09 October 2019, Baden-Wuerttemberg, Nürtingen: Ola Källenius, Chairman of the Board of Management … [+]
At a press conference Thursday, Daimler CEO Ola Kaellenius declared that they were doing a “reality check” on robotaxis and will be “scaling back” or “rightsizing” their effort in this space, preferring to focus on commercial vehicles and long haul trucking.
Reuters reports that makiing the cars 100% safe in crowded urban areas is proving to be a bigger challenge than their engineers had assumed, and that it would tie up a lot of capital for unknown earnings.
Most other engineers would say that of course it’s a bigger challenge than initially assumed – that’s how super hard challenges work, you don’t know all the problems you must solve when you attack the problem. Other companies like Waymo, Cruise, Zoox and even Ford are still pursuing a mostly-robotaxi strategy.
In one sense he is right, this is a tough problem for the world’s oldest automaker, which has spent over a century selling cars to owners. It’s a total flip on what they do, and their reputation for luxury, performance automobiles. While they dallied in other models with their Car2Go product, which was later merged with BMW’s DriveNow, in the end this goes entirely against their DNA. In spite of that, for many years I ranked Daimler’s efforts as among the best from major automakers, and the Germans in general began the game ahead of other car companies, except perhaps Tesla.
Mercedes 105 concept car, back when they were ready to think wild ideas on robotaxis
At its core, the difference comes because companies like Daimler can’t help but view the problem as “How do we add self-driving computers to our cars?” The non-car companies view it as “How can we put wheels on our computers?”
Kaellenius may well be right. The problem is hard and may be too hard for Daimler. It may even be “too hard” for Waymo and the rest, in that they will need to spend more money and time than initially expected – again, as should not be surprising to anybody except those with a simple initial view.
Trucking (in which Daimler is a large player) may indeed be the best place to first invest funds for shorter term return. The highway is a simpler problem, as all known, though it offers the serious risk of a major crash of a heavy vehicle at high speed when mistakes occur (which they will.) It also offers primarily the gain of cheaper and faster shipping to shippers, not the reshaping of cities and lives.
Daimler is rich enough to bet full on both trucking and robotaxis, though. And if they are right, and there’s too much left to do on robotaxis, then in the end they have saved a little money.
If they are wrong, though, they have bet the whole car part of their company, and bet it wrong. Yes, they will be able to buy technology from Tier-1 suppliers and startups. But they will no longer be in control the most important part of their car. In a world where the Mercedes brand will matter much less than it does today, just what is it they will own? Yes, they will have great engineering skill at making quality, luxury automobiles. They don’t want to be the company that just makes the car while others control it and monetize it. They don’t want to be the Foxconn to Apple.
Daimler’s other problem, the problem of many car companies, is that they have taken an “ADAS-centric” approach to development. That means they have taken all they are learning from making advanced driver assist – and again, this is an area where Mercedes was a leader – and tried to have the same teams incrementally improve it on a path to self driving. I agree with the many who say that is the wrong path, possibly even an unworkable path. You need to start aiming from day one at the real problem of a vehicle capable of unmanned operation. The only major company taking the incremental approach which has a shot at it is Tesla, but that’s because Tesla thinks less like a car company than any other car company.
The Robotaxi business, when somebody else besides Daimler builds it, will seriously hurt the Mercedes car business. Even people who summon a robotaxi through a company like Uber or Lyft and might get a Mercedes made car won’t care that it has a Mercedes logo on the front instead of a BMW or Lexus or SAIC logo. All they will care is whether it works and is comfortable. If Mercedes runs a robotaxi service they might be able to get traction on the Mercedes brand value for safety and luxury – performance is unimportant to robotaxis. Reliability is of course important too, but much easier to provide. If your taxis are breaking down, that rarely effects most customers, and in the rare event one breaks down on a ride (other than in a way affecting safety) it just pulls to the side and in a minute another one arrives to take the passengers on their way. Nothing like the inconvenience of a breakdown in your own personal car today.
Good luck Daimler – you’re going to need it.
