Tesla CEO Elon Musk has always been pretty straightforward about his willingness to open up Tesla technology to other companies. For example, he publicly commented on the possibility of partnering with Mercedes on an electric Mercedes Sprinter in November 2018.
Maybe interesting to work with Daimler / Mercedes on an electric Sprinter. It’s a great pickup truck. We will find out.
– Elon Musk (@elonmusk) 19 novembre 2018
This statement was certainly no accident and in reality is just a natural extension of Tesla’s mission to advance the adoption of sustainable power generation and electric transportation. With that mission in mind, it makes sense to pursue ideas that scale Tesla’s top EV platform as quickly as possible. In today’s world, many EV manufacturers are looking for EVs by building a platform that other companies can use to start and grow their own businesses. Tesla made that promise even more real recently, with a new tweet from CEO Elon Musk confirming that the company would be open to licensing its electric motors, batteries, power electronics and even software to competing auto companies.
What is important to understand is that for a platform to be attractive, another company must be able to build an attractive business product on the platform. What company could build a very attractive product on the Tesla technology platform?
Mercedes and BMW
Mercedes and BMW have been structurally weakened in recent years, with each company losing around 50% of its respective market capitalization since 2015. Even if they have teamed up to meet the challenge of electrification, they would not be able to bring together the resources needed. to have any hope of catching up with Tesla’s technology in this decade. The story was different in 2015, and even in 2018, when they could still have bought Tesla at a reasonable price, but now there is no doubt that they have been beaten at their own game of building the best car. volume at a high price. Based on the prices of their respective stocks, it is clear that investors are of the same opinion. Mercedes and BMW have no existing or future product that can compete with a Tesla.
In many ways, Mercedes and BMW are very similar to French or Italian luxury fashion brands. They still have great brands and have impressive skills in sustaining these luxury brands by continuing to improve the design of their interior and exterior vehicles, through excellent marketing and tailoring the drive to their target groups.
Would customers like a Mercedes E-Class or a BMW 5 Series built with Tesla technology inside? I’m pretty sure they would, as the interface the customer has with the brand (inside, outside, status) would be the same. The look and feel of the cars themselves would not change. We saw this exact phenomenon when Mercedes contracted with Tesla to electrify the Mercedes-Benz B-Class for California customers. The experience of owning, driving and maintaining the vehicle is 100% Mercedes, but the electric powertrain, comprising 15% of the vehicle’s components, was provided by Tesla. Some 8,000 vehicles were produced before they hit the shelves, and my wife has enjoyed hers very much since 2014.
Licensing Tesla’s electric vehicle technology, from battery to charge to autopilot, would mean having best-in-class technology. This naturally corresponds to the experience to which Mercedes-Benz aspires for all the vehicles in its range. The price would be similar to Tesla’s, with a small premium for a higher degree of customization and the scent of old-world luxury.
It looks like the next appeal from Daimler CEO Ola Källenius is expected to be to Tesla CEO Elon Musk to discuss the terms of the deal. This would save Daimler billions of dollars that they wouldn’t need to invest in their own software and battery technology (which would ultimately fail), while still allowing them to sell the best product. Tesla has demonstrated time and time again that it can and will continue to innovate at a faster rate than any other automaker is capable of. Why engage in a game of cat and mouse that cannot be won instead of just making a deal?
If Daimler and BMW are quick, they may even offer to convert some of their factory infrastructure into gigafactories with a capital-share investment – which Tesla (thanks to its high market cap) could likely provide. Musk has also repeatedly called gigafactory “products”, rather than just factories.
Does this have any potential to come true? As strange as it sounds, Mercedes and BMW lack options whether they like it or not. Any rational CEO would strongly consider this. Imagine having the opportunity to step back in time and find out what we all know today about the success of the iPhone. If you could license Apple technology in 2010, would you?
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