Daimler Chief Reflects On How Tesla Has Put a Shine On Electric Cars’ Image

Daimler Chief Reflects On How Tesla Has Put a Shine On Electric Cars’ Image


Daimler Chief Reflects On How Tesla Has Put a Shine On Electric Cars’ Image

Tesla has broken the “granola image” of electric cars and its limited audience, opening doors for competitors like the EQ subbrand, Daimler’s chief said.

During an interview last week at the South by Southwest (SXSW 2017) conference in Austin with German magazine T3N, CEO Dieter Zetsche reflected on the German automaker’s 2009 investment in Tesla, the evolution of the startup, and where the all-electric EQ brand stands.

While Daimler’s investment in Tesla led to some collaboration, it took the German automaker until the Paris auto show last September to launch its EQ subbrand. Tesla has helped break the mold of how consumers had previously perceived electric cars, making the market more viable for Daimler, BMW, and others.

“Tesla has certainly set a positive impulse because they do not say electromobility is renunciation [of power] and about ‘granola image’, but on the contrary: that is power and enthusiasm. And that is the right way,” Zetsche said.

Zetsche was referring to the limited market potential electric cars had for many years, which carried over into the launch of the first production-level EVs.

Automakers would build a very limited test run to try it out – and to comply with new regulations – as was the case in California during the 1990s. This could justify their argument that there was very little demand in the market for electric cars.

Tesla started breaking that mold with the February 2008 launch of the Roadster electric sports car. While it sold only a very limited volume, it did impress owners and EV fans enough to build momentum for the Model S launch in summer 2012. It helped open the door to more consumers becoming interested in EVs as a viable powertrain, which had also been supported by the launch of the Nissan Leaf and Chevrolet Bolt in late 2010.

Daimler’s 2009 investment of $50 million in 2009 for about 9 percent of the startup led to the company selling its stake in 2014 for a healthy $780 million. CEO Elon Musk has acknowledged the automaker for saving Tesla during a financial crisis.

“At the time, the investment was relatively important for Tesla because they had some difficulties at the time to go to the next financing round. I believe the money that we have invested and the other investors that followed helped Tesla back then,” Zetsche said.

Like Toyota’s investment in Tesla, Daimler had only used its stake for a few projects. Before the stake was sold, Daimler had tapped into Tesla’s electric powertrain for variations placed in electric Smart cars and the Mercedes B-Class.

As for its new EQ sub-brand, the automaker says this is the flagship brand for the future of advanced, automated electric mobility. It also may have been pushed forward by the Volkswagen diesel emissions cheating scandal, and Tesla getting about 400,000 pre-orders on the Model 3 soon after its launch nearly a year ago.

The EQ electric SUV should be hitting the market in 2019, and the company will also be converting its Smart car to electric-only for the U.S. market.

While Daimler won’t be building its own Gigafactory, the German automaker does see the necessity of investing in the right battery technology for its lineup.

“In the coming years, however, we are investing a billion in our battery production. By 2025, we will be launching more than ten purely electric EQ models on the market. For this, we are investing ten billion euros (about $10.8 billion),” Zetsche said

Daimler expects battery electric vehicles to make up 15 to 25 percent of its vehicles sold by 2025. BMW announced that same share by that year, as well, though that total will include plug-in hybrids and Daimler is aiming at battery electric.

Both automakers have been alarmed at Tesla’s growing presence in the overall luxury space; and increasingly stringent emissions rules in Europe and China.

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