Q&A: Mercedes CEO on EV strategy, F1, Smart and more

One of your rivals has said that profitable electric vehicles will start with electric SUVs. Is that how you see it?

“We have made a very clear decision that modern luxury is going to be all electric. So we’re really just talking about how fast we can get there. We are ramping up our electrified ranges very quickly. The cost structures of these cars are higher than we’ve been used to, so many of our early models will focus on the upper segments. But as the numbers move from the tens of thousands to the hundreds of thousands, we will reap the benefits of scale.”

Are you on target to reach your CO2 targets next year?

“We are within striking range of our targets, but we can’t yet be sure of meeting them because we can’t steer consumer demand. We can influence it, but it is clear that 2020 and 2021 are going to be challenging.”

SUV demand keeps rising, but these models tend to generate more CO2. Should you re-educate the public about which cars to buy?

“SUV sales have been increasing for 20 years around the world. People love them. The latest SUVs are getting closer to sedans in their CO2 footprint. In any case, I don’t think it’s fruitful to discuss the shape of the cars people buy. Our role is to provide the products our customers prefer, and to electrify them.”

Will there be an electric G-Class?

“The G-Wagen seems to transcend all segments. It’s its own company, almost. But yes, the G-Wagen will go electric in a few years.”

“We have made a very clear decision that modern luxury is going to be all electric. So we’re really just talking about how fast we can get there. We are ramping up our electrified ranges very quickly. The cost structures of these cars are higher than we’ve been used to, so many of our early models will focus on the upper segments. But as the numbers move from the tens of thousands to the hundreds of thousands, we will reap the benefits of scale.”

Will you keep your connection with Formula 1?

“As you know, negotiations are proceeding right now over the framework of a new F1 agreement for the future. It is important to us that any deal should be ecologically satisfactory as well as financially sound. But F1 remains a very, very attractive arena for us.”

You’ve been tight-lipped about the progress of your AMG One hypercar. Why is that?

“I wouldn’t say we’ve been quiet. In fact, the whole project is quite loud, as you’d expect of a car powered by an F1 engine. Development of the car is proceeding and we are excited about it. When we reach the right stage, we will say more.”

We have seen General Motors quit right-hand-drive markets around the world. Are these markets as important to Mercedes-Benz as ever?

“Absolutely. Right-hand-drive markets are extremely important to us. The UK is our second-biggest market in Europe, Japan is another vital area and we believe we still have good growth potential in Australia. Right-hand drive will continue as a cornerstone of our business.”

Why do you need a partnership with Geely to make the Smart marque work?

“We looked at the options for Smart and it’s clear the financial performance has never been satisfactory. We decided that the best option for fixing this was to move it to China, where a joint venture with Geely is more attractive and the technology and cost structures are right. This year will be our first producing all-electric Smarts and we have some really great new vehicles coming from the second half of 2022.”

Given the decline of motor shows and the special problems with Geneva this year, how do you view the future of motor shows?

“In general, we believe motor shows can still be very effective for us. We started the year at CES in Las Vegas, which has transformed itself into a kind of technology and motor show. For the future, we think motor shows will continue to have an important role, but we will be selective in how we use them. We are discussing developments to the format of the IAA, the [old] Frankfurt motor show. There is a plan to give it a more open format, to benefit consumers more.”

You’ve switched your priority for autonomous driving from cars to trucks. Why is that?

“Because the business case for trucks looks more attractive. Autonomy requires very, very sophisticated engineering, but we’re not giving up on cars. We’re just being careful how we deploy our resources.”

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