Mercedes-Benz, a name synonymous with luxury and performance, is currently undergoing a significant transformation as it pivots towards electric mobilityOla Källenius, the chairman of the board at Daimler AG, recently shared insights into the company’s ambitious plans for electrification during an interview on March 24. With an investment of several hundred billion euros set aside for electric vehicle development and anticipation of multiple new models being launched from next year through 2028, Källenius firmly stated that the commitment to electrification remains unwavering.

One of the focal points of Källenius's remarks was China's integral role in Mercedes-Benz's strategyHe emphasized that the Asian giant continues to be the brand’s most critical market, and as a result, there will be heightened investments in research and development as well as production capabilities within the countryThis will allow Mercedes-Benz to strengthen its presence in a market that is increasingly dominated by electric vehicles.

As the global automotive industry shifts gears, Källenius highlighted the importance of cooperation between China and Europe stating, "Cooperation and mutual benefit are the only options we have." He underscored the significance of fair trade principles grounded in the World Trade Organization (WTO) framework, resisting the allure of protectionism which can stifle competition and innovation.

During the recent annual shareholders meeting, Källenius reaffirmed that the company is not abandoning its internal combustion engine models but rather adapting strategies based on market conditionsIt’s a nuanced approach that recognizes the ongoing demand for fuel-powered vehicles, particularly in certain regions where infrastructure and incentives for electric cars are still developingThus, while Mercedes-Benz's overarching strategy remains focused on electrification, their tactical flexibility allows them to cater to varying market demands.

The journey towards electrification at Mercedes-Benz began in earnest in 2019 with the announcement of the "Vision 2039," which set the ambitious target of achieving carbon neutrality across its newly introduced passenger vehicle line-up by that year

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This was a significant milestone that laid the groundwork for future developments.

In 2020, the company introduced its "Electric First" strategy, which was designed to accelerate the transition to electric and digital mobility across all facets of their operations including R&D, product offerings, and supply chainsBy 2021, Mercedes-Benz had committed to transitioning its brand to more fully embrace electric offerings, announcing plans for investments exceeding 400 billion euros in electric vehicle technology from 2022 to 2030.

The commitment to electrification is evident as the company outlined projections for 2030, aiming for at least 50 percent of new vehicle sales to be comprised of electric modelsThis goal aligns with industry expectations and the global trend towards electric mobility, showcasing Mercedes-Benz’s alignment with the future of the automotive landscape.

Increasing R&D expenditure is a reflection of Mercedes-Benz's seriousness regarding this electrification commitmentFor 2023, the company reported an R&D budget of approximately 10 billion euros, marking a 17% increase from the previous year’s budget of 8.5 billion eurosThis spike in investment is significantly focused on developing next-generation platforms for electric vehicles as well as advancements in digitalization and autonomous driving technology.

In a strategic move to bolster its market position in China—its largest single market—Mercedes-Benz is set to unveil more than 15 new models in the coming yearThese will cover various drivetrains and serve to cement the company’s commitment to the local marketThe anticipated models include a brand new fully electric G-Class SUV, the ultra-luxurious Maybach EQS, as well as new iterations of the EQA and EQB SUVs.

By 2025, new modular architecture (MMA) platform vehicles are scheduled to begin production at Beijing BenzThe partnership with China has evolved into a comprehensive collaboration encompassing R&D, procurement, manufacturing, sales, and after-sales services, demonstrating a mature operational presence in the country.

In an effort to advance its digital and electric transitions, Mercedes-Benz has increasingly localized its R&D operations in China, positioning it as a crucial hub in its global R&D network

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The establishment of Mercedes-Benz (Shanghai) Digital Technology Co., Ltd., focused on intelligent connectivity and autonomous driving development, is a notable step in creating an extensive R&D framework that rivals those in Germany.

Hubertus Troska, a member of the board and head of the Greater China region, emphasized the autonomy granted to local engineers in decision-making processes, indicating a shift towards empowering local teams to innovateThis autonomy, alongside the swift pace of China's technological advancements, positions Mercedes-Benz’s China-based R&D as a leading global center for automotive innovation.

Additively, the proprietary operating system MB.OS, developed with significant input from Chinese teams, is set to be launched alongside the new MMA platformMercedes-Benz distinguishes itself internationally by possessing both L3 and L4 autonomous driving capabilities, making it the only company to hold certifications for conditional and fully autonomous driving systemsPermission to conduct L3 level autonomous driving tests in Beijing further solidifies their status as a technology leader in the automotive field.

Källenius also called for a reduction in trade barriers between nationsGiven China’s standing as the world’s largest automotive exporter and its unparalleled growth in the electric vehicle market, the potential for international collaboration is immenseIn 2023, for instance, China exported 4.91 million vehicles, marking a staggering 57.9% increase from the previous year, solidifying its position at the forefront of the global automotive export landscape.

Despite the positive growth trajectory, certain countries remain wary of China’s rapid advancements, yet Källenius maintains an optimistic outlook on the long-term prospects of the Chinese economy and European trade relationsHe reiterated that the momentum for global market openness and increased competition is essential for economic growth, while expressing confidence in the burgeoning economic ties between China and Europe.

“We will further increase our investment in China and advance together with the Chinese market,” he asserted, reflecting his commitment to the mutual growth of Mercedes-Benz and the automotive market in China.

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