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Mercedes Has the Horsepower for Tesla Battle (bloomberg.com)
42 points by Vannatter 11 months ago | hide | past | web | favorite | 62 comments

The problem isn't that Mercedes, VW, and other big automakers don't have more horsepower in terms of dollars to spend on R&D than Tesla. To abuse the car analogy, it's a problem of momentum and power-to-weight ratios.

Mercedes needs to do a complete 180 to become an electric car manufacturer. Employees with education and years of experience in internal combustion engines will fight their obsolescence. Plants and production lines that are specialized for ICE manufacturing will buck against the change. Their supply chain, dealerships, and repair shops will have the same problems and will also provide resistance.

It's one thing to pivot a little start-up company that's maybe a few dozen people who have just been applying generic engineering and sales techniques to a domain that they've only just invented in the past year or two. A behemoth like Mercedes does not pivot. It trundles along and slowly, almost imperceptibly, shifts course over a long period of time.

Mercedes needs a lot more horsepower for the battle than Tesla does.

I would not call it a 180. Maybe more like a right turn, if even that much. All their sheet metal stamping (or carbon fiber fabrication), chassis-making, interior manufacturing, paint, as well as parts suppliers for all that, glass, brakes, tires, wheels, etc. can be directly used. They just need to change the drivetrain.

Their distribution, dealer network, marketing, etc. is in place world-wide and very well established.

Granted, in part. Especially on interior manufacturing, where Tesla's flagship Model-S luxury sedan could stand to learn a thing or two from Mercedes, and in sheet metal stamping/carbon fiber fabrication, where OEMs do invest a lot of attention.

But I maintain that the primary focus of an automotive manufacturer is their powertrain. This is evidenced by the outsourcing of many of those other components, and by the relative budgets given to those different R&D departments. Furthermore, the other departments have become tightly coupled to the powertrain: The chassis is largely designed around the engine bay, not a large battery and electric motor. Engine braking is barely an afterthought in the design of the brakes, and regenerative braking changes a lot of that design. Auxiliary systems like entertainment, power steering, air conditioning, etc. have the existence of an alternator and serpentine belt as a fundamental principle.

Whether it's 180 or 90 degrees, it's still a difficult change for a big company.

"primary focus of an automotive manufacturer is their powertrain"

The VW Group re-uses the same engines across lots of its different brands - for a high-performance or electric car then of course the powertrain is important. For everything else its just one component and as long as it is good enough I suspect people aren't really that interested.

Edit: Other manufacturers may do this, I'm just more familiar with VW Group cars.

> Other manufacturers may do this

They all reuse components and designs as much as possible: https://en.wikipedia.org/wiki/Car_platform

The problem is that the drive-train is what car companies see as their "core competency" and have focused their energy and talents on doing that and out-sourcing the rest. Maybe they can make switch to "car making factories" as the core competency (Elon Musk says Tesla is focusing on "making the machine that makes the machine"). Not a huge switch, but those top engineers, passionate car guys at Mercedes, might not be as interested or as capable as factory automation engineers.

This is false, there are probably something like 500 engineers within Mercedes that specialize in engineering the internal combustion and drive train, and most of them work in at Mercedes AMG, which will never go away for the sheer marketing it brings.

I think the grand-parent comment is vastly overestimating how much of the car business these days is based on tuning the internal combustion engine, which for the most part has seen about all of the advances it is going to see. The rock stars of the car world are now the process and manufacturing guys (and possibly the software guys, though not as much as you'd hope or expect), who still have the power to squeeze the margins tighter than any other engineering division does, and provide more competitive advantage than any other engineering division does.

rant Electric motors are commodity items that can easily be thrown onto most chassis. Why does Elon Musk always make such a big deal about not having patents? Mostly because he doesn't have any sexy patents to trot out anyways so its good PR fluff. end rant

I think Tesla can survive and thrive, and break the 100 year drought in new car companies, but I think it's a mistake to think that's because they are going to out maneuver car companies at the car game, it's because they are becoming battery experts that they'll win. Tesla is a battery company with a car division.

Do you really think so? In my mind it doesn't matter that part manufacture is outsourced. I don't think design has been outsourced and if it has, they just give them new specs/targets to meet.

Manufacturers use other companies' powerplants all the time, so I don't know if I'd characterize it as a core competency. It's even easier to do with electric motors, if anyone is selling. They've been a partner of Tesla in the past...

> Their distribution, dealer network, marketing, etc. is in place world-wide and very well established.

Yes, but it is all built around selling the ICE as the ultimate driving machine. To compete with Tesla, the entire marketing machine will have to be reworked in such a way as to imply that their previous flagships are now legacy.

That is a bitter pill and will face much internal political resistance, regardless of the technical issues involved.

> Their distribution, dealer network, marketing, etc. is in place world-wide and very well established.

>> Yes, but it is all built around selling the ICE as the ultimate driving machine.

That... doesn't really make any sense. A Tesla and a Mercedes are literally indistiguishable from each other on the basis of their powertrain. They both look the same and have the same function and work the same.

If I modified a Tesla to ICE and it was your next Uber ride you would not really be able to tell the difference unless you were closely paying attention, and vice versa. Yes there are some performance differences and sound differences, sort of, but from a functional perspective they're both just luxury cars, outside of refueling the user experience is exactly the same.

Sure, it's an engineering challenge, but the idea that the dealer network and marketing don't apply equally well to electric cars is totally unsupported. In fact, the luxury car marketing experience is so similar across the board that you just used the BMW slogan to describe Mercedes Benz.

My use of the BMW slogan was intentional, because that is absolutely true that the marketing messaging between most luxury brands is incredibly similar (though differences exist that are relevant in ways that are interesting to some).

If you modified a P100D to use a Mercedes drivetrain, the car would feel slower and would launch like an ICE car. The feeling of initial acceleration in an all-electric performance car like the P100D is vastly different. Maybe you wouldn't notice from the backseat of a taxi, but that isn't really the point in selling a performance car. :)

But even that doesn't really matter as much as you might think. I think the fundamental issue is that you appear to be using engineer thinking and are thinking about the situation from a purely logical framework. Buyers in the real world don't behave that way and the romance copy and image that a company sells really does matter in the marketplace.

Seriously, as a Frenchman, if history has taught me ANYTHING about the Germans, it's that they're generally very apt at changing course, adapting and being ahead of the curve. They have that image of not being the most flexible but when it comes to technology and industry, they're pretty damn good and I think they'll make that transition just like they've made all the necessary transitions before.

A good counter example of this is the downfall of the German camera industry in the 60s and 70s. All that's left of that is Leica, Zeiss and a bunch of brand names (Rollei, Contax, Voigtländer..) stuck on Japanese cameras.

>A good counter example of this is the downfall of the German camera industry in the 60s and 70s. All that's left of that is Leica, Zeiss and a bunch of brand names (Rollei, Contax, Voigtländer..) stuck on Japanese cameras.

Classic camera nerd here. True, true, but mostly down to:

a) the Japanese government helping optical and camera companies share technologies, instead of Germany where patent protection makes german camera companies do hard competition against each other and find all kinds of workarounds to prevent patent infrigement from the other brand.

b) REALLY bad business decisions (for example, Zeiss-Ikon-Voigtlander at some point had something like 3 or 4 incompatible different lens mounts for their 35mm camera range)

c) the Japanese making stuff cheaper because less labor costs, unions, etc

d) Also, due to WWII war reparations, Russia and Japan 'inherit' all optical patents and designs from Zeiss germany which helps them build their optical (and camera) industry as quick as possible.

e) German companies not foreseeing the japanese menace / not doing anything about it.

Great website and article about this:


(use Google translate)

Maybe, but what's left is the stuff of legends. Zeiss (and Schott) are industry leaders, as is ARRI.

Contax isn't even that anymore (former happy owner of a 159MM many years ago).

That's called finishing the game in expert mode and getting bored :)

Leica is junk nowadays.

"Big Auto" taking everyone by surprise with a massive battery manufacturing investment in Belgium? Now that would be a nicely utopian twist on the trope of history repeating. One could hardly make up a better symbol for what the EU is about, make profit not war.

And yes, I completely made up that idea of German cars on Belgian batteries, just for the sake of historical analogy. But then I googled a bit and it turns out that Belgium, per capita, already has the biggest chemical industry worldwide. It might actually be a perfect match.

They're conservative, but that has nothing to do with technological flexibility. The problem here would be the decision itself, not the technological side.

That's a theory, but it's not sufficiently convincing to take on faith. There are a lot of different kind of expertise and capacity necessary to create a great car, from styling or marketing and sales, to interiors, seats, tires, and so on, that have nothing to do with the difference between a gas and electric means of powering the vehicle.

At a casual glance it appears that the real genuinely thorny problem with EV production is coming up with a workable battery system and producing it at scale. Which to be sure is challenging and Tesla has a head start, but it's still just a component in a much larger supply and production chain.

I'm not convinced an electric four door sedan is "more different" from a current gas four door sedan than a diesel cargo van is, and the company is adept at producing both of those. It's not obvious that figuring out how to make a reasonable electric car factory in Bavaria is more of a stretch for the company than building SUV's the American south.

These successful integrated car companies already adapt a lot as it is. The idea that they just don't have it in them to swap out a gas engine for some batteries and motors doesn't really match reality as far as I can tell.

Take a look into the EV1, it played out exactly that way with GM.

> The problem isn't that Mercedes, VW, and other big automakers don't have more horsepower in terms of dollars to spend on R&D than Tesla.

Before Tesla, Mercedes is/was historically the manufacturer that spent the most amount of R&D.

> Employees with education and years of experience in internal combustion engines will fight their obsolescence.

Do you realize making a great car is not only just about the engine? Mercedes has the best engineers in the world regarding the other parts of the automobile - suspension, brakes, steering, reliability, safety, etc.

> Mercedes needs to do a complete 180 to become an electric car manufacturer. Employees with education and years of experience in internal combustion engines will fight their obsolescence. Plants and production lines that are specialized for ICE manufacturing will buck against the change. Their supply chain, dealerships, and repair shops will have the same problems and will also provide resistance.

This! There is an incredible amount of people (and contractors) whos life depends on building components of ICE cars around these companies. They'll fight tooth and nail to keep those profits from dwindling even if that'll doom them in the long run. The amount of internal politics must be staggering and IMO is the main reason why all EV attempts from these companies are so awful - they literaly look like someone tried to sabotage each and every one of those projects.

GM maybe. Mercedes definitely not. Unlike almost all automakers, Mercedes has consistently embraced change. Their entire premise is to build a car that is 10 years into the future, and generally speaking they do it. Sometimes they mispredict the future, but they have never been afraid to correct course. A different type of drivetrain doesn't mean starting from scratch. It's a major component, but it would be foolish to think they can't be taken seriously.

I have plenty of experience with Mercedes, Audi, volvo, jeep and BMW cars - driving, renting, test driving them or being the passanger. I would say Mercedes is at least 5 years behind the competition at approx same price point. Disclaimer: I'm obviously not qualified to talk about suspension technology, combustion engines etc. But tech (e.g pilot assist/autopilot), Driver interface features and multimedia, yeah Mercedes is very very very far behind.

Most car manufacturers are 5-10 years behind in terms of deep technology and software. In recent years a few manufacturers have done a passable job papering over their legacy interfaces with modern designs and faster GPUs, but they're still buggy junk behind the scenes. And if that weren't bad enough, most of it is – from the end user's perspective – abandonware.

GM has had skin in the electric car game for decades (although a flop, the EV1 was still a try). They've sold a healthy number of Volts, Sparks, Cadillac ELRs, and now Bolts. Whether or not you are correct in supposing Mercedes can embrace the change, using GM as a counter-example is a bad analogy because from the GM perspective it is Mercedes that needs to catch up.

That said, I'm not expecting GM to set an aggressive EV pace either such as VW's 2030 goal, but they do expect to be the first to high volume electric vehicle sales [1].

[1] http://www.greencarreports.com/news/1110469_gm-goal-profitab...

Every electric car that GM has ever produced has been the result of playing national politics. The volt was announced right around the time that bailouts and cash 4 clunkers were political talking points...it was a way to show congress that they really needed to intervene to keep GM alive. The EV1 was the result of CARB regulations that required the big 7 to have zero-emission vehicles compose at least 2% of their fleet.

Unlike Mercedes or VW, which are responding to market demands, GM only showboated electric vehicles as a way of staying in bounds or gaining favors politically. GM has made virtually no effort at bringing competitive hybrid or full-electric drivetrains to their mainstream models, and they probably wont even consider it until it's bailout time again.

The Volt was in development quite prior to the bailout. The Volt was developed for selfish reasons by an executive to leave an electric legacy behind, not to curry favor with the American polity. Revenge of the Electric Car is a good documentary with first person glimpses into the Volt development/launch (as well as the launch of the Tesla Roadster and the development of the Nissan Leaf).

GM branding seems to want to continue to imply that their electric vehicles are better than their "mainstream models"; showboating is marketing. GM has also said (per the link above) that they expect to have the first "mainstream" electric in the ways the car industry would define it (high volume, reasonable profits). GM isn't just now responding to "market demands" because they anticipated them years ago, and in some ways have been working to create those market demands that Mercedes and VW are just now feeling.

VW, on the other hand, also is responding to the American polity. The US has graciously allowed VW to use the fines the EPA should have charged for "dieselgate" to instead go (and only go) to electric vehicle development.

Mercedes has a lot of help in this fight: the writing is not on the wall, it's in the law. That should be quite helpful in convincing employees to not only not fight the change, but to push for the change. At some point survival instinct kicks in.

ICE cars will be banned (either already law, or being discussed) in: Norway (2025), Netherlands (2025), India (2030), Germany (maybe 2030), France (2040), China (date unknown yet).

As the very home country of Mercedes/Daimler, Opel, Volkswagen and other car manufacturers and the (AFAIK) only unlimited-speed public roads in the world (Autobahn), I (German citizen) pretty much doubt our government will start a serious effort to get ICE cars banned in the next 3 years. Maybe if EVs get significant traction in that timeframe, they'll propose such a law to look progressive for the next election.

Even if Germany is late to this game, it doesn't change much if enough countries ban ICE. The German auto industry will have to follow: as you probably know Mercedes (and Volkswagen, BMW, etc.) export a lot, so they simply won't have a choice. And I'm sure the numerous engineers and laborers building the cars who don't want to lose their jobs will understand it very well too...

Aren't german car companies owning like half the patents of electric cars? You make it sound like tesla is the only one working in this area.

For Elon Musk's sake I really hope that he's not so naive as to underestimate the competition to this extent.

I'm not suggesting that Tesla (or Musk) are underestimating the competition and taking it easy. To the contrary, I expect they're working as hard as they can.

But if it wasn't for these factors, there would be no competition, only annihilation. It's remarkable that there's competition at all. When multiple members of the competition can restructure their R&D budget on a whim to allocate more than your entire company is worth, you need systematic advantages like this to stay in business!

TL;DR "Its the charging, stupid"

Until they have a fast charging option like Tesla's, then all the other auto makers will be "also rans" in my opinion. Case in point: The Chevy Bolt is, on paper, a Tesla Model 3 killer. It is cheaper, has better range, and it is available now. However, there is no way to charge it on a road trip (unless you're a masochist, and want to depend on flaky 3rd party charging networks where the chargers might not work, or might charge slowly). So, because of this, Chevy can't unload the cars, and have so much inventory built up that they've idled the Bolt production line.

And don't say "fast charging is only important for road trips." One of the barriers holding back EV adoption in cities is the lack of charging options for apartment and condo dwellers. At home charging mostly depends on having a garage that you own, and that you can have a charger or 40A outlet installed in. Good luck getting a landlord to do that, and if you have street parking, you're totally hosed. Tesla recognized this, and is now opening Superchargers in urban areas in advance of the model 3 being generally available.

The Bolt has DC fast charging (90 miles in 30 minutes was the tagline, but it's more complicated than that because of charging curves)

Sure.. good luck finding a fast DC charger that works when you're on a trip.

Tesla isn't immune from that problem, charger degradation has been affecting the supercharger network for a while now.

To me, when EVs are ready for mainstream use, the charging infrastructure will be there. I got a Volt because unless tying yourself to a supercharger is an option, or you own your home and can install an L2 charger, the infrastructure isn't yet where it needs to be for mainstream adoption

So what's the end game for Tesla ? owning the best charging network with large network effects, and getting high margins?

I expect that it is evolving.

Right now, there are a lot of people who will only get a Tesla for the above reasons. That gives them better market share, and allows them to command a bit of a premium for their cars.

Medium term, I'd be willing to bet that they start to make deals to let other auto manufacturers use their superchargers. This would cement their lead in charging, and they might be able to make some revenue from this.

Longer term, there will have to be a fast charging network from somebody, especially if Tesla does not open up their supercharging network. I'm really shocked that one or more of the big gasoline companies has not gotten on board with this. They make a lot of their money from the various stuff they sell in addition to gas (food, trinkets, etc). EV "fast" charging is still an order of magnitude slower than gas/diesel refueling, so people will be spending a lot more time in their stores. This should drive up their profit.

Why not? If they stay the only "charger network included, that's why we are so much more expensive up front" offering, they will naturally glide into the Apple niche: high prices that inevitably communicate status, but with a perfectly valid "excuse" for those who don't want to appear like status-buyers. There are worse fates for a company/brand. Failing this, they could still thrive as the dominant charging network if they open that up. Might even work in parallel, opening the network but keeping a minimum number of spots reserved for brand cars at all sites, at all times.

I said this statement in the MB electrification article https://news.ycombinator.com/item?id=15219469

Electric cars need a battery tech that offers a "refuel experience" if they want to change the game. Ive seen things like solid battery tech that may offer something close to this. Im not anywhere near an expert on battery tech, but I can say as a car guy that mainstream adoption hinges on this. Once this battery tech exists, then there is the infrastructure problem of charging stations. Musk has started the process, but there is a very long way to go. We also should start thinking about standardizing or at least categorizing charging levels in an ELI5 way to the average user. Maybe this already exists, but I dont think so. It seems like you need to have something like: Level 1 charge(cheaper, lower power throughput, longer wait time). Level 2 charge(quicker charge more expensive). Level 3 charge(fastest, most expensive, if your car supports it, etc)

that would roughly equate to the 3 options you have at a gas station and ease the adjustment to the differences. Maybe Im saying things that people already know, but I just see this as the barrier to adoption right now.

Chargers are already described by Levels: Level 1 is wall-outlet 120, Level 2 is "dryer outlet" 240, Level 3+ is "super-charger"/CHaDeMO. Most car displays show estimated charging times for each level in one way or another.

"Refuel experience" is a red herring at best. Partly because the ubiquity of the electric grid means that you can charge anywhere: that's the subtle game changer that doesn't always come across when someone new to electric vehicles thinks about them. A Level 1 trickle charge while I'm asleep at home is plenty for my daily work commute. My car is parked nearly the same amount of time in my work parking lot: if the office park added a Level 1 or Level 2 charger next to the street lamp I park by I'd almost never need to charge at home.

Road trips are definitely the exception to the daily grind, and are the place where you really want a good "refuel experience". I think Tesla's superchargers fit that fine, but obviously there's a range currently to people's road trip experience. (90% of 300+ miles in 30 minutes; that's about my bladder range and 30 minutes is a light snack, a good stretch, and a brief glance at Twitter or a chapter of a good book.) It might get better than that as battery tech changes, but let's face it that we're at a good enough start now that we should stop dismissing electric cars because you don't think they have a "refuel experience".

Thanks for clarifying the charge levels.

I do, however disagree on the refuel experience mainly because while it is true, that you can constantly refuel your car while it is parked at home, the long distance driving use case is exactly where electric recharging is least developed. I think that there is a certain level of comfort knowing that, in the US at least there are only a handful of places in the country where a stretch > 20 miles exists without the ability to refuel. For the most part I think most people active on HN are many times more willing to switch to electric cars. The average person on the street may not be so willing.

Yes the refuel experience as well as the total green balance (for the educated) is what is holding world dominance of the electric drivetrain back. I can litterly carry the energy needed for a 500 miles drive. What is the weight of the batteries I would need for a 500 miles ride? Additionally as I ride on gas the weight is consumed instead of transformed (gas is running out), yet a battery at 10% capacity still has its weight. Sure this behavior contributes to the environmental benefits of battery driven engines.

I don't think people realize just how much Musk is laughing at all this. He gave away many electric car patents because he knew he would profit from it so long as he has the best battery factory in the world. As it stands Tesla owns the building, the factory and rents some of it out to Panasonic.

Unless Mercedes finds a cheaper battery elsewhere they're going to be paying Tesla for these.

> they're going to be paying Tesla for these

Consumers are going to be paying for these, no matter the supplier. I don't see why Daimler wouldn't be buying components from Tesla, _if Tesla can supply them_. So far the "Gigafactory" is just not big enough for Mercedes (2,200,000 vehicles/year).


China has over half the marketshare for lithium-ion battery production and that is expected to grow.

Tesla might be a single large producer but it is a fraction of the overall world production. Is he even planning to have that much excess capacity after powerwall/teslas?

While I've digested with some heavy skepticism, I always was lead to believe it was for more altruistic reasons. Future profit was not his motivation, insomuch as increased competition and proliferation of electric vehicles into the marketplace. Leading to the an end of fossil fuels in vehicles.

Ultimately, both statements can be true. Increase proliferation while generating multiple revenue streams off of Tesla R&D.

Yeah he understands value networks and disruptive innovation. Daimler needs to start looking like Tesla - no dealerships, big investments in batteries, cheap solar, in order to compete with Tesla. Especially since the article says they need to have smaller margins on the EVs.

This does not bother me. Competition is good for the consumer.

True, in a age of reduced competition, it's refreshing to still see a ton of consumer choice in the auto market.

"The start of that collaboration was during the 2008-2009 financial crisis and Tesla, like most other US automakers at the time, needed money. Musk, along with several other investors, reinvested in the company but Daimler’s cash infusion made the difference. Musk later said that “Tesla wouldn’t exist today without it.”"

Mercedes is like Microsoft, when they helped Apple to survive.


Previous discussion of Mercedes' announcement:


However, what surprised me in this article is the following:

> VW has earmarked 50 billion euros for batteries for its electric cars

That's more than Tesla's current market cap.

Edit: Seems I missed the article on the front page, as the latter is also being discussed:


> VW has earmarked 50 billion euros for batteries for its electric cars

That's a meaningless number without the context of how many years it's spread across - which is of course the vaporware point of the statement from VW, it's about grabbing a headline (hey look, we're doing X thing too, we're not the next Nokia, really!). Tesla might as well issue a press release that says they plan to spend $200 billion on batteries (over 20-30 years, but you know, leave that part out).

>However, what surprised me in this article is the following: >> VW has earmarked 50 billion euros for batteries for its electric cars

You have to take these announcements with a grain of salt and in the light of China's announcement. The big car makers who have been criticised for being late to the party, are making these claims now mainly to prevent sliding share prices as investors begin to draw conclusions.

Tesla has captured the brand of electric car, in the way that the Prius has the best brand for hybrid. The Prius wasn't even the first hybrid car, but it was first very popular one. Anyone that drove it was making a statement about the environment and it has remained a strong brand despite a plethora of hybrid models

Mercedes will probably make great electric cars. But there will be people for a long time forward who will buy a Tesla to make a statement.

> That’s wonderful for the planet, but a bit of a worry for profit.

I can't even begin to express my utter disgust at this statement.

How long should I hold by breath for an electric G-Wagon.

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