we already have a series development for 2020 and 2022 with another couple of reductions. It is important not to forget that the diesel has a CO2 advantage of up to 15% compared to similar gasoline engines.

So if we take away the emotional debate we have had over the last two years and just look at it rationally, it is definitely better to further improve the diesel [engine] than banning it.

The car in the past used to be an island. But today, it is the ultimate mobile device