With our sustainable business strategy, we at Mercedes-Benz have set the course for the future mobility. It is clear to us that a holistic change requires linking and cooperation between economy, society and politics.
Making our path to climate neutrality a global model for success
With Hildegard Müller
Plans call for Germany’s transport sector to emit almost 60 percent less CO2 in 2030 than in 2020. In this interview, VDA President Hildegard Müller explains what, besides technology, is needed to achieve this goal.
President of the German Association of the Automotive Industry (VDA)
Almost every fourth new car registered in Germany in 2021 was an electric vehicle. Is the sector now on its way to achieving its emission targets?
This is a welcome development! However, it’s long been a question of how rather than whether we will achieve the emission targets. The automotive industry, as organised in the VDA, is clearly committed to achieving climate-neutral mobility no later than 2050. We are working hard to drive this transformation forward! The German automotive companies will invest more than 220 billion euros in research and development between 2022 and 2026 alone. And in the years ahead, German manufacturers will offer over 150 electric models on the market, meaning that there will be something for every need. There were many very interesting premieres at IAA Mobility in Munich, including some from your company. I’m therefore very optimistic about our industry, despite the many challenges it faces. Over the past two years, we have also been impacted by covid-19-related one-off effects. On the one hand, people preferred to have their own cars, while on the other, private transport as a whole has decreased.
But then again, the growth in online commerce has led to more shipments.
That’s how it is. That’s why we will have to continue to keep an eye on all of the transport sectors. Moreover, we urgently have to make headway with the digitalisation of Germany’s transport system. If traffic flows were digitally managed, for example, we could reduce CO2 emissions considerably in cities and at the same time make driving even safer, more comfortable and user-friendly than it already is. This shows how complex the topic is.
Ambitious targets require customer-oriented solutions
Will we accomplish the mobility revolution by 2030 nevertheless?
I’m in favour of honesty. This will be hard work. As the automotive industry, we’ll do our part. We’re reorganising our production processes, converting plants and focussing clearly on electric mobility in cars — all of this requires a huge amount of effort from the companies, but also from each and every employee. For heavy-duty transport, hydrogen offers a further option when it comes to electric mobility. All of these activities will help to pave the way for climate-neutral drive systems. And as I mentioned, a lot is also being done with regard to digitalisation. The government must keep its promises and create a legal framework and a digital infrastructure so that Germany can become the international leader in this field. The automotive industry has many innovative ideas to offer.
To what extent do you think industry should be responsible for accelerating the ramp-up of climate-friendly drive systems?
Germany’s new government has set ambitious targets. Putting 15 million electric cars on the road by 2030 means that one out of every two new automobiles registered between 2022 and 2030 must have an electric drive system. I think industry is responsible for making the best, safest and most efficient climate-neutral automobiles as well as for staying competitive and providing customers with good solutions. At IAA Mobility in Munich, we showed that electric mobility is fun. However, this drive system won’t become dominant until people can recharge it anywhere and anytime. Unfortunately, a lot of work still needs to be done here. As of today, the pace at which the public charging infrastructure is being expanded will have to increase about sevenfold if the target of one million charging points is to be achieved by 2030.
At the same time, 1.5 billion vehicles with combustion engines are still on the roads worldwide. How do these vehicles fit into the concept of climate-neutral mobility?
That’s a very important point. We also have to include the existing vehicles so that they can contribute to climate protection, too. This applies especially to parts of the world where the preconditions for electric mobility won’t exist for a very long time — because there’s no charging infrastructure, for example. That’s why the VDA is calling for a greater inclusion of synthetic fuels and for a mandatory utilisation rate. We also have to discuss the social consequences of this transformation. Not everyone will be able to afford a climate-friendly new car in the years ahead. I reject the idea of making mobility expensive or even banning it; that would only cause social conflict. Mobility means participation. That’s why we also have to explain at the socio-political level how we want to make the mobility of the future sustainable. This transformation will only succeed if we get people’s support and avoid divisiveness and conflicts.
The mobility of the future also includes making people the focus of inner-city planning. What role should cars play in public spaces in the future?
The focus is on human beings and their various needs. However, these needs differ. The VDA commissioned an Allensbach survey, which showed that the people in Germany aren’t tied to any specific mode of transport. Instead, they want to remain flexible and independent. This applies to commuting to and from work as well as to the organisation of leisure and family activities. As I said, mobility means participation. Moreover, we shouldn’t discuss the future of mobility exclusively from the standpoint of city-dwellers. Many people live in rural areas and feel they’re being ignored in this debate. This applies especially to people who have no alternative to driving a car because there is no adequate connection to local public transport.
Incorporating viewpoints from rural areas
It’s all a matter of having the right mix. You can see this everywhere that a successful mobility revolution has already taken place — in Copenhagen for example, where the way various modes of transport could best be interlinked was determined for each district, step by step and in cooperation with the residents. This topic also has to be addressed holistically in Germany. This means that we have to include logistics, public transport and the different perspectives from urban and rural areas. This requires a constructive dialogue and the elimination of long-standing hostilities.
What do you personally understand by individual mobility?
That I can use any mode of transport that I want, as needed. I personally have a broad range of options, from walking and cycling to driving a car, of course. I just as often take a train to go on business trips, and I fly when necessary. The way I use the various transport systems depends above all on what is offered. Sometimes it’s also a question of the weather, but it mainly hinges on the options that I have at my disposal. When choosing which system to use, I make a point of travelling in a climate-conscious manner. I’ve been driving a hybrid vehicle for years. For me, this car combines the best of both worlds. My family is distributed over a wide area, and there are often gaps in the charging infrastructure that prevent all-electric vehicles from easily travelling along every route.
Do we as consumers bear a responsibility to future generations to give up some of our usual comfort in favour of climate protection?
We definitely bear a responsibility. However, whether it has to entail less comfort still needs to be discussed. The United Nation’s 17 Sustainable Development Goals are interlinked, and social responsibility is expressly one of them. That’s why I’m firmly convinced that climate protection, which we consider to be important, has to be combined with growth and prosperity. This is necessary not only to get people to accept it, but also to make our path to climate neutrality a global model for success. We have to show other countries that taking climate protection and sustainability goals seriously doesn’t lead to less prosperity. If that’s the case, people will copy our model, which has to be our shared goal and one that benefits the climate.
Strengthening consumer freedom
Let’s get back to the consumers. Needless to say, everyone has to review their own behaviour. Every consumer has the freedom to buy the products he or she wants and they can, for example, take sustainability labels into account for their purchasing decisions. We cannot delegate this responsibility; at the same time, the government has to empower people to take it on. The government also has to establish an appropriate balance for people who don’t have a choice because their budgets are too small. That’s the only way we can get broad swathes of society to accept such changes.
However, in addition to acceptance, it’s also a question of ensuring that consumers act in a sustainable manner. How do we close the gap between people’s understanding and their actual behaviour?
Although I generally don’t like slogans, I think there’s one that fits this case very well: You’re responsible not only for the things you do but also for those you don’t do. We should all make some effort to follow this maxim every day.
To conclude, I’d like to ask you to please finish the following sentence: For me, a car primarily has to be…
It has to be safe. And comfortable. Moreover, it has to reconcile mobility with climate protection.
Thank you very much for this interview, Ms Müller.
has been President of the German Association of the Automotive Industry (VDA) since February 2020. She was previously Chief Operating Officer Grid & Infrastructure at Innogy SE. Prior to that, she was Chief Executive Officer of the BDEW e.V. (German Association of Energy and Water Industries) from 2008 until 2016. She was a member of the German Bundestag from 2002 to 2008 and a Minister of State to the former Chancellor of the Federal Republic of Germany Angela Merkel from 2005 to 2008.
Innovations have always played a key role in the luxury segment
WITH Guido Görtler & Christopher Gerdes
The launch of the all-electric luxury saloon EQS and other electric models noticeably accelerated the transformation at Mercedes-Benz in 2021. Luxury and sustainability — is this a combination that goes well together? Definitely, according to Christopher Gerdes and Guido Görtler from the Mercedes-Benz strategy team.
Head of Strategy Execution at Mercedes-Benz AG
Head of Strategy Development & Strategy Intelligence at Mercedes-Benz AG
In 2021 Ola Källenius announced a strategic shift from electric-first to electric-only. Why?
Guido Görtler: This was the outcome of a development process. For years we’ve been working not only on electric drive systems but also on the production of electric batteries. In 2014, we put the first all-electric Mercedes-Benz, the B-Class, on the road. Today we are represented on the market by electric vehicles in various segments, which we are constantly refining. One highlight was the successful launch of our new Mercedes-Benz EQ models last year. After all, a market launch of this kind is backed up by a complex interplay of planning, design, development work and production, all the way to the preparations at our showrooms. The main new aspect is the consistent decision to focus our resources entirely on electric mobility. With this clear approach in mind, we’re working on fulfilling our full potential, especially in the area of vehicle architecture and drive technology. The enthusiastic response of our customers to the EQS shows that this strategic step is paying off. Incidentally, this luxury saloon is built on a platform that was specially designed for electric vehicles.
Did the good feedback on the market motivate you to promote the transformation of drive systems even faster and more systematically?
Christopher Gerdes: Christopher Gerdes: It certainly helped. But ultimately, there are various aspects that have accelerated this development. Progress in technology is central. Our customers’ visibly growing demand for emission-free vehicles in the luxury segment had an impact on the speed of the transformation of drive systems. Of course, one important driver of this transformation are the legal regulations, including the discussions of driving restrictions for vehicles with combustion engines. And not to forget the downward trend of the battery costs. All of these developments are reflected in the capital market. Companies that are relying solely on electric vehicles account for more than a third of the market capitalisation among the top 25 OEMs. Investors are not only endorsing the transformation, they reward and encourage it.
An affinity for electric vehicles in the luxury segment
Guido Görtler: In particular, in the luxury segment the demand for electric vehicles is increasing. We’ve noticed that our customers have a strong affinity for innovative drive systems and that they are ready to actively participate in the transformation to electric mobility. For this customer group, the entry barriers are usually lower — partly because they invest more frequently in their own charging infrastructure or because they’ve acquired a taste for electric mobility via a second car.
Speaking of luxury, is a luxury car defined the same way today as it was five years ago?
Guido Görtler: The perception of luxury is also changing constantly, and especially innovations play a significant role in this. As part of the mobility revolution, people are assigning more importance to recycled materials and technology-enabled safety. Some of our customers are even explicitly demanding such features. A sustainable electric drive system can be very well integrated into a luxury vehicle, and it emphasises its premium quality. We want to use this lever to accelerate the transformation together with our customers.
How soon will Mercedes-Benz occupy a place among the top-ranking electric vehicle manufacturers?
Guido Görtler: With electric-only we’ve defined a clear plan. In 2022, we will be offering an all-electric vehicle in every segment. By 2025, we aim to have an electric version of every model. As of then, all new vehicle architectures will also be purely electric. We expect that this wide range of options will reinforce the current sales trend. In 2021, we sold over 150 percent more all-electric Mercedes-Benz cars than in the previous year. That’s a steep ramp-up!
Increasing expertise for the technological transformation
What are the biggest challenges you’ll face along this path?
Christopher Gerdes: We’ve been very successful with our combustion engine vehicles for decades. Leaving all this behind is a step that affects our company as a whole and every individual employee. We have to take this step together. With a strategic reorientation and planning, we have set the course for change. We now have to keep on developing the skills and know-how of our organisation — in every individual phase of value creation. Especially in the technology and development areas, we will continue to offer attractive jobs in the future. To this end, amongst other things we are building a competence centre for electric mobility at our main plant in Stuttgart-Untertürkheim — with a focus on battery and battery-cell technologies.
Guido Görtler: With regard to our employees, we ensure comprehensive qualification for the new tasks and at the same time recruit new talents and experts – for example in battery development, but also in the areas of software and chip technology. We are succeeding by systematically implementing our sustainable business strategy and creating new and attractive fields of activity.
Christopher Gerdes: The key challenge is to build customer acceptance and trust in new technologies — conveying that we are equipping our vehicles with excellent, mature technology. This technology is environmentally friendly as well as future-proof and convenient in daily use. The expansion of the charging infrastructure also plays a role here. This is an important prerequisite for a rapid market ramp-up. This means that the energy industry, politics and also municipalities, which often provide the space, must pull together here. After all, it’s not enough just to set up the charging stations. For us to be truly sustainable on the roads in the future, we need electricity from renewable sources and a smart electric grid to which the charging stations can be connected.
A focus on high-powered battery storage units
What’s the long-term outlook for batteries?
Christopher Gerdes: We need clarity about where we will get the huge amounts of green electricity that we need for the energy and mobility transition. As manufacturers, we also need to provide answers to the growing demand for electric batteries, the corresponding raw materials and their recycling at the end of their life cycle. Our goal here is the circular economy, because the need for energy storage units is tremendous, not only in our segment. This results in technological issues, for example the need for greater energy density. This is something our development engineers are already working on intensively. Moreover, batteries should be manufactured with fewer critical materials in the future. Our goal is to ensure humane working conditions along the supply chain and avoid environmental risks. In addition, the origins of the raw materials should also become more transparent. Last but not least, we as a company have to look carefully at how we invest — in other words, how we make sources of raw materials accessible, develop factories and buy sustainable energy and even produce it ourselves. All of these measures demand our resources, and of course, that is initially reflected in the price of our vehicles. That’s why we have to prevent mobility from becoming a luxury good that some segments of our population can no longer afford.
Where exactly do you see Mercedes-Benz’s responsibility in this?
Christopher Gerdes: We bear a substantial responsibility for shaping sustainable mobility, in the luxury segment and beyond. We’re convinced that we are living up to this responsibility through our current strategy. Mercedes-Benz has already contributed a great deal in this area in the past. We’ve developed, tested and implemented mobility concepts — for example carsharing, the fully electric smart EQ and electric delivery vans. Now our goal is to consistently electrify our entire product portfolio.
Guido Görtler: As a luxury car manufacturer, we also see it as our responsibility to actively participate in the public discourse on the future of mobility. At the UN climate conference in November 2021, our CEO joined the representatives of five other companies, more than 30 nations and a number of cities and investors who committed themselves to the end of the combustion engine. As a manufacturer, we at Mercedes-Benz already set ourselves much more ambitious targets in 2019 with our Ambition 2039, which we have since even tightened up again: we want to completely switch to electric cars by the end of this decade, wherever the market conditions allow. This strategic step from electric-first to electric-only not only accelerates the transformation — it also underlines our claim: to be a pioneer and to keep setting standards that promote innovation across the board and enable technological progress.
Responsibility for the transformation of drive systems
However, in the decades ahead there will still be a worldwide inventory of vehicles with combustion engines…
Christopher Gerdes: Of course, every vehicle naturally has a certain lifespan. And we also have customers who very consciously think about when it makes sense for them to buy a new car. Those who can generally afford to change may be persuaded by the lower operating costs of electric vehicles: these are about a third lower than the operating costs of comparable combustion engine vehicles. In addition, it can be assumed that in the future, emission-free vehicles will receive even more preferential treatment in public spaces than they do now. This might mean free access to green zones in city centres or to centrally located parking areas.
Guido Görtler: In my opinion, consumers also bear a responsibility. Emission-free driving is an important pillar in the struggle against climate change. And that, in turn, is a challenge for our society as a whole. We’re talking about changes that every individual can and must help to shape — otherwise it won’t work. We as a company have a responsibility to develop vehicles that meet the criterion of climate neutrality throughout their entire life cycle. We do this by implementing our sustainable business strategy and putting electric-only on the road.
How confident are you that we as a society will successfully implement the mobility revolution really quickly and systematically?
Guido Görtler: More than confident. In my view, electric mobility is an outstanding technology. A CO2 neutral, efficient drive system and impressive performance combined with silence and more space within the vehicle increase not only comfort but also driving pleasure. And this is exactly what it’s all about: awakening desires, creating added value and thus helping electric mobility to quickly make its breakthrough as a standard drive system.
Christopher Gerdes: There’s no alternative to climate neutrality. Consequently, all of us are determined to travel the challenging route of the transformation. If society, government and companies all pull together in this respect, we can achieve a great deal.
is Head of Mercedes-Benz Strategy Execution and has been employed in various positions at Mercedes-Benz Group AG since 2003. He took up his current position, where he is responsible for the management of the Mercedes-Benz Strategy, in August 2020. He holds a diploma in business administration from the Verwaltungs- und Wirtschafts-Akademie, Stuttgart as part of the dual study programme at the former Daimler AG.
is Head of the Strategy Development & Intelligence department at Mercedes-Benz Cars. Here, he is responsible for the strategy process and trend observation in the business environment. He worked in various positions in the Product Strategy, Finance & Controlling, Performance Controlling and Divisional Strategy units at Mercedes-Benz Cars and Vans from 2009 until February 2021, before he took on his current post. Christopher Gerdes studied politics and management at the University of Konstanz and in Istanbul and Shanghai.