As the automotive industry moves towards the future of autonomous driving, carmakers are having to find new and creative ways to stay ahead and survive. At a roundtable discussion at the recent Frankfurt Motor Show, Daimler chairman and Mercedes-Benz head Ola Källenius shared some of the challenges Stuttgart is facing, and what its collaboration with previously sworn arch rival BMW will bring to the table.

The pressures of developing viable autonomous driving technologies, compounded by the trade war between the United States and China, is making life difficult for many companies. “This is probably the most exciting time, and at the same time the most challenging time for the automotive industry. On top of that, geopolitical and trade tensions are not welcome for any industry, and certainly not for a global car industry.

“That throws an additional spice into this dish here; if I could not have that spice, I would rather have preferred that. But it is what it is, and we have to deal with the situation. I’ve been in this industry now for 26 years, and I have never seen a time with as much uncertainty, but also as much opportunity as we have now. That is why it’s fun to be in the car industry, but not an industry for weak nerves,” he said.

Källenius adds that even though autonomous driving technology is expensive to develop, it could provide a substantial benefit in the long run. “Autonomous drive, even though it’s of course a high investment to crack that very sophisticated technical problem, is, as a potential game changer, an interesting future profit pool – but with some uncertainty related to it. If and when that nut gets cracked, that’s an opportunity,” he said.

He did admit, however, that the aforementioned high investment is forcing the company to reevaluate its costs and find ways to improve its efficiency as an organisation. “We have a very high level of investment intensity at the moment. It feels like we’re doing two or three things at the same time, whereas you had only one thing before. We have to be very, very careful about our cost structures and seek efficiencies.”

For now, the company is pushing forward with the development of its own semi-autonomous driving technology, and it plans to fit the next S-Class – set to be unveiled sometime next year – with the first certified Level 3 system. Although the latest Audi A8 debuted with such a system first, Källenius said the new luxury sedan will be the first one to get regulatory approval by the authorities.

“We’re in a constant dialogue with the regulators – it’s almost as if they’re writing the rules while we’re developing, because we’re breaking new ground,” he said, adding that even without regulation, the company would regulate itself to ensure the safety of its users.

“With or without regulation, the key is safety first. It is a very, very sophisticated technical problem. I’ve spent a lot of time over the last few years interacting with our engineering teams on this. You open a door, you find three new doors. So, even if there was no regulation, we would self-regulate ourselves to make sure that we do it in a thoughtful way.”

Looking over the horizon, the company is now working with BMW on future autonomous driving technology, expanding on a collaboration originally meant to combine their respective mobility services into a single entity large enough to be sustainable. Sacrilege, you say? Not according to Källenius, who said that the cooperation makes sense if you look at it properly.

“It’s such an enormous investment to further develop this technology,” he said. “We have two very competent engineering teams that happen to live 200 to 300 km apart and speak the same language, trying to solve the same problem. In a very pragmatic way we said, if we team up here, actually both parties gain – we split the bill and we gain momentum through having more engineers on the issue.”

Källenius reassured fans of the brand that whatever happens, the company will ensure its products will maintain the brand’s DNA. “I think this may be a sign of the new level of openness in the automotive industry, and I do believe that you can compete and cooperate at the same time.”

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