On Wednesday, Mercedes-Benz teamed up with Google on navigation and in every car will provide “super computer-like performance” with automated driving sensors in a bid to compete and keep up with the behemoth like Tesla and other Chinese newcomers.
All the automakers are now rolling up their sleeves to match the software-powered features pioneered by Tesla, which allow for vehicle performance, battery range and self-driving capabilities to be updated from a distance.
Mercedes’ Semiconductor Deal with Nvidia
CEO, Ola Kaellenius said that in order to bring down the upfront cost of buying expensive high-powered semiconductors, the German carmaker has striked a deal with the semiconductor maker Nvidia Corp, which has been its partner on the automated driving software since 2020.
He said that “You only pay for a heavily subsidized chip, and then figure out how to maximize joint revenue”, reasoning that the sunk costs would be low even if drivers did not turn on every feature allowed by the chip.
He added that only customers paying for an extra option package would have cars equipped with Lidar sensor technology and other hardware for automated “Level 3” driving, which have a higher variable cost.
Self-driving sensor maker Luminar Technologies Inc struck a multi-billion dollar deal with the carmaker to integrate its sensors across a broad range of its vehicles by the middle of the decade. This took the Luminar shares soaring to 25%.
Notably, Mercedes owns a small stake in the sensor maker.
A detailed strategy which entailed moving away from the current patchwork approach integrating software from a range of suppliers to eventually controlling the core of its software and bringing partners in was disclosed during the Mercedes’ announcements at a software update day in Sunnyvale, California.
Over one billion euros ($1.06 billion) was generated from the software-enabled revenues in 2022, it also expects the figure to rise to a high single-digit billion euro figure by 2030 after it rolls out its new MB.OS operating system from mid-decade.
This is a more conservative estimate as a proportion of total revenue than others like Stellantis and General Motors have put forward.
“We take a prudent approach because no-one knows how big that potential pot of gold is at this stage,” Kaellenius said.
Mercedes’ Google Partnership
Partnering with Google would mean traffic information and automatic rerouting in Mercedes cars.
Drivers will also be able to watch YouTube on the cars’ entertainment system when the car is parked or in Level 3 autonomous driving mode, which allows a driver to take their eyes off the wheel on certain roads as long as they can resume control if needed.
An entire package Google services which include features like Google Maps, Google Assistant and other applications have been embedded in the systems by carmakers like General Motors, Renault, Nissan and Ford.
The company also said that all vehicles on Mercedes’ upcoming modular architecture platform will also have so-called hyperscreens extending across the cockpit of the car.