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Interview with Markus Schäfer, CTO of Mercedes: "Chinese brands are not competition for us"
Enrique Trillo11/23/2022 - 11:29
We chatted with Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG and CTO (Head of Technology, Development and Acquisitions) within the brand.
It is always interesting to have a conversation with a senior manager of a large car manufacturer, but if you are faced with a mechanical engineer, like
Markus Schäfer (57), who has been working at
Mercedes-Benz since 1990, that is, 32 years now, you know that what he is going to tell you has a lot of weight.
And he has weight not only because he is one of the
members of the board of directors of the brand and current CTO (Director of Technology, Development and Acquisitions) , but also because of his great experience and the deep knowledge he has of the company, since he has toured all possible positions from the base to the dome.
I had the opportunity to meet Mr. Schäfer at the
Magical Garage that Mercedes set up in Paris, parallel to the
Paris Salon itself . And the first thing I wanted to ask him is if with his new electric cars, perhaps all too similar in design, he intended to win over his customers more due to the technology and experiences they offer. In short, if
Mercedes wants to become a technology company .
But he replied that not exactly: "The sensory experience is a part. Let's say, that of creating desire. But what makes a customer want a Mercedes is the brand itself.
Mercedes are cars for VIP people . Who wants a Mercedes wants to feel VIP. You know, I want to drive to a museum, to a dinner and I want to show up in a Mercedes, because I like the brand."
I tell you that precisely in recent years it has won many customers for the lower part of its range, not with its most luxurious models. And he confirms it to me, but he advances me a
change of course :
"We have to work on the brand image. We have to work on our product portfolio. We have 42 different models. And you can discuss whether the B class represents what we want to be. And in the last 10-15 years, we changed our portfolio , especially in the entry segment. But we have always been a luxury company for 130 years. If you visit our museum you immediately realize. This was always our history and our growth strategy"
"Over the last 15 years we've grown a lot in volume, but we've added a lot of complexity in the lower segment, a bit away from luxury. So now we want to revamp the lower end of the entry level. We now have seven compact models in the entry level , which we think is too complicated."
What surprised me talking to Schäfer is his sincerity, because he even recognized that some Mercedes do not have the quality they should:
"Some of our models, from the point of view of design and from their approach, are probably not what Mercedes should be. " .
"So we're going to start with an entry level with a different shape and style, with a different focus on technology. So we're adjusting the entry segments, to achieve less range complexity, reduce the number of models."
But, returning to the subject of technology and the sensations that 'sell' their cars...
"Yes, if you have a Mercedes, it is always a special experience. Because of the materials that you touch, because of the technology that it equips. And that is what we call the sensory experience, something that you simply understand with your senses. You know, you hear something , you see something in the car, the fragrance on it... With this we want to take it to the next level."
Of course, also when it comes to technology. And about this he tells me: "People don't want to lose things in the car that they are used to outside of it. I mean, you want to have Spotify, right? You want your Apple Music, you want your Amazon music, maybe you want your Amazon Prime, even your Netflix. We want to bring it all to our own platform. So we're the creator of our electrical and electronic platform, and
we connect and use these apps that our customers prefer ."
The idea is that "they just sit in the vehicle, the camera recognizes who's driving and you don't have to do a thing. It starts before you know it, you walk up, the door opens because the car knows you're coming. You don't have to have not even a key and maybe the door will open automatically. The car knows it's you and loads your personal accounts. Even if you're on autopilot level three you can have a video conference. The only thing you can do right now is sleep." .
And since he's handing it to me on a platter, I can't help but bring up the subject of
autonomous driving . And he recognizes that they have big plans about this: "Everyone is at level two. But at level two the driver is in command. At level three the responsibility is transferred to the car, because you can take your hands off the wheel and the eyes on the road and do something else legally.
"And
there is only one company that has achieved level three certification, and that is Mercedes with the
S-Class ." About what should be noted that in Europe it is still not allowed to take your hands off the wheel.
"In addition, we are trying to do this level three certification also in the US, where the process must be approved within the next six months. And we are going to increase the capabilities step by step. For this we are working with NVIDIA and from now to 2040 it could reach level 4 or even 5 (without a steering wheel) of autonomous driving".
As a summary of this, it is more than clear: "
We are already a luxury technology company. In reality, we have always been a technology company , depending on how you define that."
Impossible not to talk about electric cars, with the great offensive of models that all brands are presenting, including Mercedes. But what everyone is wondering is
when will the price of an electric car be equal to that of combustion cars?
"This is going to take much longer than people think. The main difference is in the price of the batteries and with the current crisis and the increase in the cost of materials, that gap is even opening up more."
"It was predicted 25 years from the launch of the first electrics. But it will be quite a bit longer. The really dramatic change could only come with changing the chemistry of the batteries, like a sulfur-based chemistry, for example."
Perhaps solid-state batteries can make that change? "Well, we are working on it with two investments and startups, one in the US and one in Southeast Asia. But this is nothing that is going to mature in the next 3-4 years. I think it will take more than five or six years until we see progress.
I can't help but tell you about our market and about the role it represents for Mercedes globally: "Well, the transition to the electric vehicle must be completed for it to gain prominence. I know that in Spain there are entry restrictions, especially to the center of the largest cities, which favors that change. But the charging network still needs to be improved." And he leaves a little message for those in charge: "
The government must have more initiative ."
And to finish, I would like to ask you a personal question that I have and that many may share with me: the Chinese manufacturers. They are arriving in droves and with cars even with premium aspirations.
Does Mercedes consider Chinese brands competition? How is he going to fight with all of them?
He answers confidently and very convinced of what he says: "
Well, we don't fight against them. We don't consider them competition . As I said, we have been doing this for many years and we have gained a lot of ground."
"We are extremely successful in China. China is the biggest market. We are the number one luxury car manufacturer in China for the last ten years, we have several factories there. What I want to say is that the competition is not just Chinese, it is world".
"Being afraid or thinking that they are better is not a good way to act. Competitors come from the United States, they come from Europe, they come from Japan, they come from Korea. And China is just another rival.
"
We're not scared, but of course we're watching the competition and seeing what they're doing. And that's good, because it helps us, in some cases, increase our speed in some areas."
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So I suppose we're going to be working with NVDIA then?
