Today, I’m talking with Mercedes-Benz CEO Ola Källenius. Ola was last on the show in 2022, and he promised me he’d come back when Mercedes was ready to launch an EV version of the G-Wagen — the company’s legendary off-road vehicle.
And it’s here — the G580 with EQ technology is official, and it will start at over $150,000. Ola and I talked all about it, what it means for Mercedes’ overall electrification efforts, and whether the EQ branding is long for this world.
We also talked about the EV market in general — a lot has changed since Ola was on the show in 2022. Back then, he said Mercedes would have an all-EV lineup by 2030, which was a very trendy thing to say then. Like so many other automakers, Mercedes has been walking that back a little lately, and I asked Ola why — and what a more realistic timeline might look like. You’ll hear Ola talk about why he doesn’t see the softening as a setback and why he and the company are still absolutely committed to phasing out gas in the long run.
Ola and I also spent some time talking about what’s happening inside cars lately, as more and more automakers try to build unique interfaces and experiences instead of handing everything over to smartphone projection systems like Apple CarPlay and Android Auto. Mercedes, in particular, has something called the Hyperscreen, a stunning display that stretches across the entire dashboard. It runs MBUX, which is Mercedes’ custom operating system, and offers apps and games — even productivity software like Zoom. I asked Ola if he’d ever use something like Apple’s next-gen version of CarPlay, which would take all of that over, and he flatly said no and explained why in some detail.
There’s a lot more in this conversation, including unionization efforts in Alabama, how Ola sees AI playing out in cars, and the reveal of an upcoming electric C-Class that Ola promised me I would love. Oh, and Nick Saban came up a few times. It’s a lot.
You’re going to like this one. Okay, Ola Källenius, CEO of Mercedes. Here we go.
This transcript has been lightly edited for length and clarity.
Ola Källenius, you are the CEO of Mercedes-Benz! Welcome back to Decoder.
Great to be back on the show.
I’m very excited to talk to you again. You were last on the show in 2022. That was a different time, I would say. Emotionally, economically in the car market, it felt very different, so we have a lot to talk about. A lot of things have changed. Mercedes’ approach to EVs has changed. There’s quite a lot there, but I want to call out two things. You made two comments on the show that I want to explicitly follow up on. First, you promised you would be back when the electric G-Wagen was ready, and it’s here, and you are back. Second, you told me at the end of that episode to reward myself and go buy a Mercedes, and I did that. I bought one, but now I think it’s time for me to buy something new, and I want to talk about that as well.
Let’s start with the EV market in general. The last time you were here, Mercedes — and every car company — was announcing plans to go all-electric. The Mercedes target was “2030, all-electric, no ICE vehicles in the lineup.” But in February of this year, you said 2030 is no longer a realistic milestone and that customers and market conditions will set the pace of the transformation from ICE to all EVs. What happened there? What made you see that “okay, 2030 isn’t going to hit — we are going to have to move this a couple of years”?
Let’s start to talk about the destination. Has the destination changed? Absolutely not. We’re on our way to a future, which is going to be zero emission. So, that quest is the same. And if I go one step back, when we, five years ago, launched what we call Ambition 2039, we set an overriding goal for the company. We want to future-proof our business, and we want to turn our business into a CO2-neutral business by the end of the next decade. And that is in all dimensions — it’s not just about the product lineup. It’s, of course, about the supply chain. It’s about our own operations. The product, of course, that’s the obvious thing, but also the product in use. We are looking at this from A to Z — the whole value chain. So, if you’re on this 20-year quest by the end of the next decade, get there. Then, you need to move in all dimensions.
And now let me jump to the product, your specific question. And I said back then, for the careful listener, we will be ready in 2030 to go all-electric where market conditions allow. That was the sentence I used back in 2022 — actually, back in 2020. But when we talked in 2022, I know people exercise an element of selective listening when you talk to people in all sorts of venues. So, what stuck with people was, okay, in 2030, the product lineup is going to be all-electric. But I put in, back then, “where market conditions allow” for a reason — or for two reasons, really. It’s a systemic shift. It’s not just about the product — we can control that. It is the charging infrastructure. It is the general switch over to non-fossil-based energy sources, et cetera. So, it’s a much bigger systemic shift that we’re talking about.
It is influenced by policy and incentivization in different markets around the world, and the world is a heterogeneous place. So, I said that for a reason. Now, was that so I could say, “Oh, I changed my mind. We’re not going to do it”? No. And this is the next thing that is very, very important. We are preparing the whole Mercedes lineup from top to bottom — from the S-Class down to the entry levels like the CLA, the GLA, and those vehicles — in this decade. By the end of this decade, before 2030, we will have a full lineup. If there are markets that are ready to go for it — maybe it’s Norway that will be the first one to go all-electric — we shall see. But that investment — that putting our money where our mouth is and investing tens of billions into the architectures, the underlying technology that I’m sure we’ll talk about — all of that is happening.
But we also have to recognize now that in terms of the market acceptance, the early EV adoption phase is over. Now, we need mass adoption. Regarding the buildup of charging infrastructure and all those enabling factors, if you had asked me three years ago, I would’ve thought the gradient would be steeper at this stage in the transformation. Although I’m very much still convinced about the destination as I mentioned, now you can see that the gradient is not as steep. It’s wholly possible that, in many major markets, they will not be there by 2030. In such a situation, if you are an established manufacturer like Mercedes-Benz with a loyal customer and fan base — and, again, thank you for joining that, by the way — you cannot, in 2030, tell the customer that maybe wants a high-tech electrified combustion product from us that “the shop is closed. We’re not going to sell to you anymore.” That would not be economically sensible, and I’m sure the customer wouldn’t want that.
We have what I call tactical flexibility. And as I see it here today, in 2024, based upon the data that I see, I think this is going to go into the ’30s. How long? Hard to say. A mini caveat there: humans have a tendency, when they look out the window and it’s sunny, to think that tomorrow is going to be sunny and it’s going to be sunny for the rest of the month or whatever. And if it’s raining, you have that. Maybe the pendulum, in terms of the mood, swings to the left and then to the right. We should not discard scenarios by which the trajectory and the gradient of that EV adoption picks up pace during the second half of this decade.
We are preparing ourselves for an all-out launch of EV products, but if you go into the Mercedes showroom, you will see that it is technologically on par, with the new operating system and everything that’s going on on the technological side, digital experience, autonomous driving, what have you. That will be available in our combustion products as well. The customer expects coherence from us. They walk into the showroom, and they get that.
And last anecdote there: today, we have 350 American dealers here in Stuttgart looking at the products of the future — a whole lineup. That’s my next appointment. I’m going to have dinner with them. I’m a dinner speaker. So, we are now showing our dealer partners around the world what the product pipeline looks like for the next couple or three years. Before going into this podcast here, I called the guy and asked, “What’s the atmosphere in the room?” And they were like, “They are very excited. There were even standing ovations when some of the products were rolled in.” So, let’s be — in terms of product and technology — positive about the transformation. The big winner of the transformation is the customer. It’s just getting better every day.
The Riesling is flowing at the dealer conference in Stuttgart. That’s what I’m hearing.
Or maybe a beer. We’re in Germany.
You mentioned early adopters. I want to key on that for one second. This is the conventional wisdom, right? We were in the pandemic. There was a massive flood in the car market. Lots and lots of people bought cars. The prices of the cars skyrocketed. It seemed like Tesla, in particular, had perfectly elastic demand. They just sold every single car they were going to make. That looked like EV demand to a lot of people. It might’ve confused a lot of people. It might’ve confused a lot of governments into accelerating their transition plans. Is that your view of it: that was just overheated early adopter action, and now we’re back to a regular car market?
Maybe it’s some of it, but I’ve been in the auto industry for 31 years now, and I’ve seen peaks and troughs and ups and downs and different economic cycles, but I’ve never seen any business, including the auto business, be able to abolish gravity. There is a certain inertia and a certain speed to everything. Once you go from early adoption to mass adoption, one thing that the consumer will never not want to have is complete freedom and individual mobility. If we look at this now as a system, there is a significant effort ahead of us in building up charging infrastructure. In fact, since you and I talked last, you probably have seen announcements for Mercedes both through consortiums with other manufacturers but also standalone that we are now, over the next five, six, or seven years, putting billions into charging infrastructure.
Mercedes doesn’t build gas stations today, nor do we have to. It’s not our business. We’re a car company. But to avoid this chicken or egg situation that you can get into when you want to take the step to mass adoption — but, even more importantly, send a signal to Mercedes customers to say, “We got your back. We’re investing for you. We want you to have convenience” — we’re actually trying to accelerate and enable. We are part of the systemic shift as well, but early adoption is always chapter one in the book. Now, we’re in chapter two. Chapter two is just a much longer chapter.
Let me ask you a question about the charging infrastructure piece. The transition to EVs is a lot of change, especially for a company like Mercedes, right? Historic strength in building internal combustion engines and all the things you have to do. The last time you were here, we talked about moving that strength into building EVs and all the different things you might have to do. That’s en route. Now you’ve got to go build gas stations, right? You’ve got to build charging infrastructure. You have to sign deals with electric companies — all this other stuff that is a new set of capabilities. One, how do you make sure that you’re going to be good at that? And two, where does the margin to fund all that build-out come from?
The auto industry was always about being a [decathlete]. It’s not just a 100-meter dash or the long jump or whatever. If you want to be successful in the auto industry, you’re a [decathlete], and the sum of all your skills needs to lead to the Olympic gold medal or whatever you’re fighting to win. With the transformation, we’re adding two or three disciplines: the EV drivetrain, everything that’s happening on the digital side, but also now some things that were maybe not on the cards, where you go vertically into the energy distribution as well. We have a competent team that works with enabling factors for customers for a long, long time. It’s the Mercedes-Benz mobility team that has done everything from mobility services that does, of course, the financial insurance and all those services — so this whole know-how of how to create services around the vehicle to make the ownership experience better.
We have some foundation know-how there, but maybe we have not yet, in our previous life, understood the complete landscape of the US electricity market. You’ve got to partner with people, and we have selected what we consider the best partners in the business, and we’re doing this in joint-owned new entities that we have built up. Then, we have a lot of especially young people in the company that just pick up on a task like that, and it seems like four weeks later, they’ve read everything that you can possibly read on the topic, and they use their intelligence, their energy, and everything to step into it. So, there, we’re becoming a startup again. It’s not 10 sports anymore; it’s 12, 13, 14 sports that you have to master.
As CEO, how are you keeping track of your mastery level?
I think this goes for any position, but it also goes for the CEO: don’t believe that you know everything. Life-long learning. Stay curious, read a lot, speak to people. Of course, use your experience, but you have to open your mind. This technological shift is too big to rest on your old know-how. It’s not going to be enough.
Let me ask in a more specific way: building charging infrastructure is very hard, very capital-intensive, and physically intensive. You have to put chargers in the right place at the right time for people who are making long journeys. You’ve partnered with Tesla, right? You’re going to use the NACS [North American Charging Standard] connector. You’re going to be part of the supercharger network. You’re building your own network next to it. How do you know if you’re winning in this game?
In consortium or piggybacking off of what others already have built up — a tactical decision to improve the customer experience — it’s all about the customer here. But if we go deeper into charging, what do you need to know? Location, of course. Location, location, location. You need to know the driving patterns of where your customers drive and what is relevant to them. Through our connected data fleet, we have all of that — anonymized, of course — so we know the routes where we need to be. You then need to team up with partners that know people in real estate or other companies that have real estate in the right locations. You’ve got to look at how many actual charging points per charging location make sense. What’s the density in terms of charging speed? And all the Mercedes are going to be high-power charging and the next-gen EV vehicles with 800-volt systems and everything are going to be even more high-power charging. Of course, go for high-power charging so that you can charge the vehicle very quickly.
You look at utilization. What is the minimum utilization? You mentioned capital. What’s the minimal utilization you need to make money? It needs to be a business in its own right. For sure, you have an investing phase, and you plant your vines, and maybe your first good wine from the vines is five or six years later, and then the asset starts paying off. Of course, the spreadsheet is involved as well. What does this look like financially? In our view, it’s not “winner-takes-all, there can only be one charging company, and it’s the only one that can make money.” No. But you need to have a minimal critical mass for it to make money and also carry the fixed cost. So, we have done some careful calculations on that, and now we’re on our way.
The first stations are now up in the US, up in Europe, up in China. We’re looking at Korea. We’re looking at Japan. We’re looking at other places. We partnered with our dealers in India and very quickly put up a range of charging options in India along the main driving routes, so things are moving here.
Do you think we’re going to get to a place where there’s a Tesla charging station, a Mercedes charging station, and a Rivian charging station all on the corner of an intersection like we have gas stations today, and they’ll just advertise their rates, and it will be that kind of business?
Not impossible. There’s still a lot of free land out there for this. We have not claimed every little piece of land where you can dig for gold here. A lot of it is open.
I asked that question because if that’s the end state, that market operates on relatively razor-thin margins. It’s the gas market, and the prices fluctuate, and everyone’s always aware of it. You literally see gas stations next to each other trying to beat each other by 10 cents. If you end up in that situation, will all of this forward investment have been worth it?
If we get into a place, 10 years from now, where the market starts consolidating, well, maybe the market consolidates. We shall see. I don’t know. Our primary goal would be number one: customer experience. Take care of the customer. Make sure that our customer has what they expect from Mercedes. Number two: to make money. And we will then weigh our options and see what the best route forward is.
I think it’s a good place to ask some pretty classic Decoder questions. The last time you were on the show, we talked about the structure of Mercedes, which, at the time, was going through being streamlined into Mercedes-Benz Group after the spinoff of Daimler Truck. It’s been a few years. How has that gone? Are you more focused? Is that structure still the same, or are there more changes?
I think we’re more focused. We had a hypothesis, even though Daimler had been together for more than a hundred years with cars and vans on the one side and trucks and buses on the other side. If you now look back at the spinoff from a financial point of view, where you unlock the conglomerate discount and create value for your shareholders, the spinoff was just that — we gave shareholders shares in two companies instead of one company. Now, a couple or three years later, did that happen? Absolutely, it did. So, the financial hypothesis so far — and I know you’ve got to win every football game one at a time, I realized that — that worked out really, really well for shareholders, and the feedback that we have received from our shareholders was “that was absolutely the right strategic move.”
When it comes to the focus, when you’re not in big management meetings and talking about everything and then half of the audience is listening or half of the other half is listening to the other, do you get more focused? Absolutely, you do. I’m sure that goes for the truck guys. You have to ask them, but they’re in the spotlight of the financial market. They’re publicly listed on the Frankfurt Stock Exchange, but it’s all about trucks and buses for them. It’s all about luxury cars and premium vans for us. We have streamlined the organization and really tried to do a very, very simple thing: build the world’s most desirable cars, make our customers happy, and also make a little bit of money out of that.
It’s funny that you run Mercedes, and I run a team of 70, and I think I have meetings where only half of the people are listening. The problems are the same no matter how big you are. Have you changed anything about how [Mercedes-Benz] Group is structured after the spinoff? Since you’ve been able to focus, there have to be some benefits you’ve seen that have led you to structural changes on your own.
Yes. Whether the spinoff in its own right was the only catalyst for that or the transformation in general, I think maybe it’s a mix of everything there. An organization is not a static thing that just sits there and nothing ever happens. I think we are constantly evolving, but much of our structure is centered in and around the product, and I guess that’s how a car company is run. You have the functions, R&D, production, marketing and sales and so on, and the other functions around that, but it’s so much centered around the product. And there, from time to time, we also make organizational changes, but only if they make sense. Does it make us faster? Do we get to the right answer in a better way? Those types of things. Where it’s constant change at the moment is on the process side, especially through digitalization. And now, with GenAI entering the stage — yet another tool in the toolbox — we’re in the sandbox, and they throw us another thing that we can play with.
On the process side, I would say there is even more change to make things faster, more productive, higher quality. The simulation tools just get better and better and better. Based upon 75 years of research in safety, one of the hallmarks of Mercedes, where the trailblazers in the auto industry have safety, we have so much data now that our simulation models for simulated crashes are so good in terms of the correlation to what happens in the real world. We still crash a lot of vehicles, but the simulation data is so good that we literally can simulate hundreds of variants of those crashes without even building a car. But you’ve got to get it right. There is a revolution going on in how we do the business, not just on the product side.
What do you think the biggest change you’ve made has been in the past two years?
The biggest change has been around digitalization — rearranging our processes in and around the digital tools that steadily become available.
In production, we have been working on the virtual factory for, I don’t know, 25 years, but the latest extension is our Hungarian plant where we will build the next-gen EV like the CLA, for instance, that we showed at the Munich Auto Show in September. The digital tools that are available now [allow us] to make a complete digital replica of the plant before you even pour one bucket of concrete and move that into a 3D [model], down to the last station in assembly, and look, from all angles, at the assembly moves and everything. It’s like you can build the whole factory and go through a whole series of iterations of that, and that would’ve led to physical changes. It’s scary good. Your ability to then, once you go into the hardware, have a first-time-right ratio there is much higher. Saves cost, saves time.
We had Matthew Ball on the show a while back. He wrote a book called The Metaverse. This was a big part of his pitch about the Metaverse: You would have digital twins of real-world factories and other facilities. You’d be able to put people in virtual environments that would lead to a result where you are right the first time when you actually build the physical environment, and you can obviously iterate virtually before you iterate physically and bring down the factory production time and all that stuff. That’s a big bet, right? That’s the pitch, but you have to go get it right and do it, and it has to work. Between that pitch and investment in those kinds of technologies, the investments in charging, these are huge decisions that fall on you — to invest in these things and bet the company on them. How do you make decisions? Has that changed as more and more digital technologies enter the fray and more and more capital investments seem like the numbers are going up?
Of course, on any one business decision, you make assumptions. You put the finances on a piece of paper. You calculate it, but not everything can have 100 percent predictability. It’s just not how it works, especially on the digital side. In some cases, you just have to have belief. You see a digital product coming, and you go, “Wow, this is a great idea.” I 100 percent agree with what you just said. The digital twin is not just a factory. We have a digital twin of the product as well, and we use that term — digital twin. You just look at that and go, “That is intuitively right.” No matter what the spreadsheet says. Don’t spend too much money on calculating how many hours you save and what’s the cost in dollars per hour and so on. Maybe you can do that to comfort yourself that you’re making the right investment decision, but you have to marry that to “this looks right — let’s go, let’s do this now, and give it to the engineers and let them play with the toy and just unlock the potential of it.”
You do a mix of those two things, but you’re right; the level of investment is high. In the auto industry and our company, we have never invested on a higher level than we’re doing now — mostly in product, of course, but also into enabling technologies like the ones that we just talked about.
I want to ask about one big decision, and I really just want to talk about the G-Wagen. Let’s be honest: this is all me eating the vegetables before I get to talk with the G-Wagen.
The auto industry is in a time of massive investment, changes to manufacturing, and bringing down costs by using digital technologies, potentially with AI. Your workers in Germany and across Europe are widely unionized. There’s a union campaign in Alabama right now at your factory there. There’s controversy around it. Are you going to let that go through? The issue that unions have in America and that the UAW has is that the transition to EV manufacturing will reduce jobs or reduce pay in some way.
Alabama is dear to my heart. I worked in that plant twice in my career. In fact, I kind of started my career in the trainee program there. I founded my family in Alabama. Two of my kids were born there. I feel like an Alabamian. I’m a Crimson Tide fan, for the football fans out there. Maybe some of you know that Nick Saban — the GOAT as far as college football coaches is concerned — is a Mercedes dealer. He’s here this week. I’m having dinner with him tomorrow because he’s part of that — looking at the products that I mentioned.
I just want to be clear: you’ve now revealed that Nick Saban gets his own dinner.
I consider him a friend, and I was there when he won his first championship with Alabama. Obviously, I’d won a championship with LSU. I’m emotionally committed to the United States. I’m emotionally committed to Alabama and to that plant. We have a fantastic team there. It’s second to none. The passion that they have to build the greatest cars, the atmosphere, people going the extra mile, that “one team” culture — all of that is unique. Ultimately, it will be the team members who decide what they want to do going forward. And there you have it.
It’s great that you love Alabama. It’s great that you love Nick Saban. The union there is saying Mercedes is union-busting. They want to decide. They’ve asked for an election. Do you want this process to be as contentious as it seems like it might be?
When unionization campaigns happen around the world, of course there will always be some emotions around that. I think that is inevitable, but it comes back to one simple fact: the team members have their future in their hands, and they make that choice. So, that’s it.
Okay, got it. We’ll see what happens there. We’re definitely tracking it because it’s very interesting. The Big Three — [General Motors, Stellantis, and Ford] — have sort of embraced their unions, but outside of that, not so much. And that movement is starting to grow with EVs. It seems like the auto union movement is going to happen in parallel with the EV transition, at least in the United States. And I think it seems like that is yet another thing to manage as part of the transition — if you want to be all-EVs by the mid-2030s, the labor issue is one you’re going to have to solve.
Well, I don’t know if that’s the dynamic behind this particular situation. We operate in about 150 countries around the world. We don’t have production operations in that many countries, but we have production operations in many countries. We’re, of course, in Germany, our home, and in several other countries in Europe. We’re in the United States. We are in China. We are in Mexico. We’re in South Africa. We are in Thailand. We’re in India. We’re almost everywhere. Each country has its own systems in terms of labor representation. As you know, we have labor representation here in Germany. It’s part of the tradition, and we work well with them. And we have some countries where there is no labor participation in an organized way. As you go around the world, you have different [systems], but one thing that is never different if you go around the world: there’s always one Mercedes culture. There’s one Mercedes standard.
If you go into that plant in Alabama, if you go into a plant here outside Stuttgart, if you go into one in… I was in Beijing this week, and if you go into that plant or in India or anywhere, you see the same thing. You see the same standard. You see the same technology. You see the same precision. You see the same passion and dedication to quality. You see the same way we work. You see how we have a people culture. That’s the one Mercedes team. That never changes.
Alright, where’s the G-Wagen being built? You mentioned all those places.
In Graz, Austria. Graz, Austria was the place that was selected in a joint venture, which was called [Steyr-Daimler-Puch] at the time and, today, is Magna, part of the very large Canadian automotive supplier industrial group. Since 1979, the home of the G has been Graz, Austria, in Styria, a beautiful part of the country. We have an additional benefit of being exactly there.
They have a mountain next to the plant. This mountain is called the Schöckl. It’s [been] privately owned [for] decades, [maybe] centuries. That is one of the roughest off-road tracks in the world, and we have, from the owner, a special permit to test our vehicles on the Schöckl. If you look carefully in the door seal of a G, you’ll see a little plaque which says “Schöckl tested.” You’re only a real G if you’ve done that. Since I work at the company, I have become a member of the exclusive club, and I have my own plaque.
I have earned the plaque of “Schöckl proofed,” and I’ve got to tell you this story. Many years ago, I got this. They put you in a G, and you are supposed to negotiate the whole mountain and get to the top. Okay, fair enough. I’ve done a reasonable amount of off-road driving in my days. And when I was up for “the test,” I started going. I hit, in the middle of the mountain, a very sharp rock back then, so a tire blew, and those are sturdy tires. So my particular experience included a switch of tire. The engineers helped me — I have to give them credit for that. And I came up to the top with slightly sweaty palms, proud of myself. I’m sure that the professional drivers were giggling behind my back, but anyway, I made it to the top.
At the top, there is a hut. There, you drink a typical Austrian Schnapp, which is called Zirbenschnaps. If you try it, it doesn’t taste that good, but you don’t think about that when you’re at the top. You think you’ve earned the plaque — you haven’t. Now comes the most exciting part: you need to go down with a professional driver, and you take one of those guys that have done that for, I don’t know, 20, 25 years. The only difference is he takes you down that mountain sometimes at 40, 50 miles an hour. You need to have a lot of belief.
Those are narrow roads. There are a lot of rocks. There are a lot of trees. It’s steep. You get to the bottom. Needless to say, I survived; otherwise, we wouldn’t have this conversation. I’ve earned my plaque. So, not only has Steyr or Graz, the city, been a good place for us to do this — we have the perfect conditions for that unique, adventurous product.
So, it’s an electric G-Wagen. It’s a G-580. You’ve been showing it off in camouflage forever. At CES, I saw three or four of them do the circle turn all in a row together. It was very entertaining. I want to call something out here. It is not the EQG, which is how you’ve named all the other EV models you have. It is the G-580 with EQ technology, and it seems like, at some point, EQ as a brand has to fade away. Is this the first step of that fading away?
In a certain phase of going toward electric, you over index on “this is electric.” But in the end, every Mercedes is a Mercedes. The EQS is a Mercedes. The S-Class is a Mercedes. I drive the EQS SUV. That’s my company car; I love it to death — best car I’ve ever driven. But we will, over time, in terms of nomenclature, make sure that we then, at the end, don’t confuse the customer, that zipper comes together. So, it’s the G-Class, and it is electric, hence why, on the fender, it says “EQ technology.” In the fall, I got to drive a prototype of that electric G up and down the Schöckl mountain. No less than five times, we had a press event. There’s one thing that can never be a surprise and that you have to stick to: a G needs to look like a G. Never mess with the styling. The G remains the G.
It needs to have phenomenal class-leading off-road capabilities, and of course, I’ve driven the mountain with the incredible combustion-based products and with all the differentials and everything you have. The electric G is so precise. The software feels the surface and can, with millimeter precision, adjust every single tire and put the exact right torque and everything to it. It was unbelievably easy to get up the mountain, and I need to probably send you some pictures of some of the situations that I was in. I was joking [with] the engineers as I came up, [saying,] “My mother could do this.” With that statement, I’m not saying that my mother is not a good driver. In fact, she’s a better driver than I am and probably has a 60-year record of no accidents and stuff like that. But maybe her daily drive is not a hardcore off-roading, but it is so easy. Anybody can more or less negotiate that vehicle with the electric G. So, I think the tailor-made electric drivetrain that we have made for that car kind of opens up a new dimension of off-roading.
First of all, I feel like some hardcore off-road fans are going to have a lot of feelings about EVs making it so easy that anybody can do it, especially on trails that hard. That’s one thing — we should set that aside. That could be a whole hour of just people feeling that way.
But there’s something else here that I think is interesting that you said: “It has to look like a G.” This is an iconic car design, and you’ve added an electric drivetrain to it. You can go buy essentially the same design with a gas drivetrain in it and have a different experience. That has not been a Mercedes approach. The S-Class and EQS look radically different from each other. Inside, they are very similar, but outside, they look very different. They have different brand names.
I have a C-450 AMG. I would love to get a C-Class EV. You don’t make one yet — you might — but I would like it to look like the current C-Class, not whatever design language is happening on the EQ side. Is this something that you’re thinking about changing as well? Because the G-Wagen is the first one where you see that it’s the same essential design with different drivetrains.
Take the EQS sedan, for instance — the most slippery car in the world. Here, you have this huge luxury limousine — five, 20 meters long or whatever — with all the Mercedes bells and whistles, including the insane Hyperscreen and all that stuff. And yes, for that car, the sibling car to the traditional S-Class, form follows function. We built a machine that we just now updated coming in this summer with a drag coefficient of O.2. And now in WLTP certification values up to 828 kilometers [514 miles] of range. It’s phenomenal for a vehicle like that. We have the highest customer satisfaction ratings of any car on that one. You can’t do that to the G. The G is the G, and the shape is what it is, and that is one of the main buying criteria.
Are the EVs going to stay more different design-wise?
I’m not going to reveal everything, but if you’re in that C-Class segment — one of the cars that we are showing the people here today, by the way, so in a not-too-distant future — I guarantee that you will love the styling. If that’s not the case, money back for you. I’m putting that bet out there. Once you see that car, we’re going to do another Verge podcast in 2026 when it’s out, and then we’ll see if I over-promised.
Alright, I’ve got to see if Nick Saban is going to leak me this car, first of all. Second of all, that’s really interesting — the idea that you’re going to converge the standard design and the EV design or that you will guarantee that people love it. The classic Mercedes design, people just love it. The EQ design has been more polarizing, so that guarantee feels like you’re going to head in more of a direction that, let’s say, BMW is in, where the i4 is basically a 4 Series with an EV drivetrain and the i7 is basically a 7 Series with an EV drivetrain. Is that what the market is telling you? That, strategically, we should make more of the same car with different drivetrains?
We’re heading in a direction that will be 100 percent Mercedes and 100 percent recognizable as a Mercedes. Pick up on styling cues that are uniquely Mercedes and can only be Mercedes and will be beautiful. So, I stand by my promise.
Alright, we’ll have you back. Every time you have a new car out, we’ll have you back, and we’ll just pick up the conversation.
Can I say one thing [about] the G? Because I think this is important. So, the styling is the same — don’t mess with the styling [is] rule number one with the G — but you mentioned the Mercedes engineers. They have ants in their pants. They never stand still. They always push forward. They always look for what’s next on technology. We have made a whole host of subtle changes that only the trained eye will see but that makes a world of difference. I’m going to take one example and as we’re now launching this electric G, we are also updating the complete combustion offering of the G as well. So the whole G lineup is being freshened here alongside the electric G. If you take the A-pillar, the way you put two pieces of metal together back in 1979, the flange was kind of on the outside of the body, not on the inside, and you cover that with a nice-looking cover — this black strip that every G driver immediately recognizes — but that creates drag.
On a combustion-based product, that may not be that big of a deal, but on an electric car, you are chasing every single arrow point. It’s like you’re in Formula One: they’re looking for downforce, and here, the guys in the wind tunnel are looking for drag reduction while keeping it beautiful. So, we turn that inside. We still put a nice-looking cover on top of it. You don’t really see it, but it significantly reduced the drag — just that simple change to the body construction. While we were at it, we did that for the ICE-based cars as well. You get them better range — that’s the thing. Of course, you chase range. You want to keep the battery. Every kilowatt-hour, every watt, is precious in an electric car. So, every user of wattage you optimize and pushing an object through air eats up energy, obviously. Remember your physics class in school.
But what’s the benefit on the combustion side? Of course, that reduces the consumption on that one as well, but it’s not as crucial, but it reduces the wind noise. Now, you don’t live in Germany, but if you [did], we still have free speeds on the Autobahn. Maybe an AMG GT is the right car to open it up and see what it can do, and the G is a little bit less so. But if you [were] driving a G, let’s say, at 160 or 170 kilometers an hour [99–105 miles per hour], the wind noise, in spite of the boxy shape, is so much less now for one of those subtle changes that you can easily have a conversation on the phone hands-free or with the person sitting next to you, what have you.
We have made dozens and dozens of dozens of small changes to the G that make the product overall better, and we have completely updated the infotainment to the latest and greatest — maybe not the number one buying criteria for the G, but a lot of people buy the car. It’s a lifestyle choice. You live in downtown LA, you go back and forth to work with it, and you just love it because you love it. And you want to have the latest navigation. You want to have the best entertainment. You want to have all of those things and all the convenience. All of that comes with the electric G, but also with the combustion-based Gs.
I feel like in downtown LA, most G-wagons are off-roading by going over the curb at Starbucks, and that might be it. Let me ask about the infotainment. This is a big deal in the industry. It feels like a central tension of the entire industry.
You have the Hyperscreen. For people who don’t know what the Hyperscreen is: pause the podcast and go look at a picture of the Mercedes Hyperscreen. It is very compelling. It’s a huge screen across the front dash of the car. Even for your models that don’t have a Hyperscreen, you still have big screens everywhere. You have MBUX, which is your infotainment platform. You just added ChatGPT to it, which is fascinating. You are all in on AI — you’ve mentioned that several times now. There’s another view of the world, which says, “Just give all of this to Apple,” right? Apple CarPlay is what people want to buy.
GM drops CarPlay — there’s a huge outcry. We’ll see how that plays out for them. Apple is very confident that people are going to buy cars with Apple CarPlay. You still have CarPlay in there. In 2022, Apple announced a version of CarPlay that can take over something like the Hyperscreen and take over the instrument cluster in front of the driver. I asked you then, “Would you ever do that?” You said, “I’ve got to talk to them.” It’s been a couple of years. Have you talked to them? Would you ever let them take over all of the infotainment of the car in that way?
The short answer is no, but you need to look at it from a bigger perspective. Everything that’s going on in this digital window into your car and to the world is not just infotainment. It’s not just the music that you listen to or the phone call that you make. Where there is another revolution going on is assisted and automated driving. Our so-called Mercedes-Benz operating system is really the central nervous system in the brain of the whole car, of which the infotainment is one of four domains. The whole operating system — infotainment, automated driving, every single function of the body, exterior and interior of the car, the whole drive system, the battery management, the telecommunications module speaking to the cloud where we have the personal delay file for you with your settings and everything — is all one holistic software architecture.
If you want to create a superior customer experience, you need to think about that as a whole, and only the manufacturer can tie all of it together. Nobody out there — none of the tech companies — is even aspiring to do that whole thing. If you want that to be perfect, integrated, and seamless, you don’t want to jump between different worlds — “Oh, I’m now in the infotainment. Well, let’s jump back to Mercedes,” and so on and so forth. So, our quest is a different one. We want to create the best digital experience in the world for you. That includes fantastic and intuitive UI. And you will also see when we launch MBOS 1.0 next year in the CLA. But the precursor to that is MBOS 0.5, which we actually already launched in the new E-Class, where we have programmed the complete infotainment domain ourselves. It’s probably the biggest digital in-house product that we have ever made.
We work with the best. Yes, we’re integrating Google Maps. In fact, we are developing with Google the next generation of what a map in a car married to the driving-assistant system should look like. [It’s a] fascinating product where the best of the Google engineers and the best of the Mercedes engineers can throw their expertise together and take that to the next level. I fundamentally believe that holistic customer experience is best done by us, and we will serve you. Then, there are, of course, other aspects to that. If you get a Mercedes product, I assume you have a Mercedes me ID, you have the app, you have everything. You can take that ID with you to several cars.
My wife and I actually have our profiles in both our cars. When I step into my wife’s car, the car recognizes me, and it puts the seat in the right position. It turns down the air conditioning a little bit. She likes it a little bit warmer. I like it a little bit colder. It puts on my favorite music station, whatever it is. My tailor-made suit — my digital tailor-made suit and physical suit — adapts to me. All of it is integrated. Your personal profile with your privacy (you choose your privacy — it’s another very important thing for Mercedes) is in the cloud and is available. You don’t want to rip one limb of that body out and give it to somebody else. I fundamentally don’t think that’s the right thing to do.
And, of course, we want to keep the customer interface with you. There are so many reasons why we’re doing what we’re doing, but we’re not fundamentalists to say, for some reason, we’re not going to allow a customer to use Apple CarPlay if that’s what they choose to do. We have Apple CarPlay. We have Android Auto. If, for some of the functions, you feel more comfortable with that and will switch back and forth, be my guest. You can get that, too. But to give up the whole cockpit head unit — in our case, a passenger screen and everything to somebody else — the answer is no. You’re stepping into your Mercedes cocoon, your Mercedes rolling living room, and the furniture and the digital stuff are from Mercedes. Welcome to Mercedes. That’s it.
There’s a lot of concepts in there. This should have been the first question because I’ve got a whole hour of questions just to follow up on all that. Let’s start with mapping, which, to me, feels like once mapping plus autonomy come together, a lot of the car market will change around it. So, you get in the car, you tell Google Maps, “I want to go here,” and the car drives itself there on whatever timeline. That could be five years from now. I don’t think it’s tomorrow, but on some timeline, this is where the industry is headed. At that point, the user interface in front of you — the screens, the infotainment — becomes what you’re doing. You’re in competition with the phone because people will just pull out their phones and play on their phones or the car goes wherever it goes.
To make this happen — to even get to the place where you’re in competition with a phone like that — you need a mapping system. You need people to use the inbuilt mapping system of the car. And right now, people use CarPlay for messages, podcasting, music, and mapping, so you’ve got to compete with the mapping. Is that why you’re working with Google? To get people out of using CarPlay for mapping?
I think, in terms of customer experience and use cases, obviously, if you’re in a car, you’re probably going somewhere, right?
Oh, by the way, I’ll add for EVs, you need to map your charging and pre-condition the car for charging.
That’s a given. We have that today. Most of the things that I’m talking about, we have today, but we’re taking it to the next level. So, if you’re in a car, you’re probably going somewhere, even though that’s maybe another chapter of the podcast. A lot of customers in China and in Asia actually spend time in the car just to spend time in the car, and I’m going to get back to that in a second. “Me time” in the car is kind of the new thing. So, we are going to create downright the best “from A to B” digital experience that you can think of. And it’s obvious — you said it yourself. If you integrate that with other functions in the car, driving assistant — can’t reveal too much here. It’s almost like I’m having my presentation on the next-generation vehicle here. It’ll be too soon, but we do speak about this.
So, yeah, stay tuned. It’s great. Now, it’s about to get even better. But here’s another thing: I love my smartphone. You mentioned Apple. I have Apple. I have a MacBook and everything. I think Tim Cook and Steve Jobs before him have done a fantastic job over the last many decades. So, I’m an Apple fan through and through. I watch movies on my iPhone on a train or when I’m waiting at an airport or whatever I’m doing. But when I get home and I want to watch a movie, I watch it on my fantastic TV — a much bigger screen — laying on my sofa. Now, look at your car, especially when you’re in autonomous mode. We have the first level three baby steps in the market already, and the next step is to raise the speed of level three.
I test-drove a prototype here in Germany to raise the speed from 60 kilometers an hour to 95 kilometers an hour. Wow, then it starts getting interesting, right? It’s like you can put yourself in the right lane and be in a train. If I then want to watch a movie, what do I pick? My fantastic, blow-your-mind, very big Hyperscreen in the car like in my living room at home, or do you pick up my phone and watch that small screen? For me, that decision is an absolute no-brainer. If I want to have a video conference, maybe I don’t want to watch a movie — I want to have a video conference. I want to be able to see the PowerPoint presentation and see the person that I’m talking to. I could go on and on and on and on and on.
There are so many reasons why you would do this. If you look carefully at the concept car of that CLA that we showed in Munich, look at what the passenger is going to get. We were the first ones with the new E-Class that I mentioned before that now got certification in Europe that the passenger can watch a movie while you’re driving. You’re not allowed to have driver distraction and all that, but if the driver directs its view to the screen and starts watching the movie, it turns black. So, you have eye tracking for stuff like that. There is an explosion of use cases going on here, and the real estate in the car is that your 55-inch TV — it’s not quite that — but it’s going to be, in Mercedes, a very attractive offering to take care of a lot of those use cases.
So, the bet here — and I’ve heard this from a lot of car manufacturers, I heard this from you the last time we spoke — is that people will be drawn to the biggest screen they can get and that the computing environment of the big screen in the car will be so good that it’s competitive with the phone. And you’ve already begun some of that stuff. There’s Zoom in a Mercedes right now, I believe. You have these applications. You have these abilities.
But it’s not only that. If I go back to that, you talked about marrying the map to the assistant system — well, you have to have the car domain to be able to do that.
That’s not a trivial thing, by the way.
I believe you. I have no reason not to. But I look at your specific example of watching television, and I look around, and I see most people have stopped watching [television]. They were watching their phones, even in their own homes. They turn on Netflix, and they look at their phones at the same time. You see that behavior is incredibly hard to crack. And then, on top of it, part of the bet in all that investment is that you’ll be able to monetize the experiences in the car the way that the phone platforms have been able to monetize, the way that Apple and Google have been able to monetize. Is that playing out? Do you see people using your app store, using your e-commerce abilities, using the platform in a way that suggests you can get to the mobile market style monetization? Because I listened to Mary Barra at GM, and that’s the bet that they’re making. Then I talked to Jim Rowan at Volvo, and he says, “That’s crazy. We’re never going to have the scale to do that. Just car plate it.” And so there’s a pretty big extreme in this industry.
Some things you can monetize — some things you can’t. We had a tech day on Mercedes-Benz operating system, MBOS, in California at our Sunnyvale tech hub two years ago where — and you can watch that presentation, I’m sure it’s out there somewhere — we talked about that monetization. What can you monetize, and what can’t you monetize? We take, I would say, a sober view on how much revenue and profit pool you can drive with that. I don’t think it would be realistic to say, “Oh, this is going to be tens of billions of revenue,” and so on and so forth. And that’s not what we said. But everything that gets more and more close to the original know-how and IP of the carmaker, where you can monetize, will be things like different types of assisted driving, autonomous driving — not go crazy, but in the project that we’re working with Nvidia [on] to develop the next generation autonomous drive for our cars, you’ll have a lot of different functions. And yes, of course, you can monetize that.
We have been monetizing driver-assistance systems. We are the inventors of driver-assistance systems. We have been monetizing it now for almost 30 years. So, in the ADAS [advanced driver-assistance system] domain, there is more. In the infotainment domain, much of it will be just part of the car. It’s just part of the car. But there are things that you can throw in there as well. You can turn your car into monitoring your driveway and be almost like a burglar alarm and stuff like that once you have all the sensing and so on. So, there are pockets here and there.
But also, we talked about the insane Hyperscreen — it’s a digital sculpture. It’s not a screen — it’s a beautiful object. It’s a piece of art. We also sell the hardware in the car as well. So, it’s a combo of that. All in all, we are monetizing, but I think also you need to be realistic. We’re not turning ourselves into a mobile phone company; that’s not who we are. We’re not in primary competition with Apple or Google or whoever around the world in that. In fact, we have great partnerships with these companies and work very well with them.
Look at what we did with Apple Music and Dolby Atmos on the music experience: if you’re into music, that is concert hall quality. I’ve never heard music in a car at better quality. If you close your eyes, you’ll think you are at the Elbphilharmonie in Hamburg, which is supposed to be the best acoustic building in the world or something like that. It is great. So, it’s not the issue, and we don’t think in those terms. Take care of the customer. Create the best digital customer experience. Partner with companies like Google and Apple where it makes sense for them and for us. But be the architecture of your digital environment in the car. And as I said before, it’s no less than the brain and the central nervous system of your vehicle. You can’t outsource that.
Let’s wrap up and talk about AI. We’ve been talking about monetization and costs and what you can monetize and what you can’t. There is ChatGPT in the Mercedes car, in the Mercedes operating system right now, in MBUX. It feels like it’s just there to be cool. It’s a cool thing to add to an operating system like that. There’s no business model that really works for ChatGPT, right? Or for any of the big LLM-style AIs. Next to that, you have autonomy, which, at some level, people are going to start charging subscription services for. That seems to make sense because of the ongoing mapping and improvements you need. Do you see a path forward for the ChatGPT-style AI in the car? Because the whole industry is confused about that.
Definitely. The next level is this — and we actually showed it at the CES in Vegas in January. You’ve got to now start training that AI to be more specific to your environment. You take the world, the knowledge of the world. Of course, you don’t say no to that. The knowledge of the world is — I think I used the analogy last time we talked about this: This is your Jarvis, your Iron Man. And Jarvis knows everything. It is like your digital brain that is helping you negotiate any situation, but you need to now train your Jarvis for the Mercedes world to make it more relevant for everything that is going on in the car. And we are working on what we call the Mercedes virtual assistant, which means common knowledge plus specific knowledge to give you ultimately a Jarvis in the car. That’s where it’s going.
That’s a great vision. But right now, ChatGPT hallucinates. It is frequently wrong. I don’t trust it to do a lot of things. In the general case, LLMs have, I think, hit a ceiling, and we’ll see if that ceiling gets higher over time. In very specific cases, you can see how they’re useful. You can see how people are tailoring them and focusing them. Jarvis is a very general case. How do you go from “We have it in the car today; we need to tailor it to the car” all the way to Jarvis and, by the way, pay the fees necessary? I don’t want to pay another $20 to use the Mercedes assistant in my car. Which is how much ChatGPT costs today.
Step by step. It’s back to the customer experience. Maybe you want to have very specific answers on the destination you’re going to or the type of restaurant and what they have on the menu. You navigate automatically to that. All of those things — specific questions that don’t yet work today but which would add a layer of convenience — that’s the direction. That is absolutely the direction. Of course, our ChatGPT integration in the cars right now is a beta. But if you don’t start learning, you’ve got to jump and start. And we tell our customers that right now, that is beta. I use ChatGPT also for a lot of search cases, but I’m also careful if I feel that the answer is a little bit of gobbledygook. You need to be a semi-intelligent interpreter of the answer as well, of course. So, we are going to start training a Mercedes-Benz virtual assistant and gradually add use cases for you.
Do you think this is something where you’re going to look at different model providers over time? You’re going to build your own model? You’re going to stick with OpenAI? What does that look like for you? Because that’s a pretty key dependency here for the product.
I know that, but competition is rising in that space now. There’s always a company that’s going to be the first one out. I don’t know how many billions and billions and billions are going into this by many, many players, so I can see how competition is starting to rise here now. And we do what we always do: we assess the options and pick the partner that we think is the best partner.
That’s great. Well, Ola, you’ve announced at least two cars here today, one a real car and one that you promised to come back [to share] when it’s real. You revealed some of your roadmap, and you’ve told us that you’re building Jarvis. I think this is a pretty good episode of Decoder. Thank you so much for coming on the show.
Thank you for having me, and I’m looking forward to that 2026 podcast.
Decoder with Nilay Patel /
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