CEOInterviews.AIIs Mercedes Turning "Electric Only" into "Electric Maybe"? - Britta Seeger, Mercedes Head of Sale...

B

Britta Seeger38:10

You can't prepare for everything. We don't know what will happen. I believe we're agile, we engage with it, we're open in interaction and discussion, and we want to spark these discussions early to handle things as best we can.

I

Interviewer38:28

But the reality is that in China, customers are increasingly choosing domestic brands over foreign ones. How do you address emerging competition?

B

Britta Seeger38:41

We face new competition the way we always have. This isn't the first time new competitors have appeared on the horizon. We dealt with Japanese manufacturers who entered European and American markets. Then came Korean manufacturers—the Hyundais, the Kias. We're in a very competitive environment, so you always observe the competition. We're doing the same now with the Chinese, but we also observe the US—we can't forget that new players are emerging there too. It's our normal practice to stay curious, especially in sales, to ask what does it mean, what's emerging, what do we see in China. And what's interesting behind the message we keep hearing about China is that the market is growing from the bottom up. The big growth of new players is happening in price segments where Mercedes is not and will never be present.

I

Interviewer40:39

Was that specifically in China—was it a problem for BYD and NIO, who received substantial price cuts not too long ago, given that the market, as you say, grows from the bottom up? When I was last in Shanghai at the auto show, I photographed from a highway overpass and colored all the electric vehicles green and all the Chinese vehicles blue—there wasn't much else to see. Was that a wrong approach for the Chinese market, entering with luxury electric vehicles?

B

Britta Seeger41:19

I wouldn't say it was a wrong approach. What we see is that the willingness to drive an electric vehicle varies across different regions and segments. In China, the willingness to switch to an EV is less pronounced in the segments where Mercedes is strongly represented. We also need to consider what drives the Chinese EV buyer. On one hand, you can more easily obtain a license plate for an electric vehicle than for a combustion car—a major purchase incentive. On the other hand, the supply of affordable EVs has grown disproportionately, so getting an EV license plate was also financially attractive. These factors led to much higher adoption in those segments than we've seen for our clientele. For our customers, getting a license plate isn't as challenging, so their willingness to stick with combustion vehicles remains greater.

We need to carefully analyze these dynamics, both in China and in all other countries—we'll certainly get to Germany and Europe as well—at what speed will customers continue switching to EVs?

I

Interviewer43:03

Do you think it would have been easier with the EQS, which wasn't exactly a runaway success in China? All the large European EVs—the i7 included—aren't exactly flying off the shelves. If you had to do it again with the MMA platform, entering with a CLA-level vehicle, would that have been the better approach?

B

Britta Seeger43:29

You can't know that beforehand. But we are present—we have the EQA and EQB on the market. Relative to its segment, it performs quite well, as it does in Europe. We're very satisfied with the success of the EQA and EQB. In Europe, there's strong customer demand—the vehicle fits exactly into customer needs.

What we see with the jump to electric is that many who can afford it start with a second vehicle to try it out, to say maybe this isn't the car I'll use for longer trips. I have less of that range anxiety that was present at the beginning and may still linger in some minds—what happens if... I must say, I've been driving purely electric for three years now, long distances and short distances. If you're traveling long distances on European highways, you don't need to have range anxiety.

What you do need to do—you have to plan your route, find the highest-performance charger with 350 kW so you can get back on the road quickly. We have the range assistant in our EQ vehicles to help. But beyond that, you don't need range anxiety because the highway charging network is now so good. It's almost at the cappuccino-break level—you plug in, take a short break, and when you come back after 15 minutes, you have 80%. I really hope we can convey through this podcast that range anxiety, while I understand the hesitation around this change, is simply not necessary.

I

Interviewer45:30

Personally verified, personally confirmed. We discuss this regularly in the podcast. We've done major features on the range assistant, etc. It's clear that driving to Croatia might be trickier, or heading east toward Poland or Czechia into less urban areas—but that's understood. Now, you've long championed 'electric only' as a major strategy, and it's somehow morphed into 'electric maybe, somehow, sometimes'—you're doing combustion engines again somehow.

B

Britta Seeger46:19

I must firmly contradict that. 'Electric only' continues to be the slogan we operate under. The direction is totally clear—the full focus on investments, on building up and preparing to bring electric vehicles to market. Full steam ahead. We're not moving a single millimeter away from that because the future is totally clear.

What you're perceiving as a 'maybe' is about the speed—which has apparently slowed. But honestly, this is our response to what we're seeing. What do you do as a well-managed company, as a representative of a brand you want to keep successful long-term? That's why we continue pursuing this strategy—there's no way around it—to deliver the best electric vehicles in every segment by the end of the decade. Full throttle. When we see that markets and customers are slower to show willingness to switch, you have two options: you continue your strategy and progressively lose customers and markets—which I don't find attractive—OR you cleverly say you'll continue the one strategy clearly but also prepare to keep the vehicles currently in your portfolio available through the next decade.

That's what we've done. We projected early in this decade that 80-90% would have switched to electric by the end of the decade. We don't see those numbers. Nobody sees them. And while we've talked about customers, we mustn't forget that many government interventions have led to customer uncertainty.

The discussion alone—and everyone feels this—if you compare, five years ago the general tone in major societies was 'this is what we need to achieve.' Governments were supportive, telling customers and citizens this is where we're heading. The EU made clear guidelines. What people now feel is that something is happening where they feel left alone. Looking at Germany—when Germany essentially switched off customer support over a weekend last December, one week before Christmas. What we discuss with the government is one thing, but what I see on the customer side is deep uncertainty, and of course an immediate impact on their wallets. People made decisions under completely different premises, and we feel this uncertainty. When suddenly the tone is reversed, questions arise: will charging infrastructure still be invested in? What will happen?

I

Interviewer50:06

But there is a lot being invested in charging infrastructure. I personally don't buy the range anxiety argument anymore. But what we're talking about is perception. When we have the chance to engage with customers and have the conversation, we make progress. We know 80% of customers who drive our EQ vehicles today would never drive another car again—they're that enthusiastic.

B

Britta Seeger50:38

What we want to achieve together is that more people take that step. I still believe two things are necessary: first, a highly attractive product offering that addresses the things where customers feel uncertain—namely charging speed and range. We need to make offers there, and they will improve through technology and innovation. All new vehicles will have better range and charging speed than predecessors. Second, we as a company stick to the strategy, but we also need clear, secure framework conditions for our customers so they know: this is the right thing to do, and I'm being supported on this path.

I

Interviewer51:21

I have two follow-ups. First, since you mentioned feelings—what feeling do you get when you hear the word 'technology openness'?

B

Britta Seeger51:32

The answer needs to be more differentiated. Given where innovation funding is flowing today, for private transportation it's clearly electromobility—that's where the highest innovations are, reducing battery costs, removing critical materials. But I do find the discussion about e-fuels valid for vehicles already on the road. If the EU bans new combustion registrations in 2035, we still need an answer for all vehicles out there. Nobody's going to ban diesel or gasoline in existing cars. There's no refueling ban. What I was referring to is: what chance do we have to do something good for the environment if we offer alternative fuels for these vehicles? That's an economic decision, but let me ask you—what's your personal view on technology openness? Do you think it makes sense to pursue e-fuels, as is being pushed politically in many places?

I

Interviewer53:08

At least my perception is that there's a lot of discussion about it.

B

Britta Seeger53:10

And I'm somewhat glad, because I believe technology openness is important for different mobility applications. As you know, we were closely connected with our truck colleagues who also build electric trucks—Alex Block was recently traveling with one. But electric trucks won't be the right answer for long-haul transport, so hydrogen fuel cells will certainly be a much better solution there. However, this technology isn't yet applicable cost-wise—we can't get the cost reduction right for private transport. If we ever achieved that, we'd still need to get hydrogen supply sorted. So I believe it's important—at least for now, we've decided to put all focus and innovation on electromobility. As I explained, removing all critical materials. Last week we opened our E-Campus in Untertürkheim, where we're investing millions to make batteries more efficient, lighter, with fewer critical materials, more range, more density. Focus helps. I believe for private cars, this is the right solution. For truck applications, I think we need to stay technology-open.

I

Interviewer54:43

Second topic: you mentioned the expired EV subsidy, which in my eyes primarily addressed the price issue. That implies EVs are simply too expensive. How much further do prices need to drop to become attractive again? The subsidy gave some manufacturers up to €12,000 off with special conditions—enough to make anyone bite.

B

Britta Seeger55:14

The subsidy—I see this not just in Germany but internationally—is support for people stepping into an EV for the first time, making that transition. But it's more psychological than truly necessary. It's something for the mind, which is what we've observed. The second point is that all market participants share the ambition—this is why I mentioned our E-Campus—to innovate and develop more affordable batteries. We still don't have cost parity between a combustion engine and a battery offering adequate range. So innovation must go into closing that gap, and that must be everyone's innovation drive.

I

Interviewer56:14

Let me just read into this to make it very clear: the currently weakening EV market, especially in Germany, will not lead to budget cuts at Mercedes in innovation, research, and development?

B

Britta Seeger56:36

Absolutely not. And that was never communicated that way. That's why I immediately contradicted the 'electric maybe' characterization. No. In spring of this year, for the first time we stated: we remain strategically focused, and we're opening tactical flexibility. That's what I illustrated—if consumer behavior develops this way, as a responsible board member of a business, you must ensure you position your business for the future as best as possible.

I

Interviewer57:14

Does this leave room to look globally for additional niches to occupy? Or is the focus now decisively on what's on the plan? Are you talking about product niches?

B

Britta Seeger57:39

Exactly. We're always ready for pleasant surprises, and we still have something coming.

I

Interviewer57:45

Okay, now I'm curious. But regarding focus—you recently had Achim Hartig here, who was with you for a long time. We see other manufacturers pushing digitalization hard. You're driving it forward especially in sales. The automotive industry has great difficulty digitizing itself—not just sales but the vehicle itself. Now you say you're spreading focus, making a tactical foothold for combustion—that all costs resources. The Swabian in me says: limited resources, I can't play everywhere equally well. Something has to give. Looking at what the market does—Chinese manufacturers trying to score with digital services—shouldn't the focus be on just two fronts: electromobility and digital services, service on demand, and not also pursue combustion and other topics?

B

Britta Seeger59:02

That's exactly what we're already doing very successfully. MBUX is also a great system—we've tested it multiple times on the podcast, a superb system. But there's room for improvement, which is why with the CLA launch we're introducing our Mercedes-Benz Operating System MB.OS, which opens even more opportunities for the future—enabling faster service launches, making it even easier for customers to purchase.

That's the idea—this business, in which we're already successful today even with a relatively small product portfolio, will grow with MB.OS. This will remain an ancillary business, and that's important and good because it contributes to the vehicle's attractiveness. I keep my vehicle fresh, we have countless ideas—I can even apply new skins to my vehicle. All these things will come, making it even easier for customers to purchase them. You keep your vehicle attractive as an owner, and it's important that we drive this forward and make it as easy as possible for customers. But it will never be as important as the vehicle sales business.

I

Interviewer1:00:32

You need, for example, an iPhone to use the App Store. Hardware is always the prerequisite for software. But how much revenue does Apple make with the 30% from the Store, for which they maintain the platform, do reviews—it's effort-intensive. Is 30% the right share versus the device? We know an iPhone isn't worth €1,000 in hardware, yet Apple makes an incredibly large share just by maintaining this marketplace without doing much value-creating work. Why don't you focus on becoming the platform where Spotify, WeChat, and all the others have to come to you? 'We have the world's best store, come to us,' so customers say 'I want all these cool services, that's why I have to buy a Mercedes.'

B

Britta Seeger1:01:47

That's exactly what we're doing. We already have Spotify in the vehicle. It took quite a while, but it's not our fault—two partners need to find each other. If you want to integrate a partner as easily and customer-friendly as possible, we have to achieve that together with Spotify. We were among the first to have Spotify integrated because we had to make it work together—get the interfaces right so it's as easy as possible for Spotify to plug into our platform. But that's exactly what I meant—you have to enable Spotify, but ideally you wouldn't just enable Spotify. The idea should be broader.

I

Interviewer1:02:26

But that IS the idea. That's why I'm saying with MBUX it's still challenging, which is why there's the next leap to MB.OS. It will be much easier there. You'll have Star Apps and can rapidly introduce local apps, because that's really the biggest challenge in the automotive sector—opening up to local ecosystems. The ecosystem in Turkey is fundamentally different from China, the US, or South Korea. You have the platform in MBUX, but it will be much easier with MB.OS next year—the idea of plugging into local ecosystems. Apps are the business—you bring them in. You mentioned service on demand—subscriptions. If we look at our readership and the feedback we get, that's where emotions run high, and it probably hits you the same way. In a build-to-order market, I think it's hard for customers to understand: I buy a vehicle that has certain hardware features, but I can't use them unless I unlock them in the system. I understand it can be a functioning digital revenue model, but how well is it actually being received? Is the market still very critical, or is it actually landing?

B

Britta Seeger1:03:59

I can clearly say: the logic must be that it provides added value for the customer to subscribe for the duration they drive the vehicle. Things built as hardware—you wouldn't subscribe to seat heating at Mercedes. But Apple CarPlay and similar things—if we're talking about truly digital services—you receive a software update that changes something in your vehicle. It's not like seat heating, which is installed. I must be very clear: an Apple CarPlay software update is not something where the customer says this is crazy.

I

Interviewer1:04:49

But your operating system updates too. The apps on my phone update too. And if I now say I get more performance on demand—the hardware is there: the battery, the inverter, the electric motor—it's all installed. And you say 'you're allowed to spin it faster now' or 'here's a software update.' Whenever something happens to your vehicle where you get a software update and can experience more features—where something actually changes in your vehicle—there you have the logic to offer it as a subscription. You can also get it lifetime when ordering the vehicle. All these options you offer, especially with MB.OS. You've listened and observed what initial attempts at the customer level produced, and you've set up the model so the customer has the full choice: try it for three months, it adds value so I'll keep it, I know this feature and want it lifetime, so I order it that way—like ordering a larger screen.

For all options to be held for the customer—understood. For digital things, I see the challenge. But for hardware things, we saw it with the 2G network shutdown: suddenly you couldn't deliver live traffic data for older vehicles. Those cars were five, six years old or so, and it's frustrating because a car has a lifetime of 15 years or more—maybe 100 years. Then this essential service, live traffic, gets shut off and Mercedes says we can't do it. And when you dig into the background, maybe it's because we don't want to buy a license or don't want to install an update module. With more digitalization—a concrete example that was perhaps difficult to handle, but this won't be the last time something goes away. VW had the issue with the ID where there was only a navigation app, and then they said they won't continue it because they don't sell that car anymore. You end up with a three-year-old app and no navigation. This will happen in the same mechanisms at Mercedes. How do you deal with it? Because it's a sales and after-sales issue.

B

Britta Seeger1:07:51

That's absolutely correct. We all experience this in our private lives. My iPad is still functionally perfect, but I can no longer use all the apps because not all apps are supported. It's frustrating—it's still a good hardware tool, but I can't use everything because the last update or new apps aren't supported. This is a challenge for all of us.

We've dealt intensively with this, especially in light of customer reactions to the 2G and 3G network shutdowns. Intense discussions, because the question we must ask is: what would it mean to take a different path? Honestly, we first spoke with the network operators, because they shut down the service—which frustrated us. Then for some models there was no possibility to do anything. We saw customer willingness to... and we made a decision that wasn't optimal for the customer, but technologically many of these vehicles had no alternative. It's frustrating. We know all hardware operators with digital elements face a major challenge: sustaining over lifecycles that match the hardware. It's an unsolved problem, and we all must address it.

I

Interviewer1:09:21

And hoping you find a technology that makes it easier going forward. But that means even currently it doesn't quite work? Because what's happening currently is also... when we face this problem again—it won't be exactly the same, no network shutdown likely in the near future—but we'll probably face a similar problem with other things.

B

Britta Seeger1:09:42

I believe the core question for all of us will be: as applications become more powerful, can the vehicle keep processing all this data over the next 15 years? That's the core challenge. Will the processor be big enough? Like with our computers—at some point your computer gives in when the newest Windows update comes. How do I design my platform? How future-proof is it? In all our product development, a key question is: how large do I size the processors for the future? If I want autonomous or semi-autonomous driving, how big must the processor be to handle all the data while the customer uses their applications? Processors will naturally become much bigger. Looking at what we installed 10 years ago—we're preparing for this future. That's why we work with Nvidia, the strongest chip manufacturer, to create exactly these prerequisites so the vehicle can continue serving our customer over its lifecycle as well as possible.

I

Interviewer1:10:59

Unfortunately, time has marched on and you also need to head out soon. We need to move to data processing—our podcast's signature segment: the either-or questions. A very fast form of data processing. Luca will give you options, and please choose spontaneously between the two.

B

Britta Seeger1:11:25

Oh, so this is about me as a person? Not what the company... no corporate perspective?

I

Interviewer1:11:33

Exactly—no stock-price relevance. As a spoiler for listeners: are you more of a streaming-service person or CD and vinyl?

B

Britta Seeger1:11:41

CD and vinyl.

I

Interviewer1:11:43

Ferrari or Tesla?

B

Britta Seeger1:11:45

Ferrari.

I

Interviewer1:11:46

Apple or Google?

B

Britta Seeger1:11:47

Apple.

I

Interviewer1:11:49

City living or old farmhouse in the countryside?

B

Britta Seeger1:11:52

Oh, I like it here. That was very quick. City living.

I

Interviewer1:12:02

Car or bicycle?

B

Britta Seeger1:12:07

Well, let me elaborate—during the week, car; on weekends, bicycle.

I

Interviewer1:12:12

When you're in the car—front or back seat?

B

Britta Seeger1:12:14

Preferably front.

I

Interviewer1:12:15

Are you a good driver? You have three children—would they say so?

B

Britta Seeger1:12:21

Yes.

I

Interviewer1:12:26

Regarding data privacy and terms of service—tinfoil-hat person or accept-all?

B

Britta Seeger1:12:30

Accept all.

I

Interviewer1:12:33

For an adrenaline rush—motorcycle or fishing?

B

Britta Seeger1:12:39

I'm not a motorcyclist, but rather motorcycle.

I

Interviewer1:12:44

Star Wars or Star Trek?

B

Britta Seeger1:12:47

Star Wars.

I

Interviewer1:12:48

Coffee or tea?

B

Britta Seeger1:12:50

Coffee.

I

Interviewer1:12:51

Steak or beef stew?

B

Britta Seeger1:12:53

Beef stew.

I

Interviewer1:12:54

Night owl or early bird?

B

Britta Seeger1:12:55

Neither.

I

Interviewer1:12:56

Alright, Britta—that was it. Really quick and sharp. That goes well for every guest.

Many thanks. I think we've learned a lot, heard a lot, understood a lot—especially what's happening with the luxury strategy. It's sunk in a bit deeper for me what that will entail. Luca will need a few more days to process that, I have a feeling. I think you out there, many thanks for watching, for listening. If you have a question for us, write to [email protected]. If you have a question for Britta—and we'll do this live now—we'll try to get that commitment to forward questions and get answers. On Spotify you can now also ask questions we can answer. By email at [email protected], on YouTube you know how. And otherwise: subscribe, bell, and the whole deal—you know why. Like, share, tell others. And I'll say goodbye.

I

Interviewer 21:13:52

Many thanks, and to you too. It was a lot of fun. Until next time. Ciao.

While you're still here—you just watched this video, so you're definitely interested in mobility and perhaps the mobility of the future and all the innovative solutions around it. I have good news: we have another big event at the end of September. The Auto Motor und Sport Kongress is happening again on September 24 and 25. We'll have many guests with really big names—Gernot Döllner from Audi, former VW chief Herbert Diess, Professor Johan Rockström from the Potsdam Institute for Climate Impact Research, Barbara Frenkel from Porsche, and Karl Thomas Neumann, former Opel and Continental CEO, now an investor who knows startups well. There are two days: day one is an AI conference where we invite many startups competing for a €100,000 prize for innovative mobility and sustainability solutions combined with artificial intelligence. If you want to know which startups are there, come to the Allianz Arena in Munich on September 24 and 25. We look forward to seeing you.