Preparing to take the wheel at Daimler
Mark Smyth spoke with Ola Kallenius, the next chairman of the leading car maker
Ola Källenius is 49 and Swedish. Without context, this is inconsequential, but he has just been announced as the successor to Dieter Zetsche, the chairman of Daimler.
Zetsche is older, and he is German. Many would expect Kallenius to be the boss of Volvo, but he is going to be the big boss of Daimler, including Mercedes-Benz. And he is not German.
He is currently a member of the board of management of Daimler though, responsible for group research and Mercedes-Benz development. He has a great deal on his plate, not least of all becoming the first non-German chairman of the massive Daimler Group.
Sitting down with Källenius, it was clear he is not ready to discuss his new appointment yet.
"This is, of course, a very exciting and interesting challenge, but something to talk about next year, so I’m focusing for the next nine months on research and development, but we’ll get back to it next year."
First he has to deal with the issue of further reducing emissions after the EU voted to impose even stricter targets on the industry from 2025.
"Electrification is key to meeting the future targets, but you have to look at the position that we start in; we have just had a change in certification procedure from the NEDC (laboratory testing conditions) cycle to the WLTP (real-world testing conditions) cycle, which, with a much wider envelope in terms of the driving profile for the WLTP cycle, is moving the CO2 values up.
"One must have as a goal to meet the (existing) standard in 2020-21, which will be a tremendous challenge; there are no two ways about that. That will be a tremendous challenge where we are putting the technical foundation in place to be able to do it. The one thing that we cannot control, certainly not in the short term, is what happens in the market place — and how … the customer makes his or her choice — and I think that’s where the insecurity lies.
"Yes, we have a massive electrification offensive in the making and if you look at it, it’s a three-pronged approach. Every single one of our combustion engines will be combined with 48V, so mild hybrid is the entry point into our brand. Every single model will have a plug-in hybrid from S-Class to A-Class. We’re now in the generation where we are switching over from our 30km hybrids to our 50km (ones) … the GLE will actually be the first car with a 100km range on a plug-in hybrid in the WLTP cycle."
Asked if the increased range will come from a switch to diesel power, he replied: "We didn’t say that but you shall see soon (second half 2019), so plug-in hybrids from top to bottom and then of course the EQ family. That is happening on the road towards 2025 and then of course broaden that on the road to 2030."
Pushed further on the question of a return for diesel, he said: "The good news is that the current generation diesel engines that we’re putting into the market are great performers, both in terms of NOx and fuel economy. So the intense discussion that we have had over the past couple of years — what’s the NOx performance? — I would argue that problem is solved."
Meeting emissions targets is something that will continue to keep Källenius busy even after he takes on the new role, but there are other challenges too.
"The technically most complex task to solve is autonomous drive Level 4 and Level 5, so if you look at everything that needs to come together to make that work in a chaotic city driving situation, in a safe manner, is certainly the most sophisticated challenge. We are working on a two-pronged approach. On the one hand, as the next level driver assistance systems, where today we have sophisticated Level 2+ systems I would call them, we’re on the verge of jumping to Level 3 which is our target for the next S-Class, that is something that you can then buy as an option and you can then proliferate, especially with a brand like Mercedes, relatively quickly into higher volumes.
"The Level 4, Level 5 effort is for a use case for a mobility service, so a robo-taxi, for a city and there in the next three to four years we want to commercialise that for the first time."
Then there is the matter of further collaboration with partners in a global automotive market. This year, Chinese car maker Geely took a stake in Daimler, so could there be more co-operation between the brands or is it just a financial transaction?
"The initial contacts have been constructive and what projects can come out of that — it’s still a bit too early to say, but discussions are ongoing."
As for Geely’s ownership of Volvo, Kallenius said it’s too soon to say whether there could there be some collaboration between Mercedes and Volvo.
Back to research and development: is it a difficult environment currently, given the rapid change in technology and market demands?
"If you ask the engineers — these are the best of times. Financially, it is of course a bigger challenge to transition a whole industry and a whole infrastructure from being solely combustion-based to going into heavy electrification. So we have to manage carefully how we navigate through this transformation financially, but technically we’re excited about it and feel that we are in a good position on many of those fronts."