Daimler believes in the future of the Stuttgart region as business location - and is gearing up for the future


Autoland, quo vadis?

For decades, the state of Baden-Württemberg and the Stuttgart region in particular have been regarded as something of an automotive wonderland. It’s the place where the automobile was invented, and the automotive industry continues to be the basis of the region’s jobs and prosperity. However, the car of tomorrow will be quite different from that of today. How will this affect the region and its people? Are they prepared for the associated structural transformation, or is the entire region at risk of falling into decline?

10 min reading time

by Christian Scholz, Editor
published on December 19, 2019

When the popular SWR Hitparade radio show is on air, nearly everyone in the state of Baden-Württemberg listens. The shows principle is quite simple: Once a year, listeners vote their favorite song. After the voting has ended, the state’s largest radio station plays the songs ranked in the Top 1000 (and nothing else) for an entire week. This year, the famous radio show celebrated its 30th anniversary. Once again, a band from Stuttgart was among the Top Ten: an a capella group called “Füenf.” The reason why their song “Mir im Süden” (We in the South) is so popular may be because of lyrics like this: “We in the South produce higher-quality motor vehicles (…), because sadly hardly anyone can compare with us in technical fields.”

Although these lines must be understood as slightly ironic and may sound slightly clumsy (even in the German original), they explain very well what the people in southwestern Germany are especially proud of. This is where the automobile was invented, and Gottlieb Daimler’s dictum “The best or nothing” is still the guiding principle for vehicles that are built in the company bearing his name. The automobile is, after all, the foundation of the region’s flourishing economy and thus of its jobs and prosperity.

Along with machine construction, the automotive industry is by far the most important manufacturing sector in Baden-Württemberg – and the Stuttgart region is, in a sense, the industry’s heart. Some people even regard the valley of River Neckar as a kind of automotive Silicon Valley. Companies such as Daimler, Porsche, and Bosch as well as numerous supplier industries, universities, and research institutes ensure that the region also drives job creation. In Baden-Württemberg, the jobs of almost half a million people are directly or indirectly dependent on the automobile.

Mercedes-Benz plant Stuttgart-Untertürkheim. In the front: The Mercedes-Benz Arena.
Mercedes-Benz plant Stuttgart-Untertürkheim. In the front: The Mercedes-Benz Arena.

However, this blessing can quickly become a curse. Because naturally, this also menas that the region is very dependent on the automotive sector. And this key industry is about to undergo a fundamental transformation due to the digitalization and electrification of the automobile. Many people claim that cars will change more over the next ten years than they did in the past 130. Moreover, nobody can say today with certainty whether this transformation will be successful and how fast it will actually take place. To put it in a nutshell, the region’s success over many decades also poses the biggest risk for its future.

That’s why many people in Baden-Württemberg are rightfully wondering: What will happen to them if this driving force begins to stall because the demand for combustion engines falls and the transition to electric mobility, autonomous driving, and new mobility concepts such as carsharing not only costs a lot of money – but perhaps a lot of jobs as well?

Uncertainty leads to concern. The people are especially worried that their region may one day end up like the industrial cities of Detroit, Michigan and Dayton, Ohio in the US. Population decline, unemployment, and crumbling facades now characterize these Midwestern industrial cities, which were for many decades centers of innovation where big car companies ensured jobs and prosperity. No, people really don’t want to think of such scenarios in their “sidewalk-sweeper state” (as the German weekly “Die ZEIT” once called Baden-Württemberg).

View on the so called Neckar valley.
View on the so called Neckar valley.

Transformation as a long-term project

So far, there is still no pressing reason for such a bleak vision, because the chances are good that the region will handle the emerging structural transformation better than these American industrial cities or the German Ruhr region when the coal mines began to be closed down. That’s because Baden-Württemberg won’t have to attract new industries — as the Ruhr region had to do for several decades — as long as the existing industries are able to change with the times and re-invent themselves.

It is not unlikely that the people in this region, whether they originally came from Swabia, Baden, or out of state, can do this, because they have always been known for their diligence, perseverance, and inventiveness. These qualities will be even more essential in the future if Baden-Württemberg wants to be successful also in the long run. Political and business leaders are well aware of this because they know that holding on tight to the status quo would pose the biggest danger to the region and the entire state. What the region needs is good ideas that provide answers to the big questions of our time.

These questions include: What can we do to fight climate change? How can we make individual mobility so sustainable — now and in the future — that our environment will remain livable? How can we use digitalization to improve safety, comfort, and traffic flows? And lastly: Which mobility solutions do cities and metropolitan areas need to accommodate the increasing number of inhabitants? It's clear that the region where, in 1886, Gottlieb Daimler invented the future (as did Carl Benz in nearby Mannheim), and which is the home of automobile-related technological leadership, will now have to reinvent the future once again – in order to achieve sustainable, responsible, and self-determined mobility.

Wanted: Innovations and professional training

Franz Loogen is the Managing Director of Landesagentur für neue Mobilitätslösungen (State Agency for new Mobility Solutions) and Automotive e-Mobil BW GmbH  and the co-editor of the infrastructure study “BWe mobil ,” which was published this year. Every day, Loogen deals with the question of where the automotive sector in Baden-Württemberg will go from here. He is convinced that the state is increasingly becoming involved in an international innovation competition in which the goal is to create the best solutions for achieving sustainable mobility. Past achievements no longer count for much in this struggle.

Although tradition is important, it is no guarantee of future success. In a talk with us, he left no doubt about this point, saying, “The state of Baden-Württemberg and its strong automotive cluster of manufacturers and suppliers is still at the forefront of the automotive economy and is set to maintain this position. But this won’t happen automatically. International competition has intensified and new players, also from other sectors, are moving into the market. Besides supplying well-established technologies, the sector will need to be hungry enough to lead the global market in the new technologies as well.”

Franz Loogen, Head of the Baden-Württemberg agency for new mobilty solutions and automotive e-mobilty. Co-publisher of the BWe mobile study.
Franz Loogen, Head of the Baden-Württemberg agency for new mobilty solutions and automotive e-mobilty. Co-publisher of the BWe mobile study.

The principle of lifelong learning is also a part of this development, Loogen says. The process will gradually affect more and more skilled employees in the state in their different roles: “We’ll therefore have to develop qualification strategies in good time to prepare employees for new tasks in future-oriented sectors that will be profitable in the long run.” This also means, of course, that people will have to remain agile and that things will have to be done differently in the future. However, Loogen is confident, because the people of Baden-Württemberg have always been good at keeping abreast of economic trends and social developments.

When it comes to sustainability, Baden-Württemberg has played a pioneering role for a long time. Many people even claim that sustainability is becoming a sort of trademark for the state. As far back as 2007, the then state government launched an initiative titled “Shaping the future today.”

Change is coming. How is Daimler changing?

Although some people like to claim that the automotive industry has failed to recognize the signs of the times, Daimler has for many years been successfully working on increasingly fuel-efficient combustion engines and locally emission-free drive systems for electric and hydrogen-powered cars. However, it was unclear for a long time when such products would actually be ready for the market and whether there would be a sufficiently high demand.

Well, the demand is now there. But automobiles have a much longer development cycle than smaller electronic devices such as smartphones. That’s because cars have to transport people as safely as possible and the technology they contain has to be tried and tested. As a result, several years of development work are needed before a vehicle reaches the series-production stage. However, we at Daimler are already working hard to create a completely CO2-neutral fleet of new vehicles. We are investing more than €10 billion in this endeavor.

Our Ambition 2039 strategy provides a clear roadmap for achieving this goal: Its focus is battery-electric mobility. We want more than half of our car sales in 2030 to consist of vehicles with electric drive systems. These vehicles consist of plug-in hybrids, which we have offered for some time now, as well as all-electric vehicles, which will be the wave of the future.

Our first all-electric car of the new EQ brand, the Mercedes-Benz EQC 400 4MATIC (electricity consumption in kWh/100 km (NEDC): 21.3-20.2; CO2 emissions in g/km combined: 0*) was launched on the market in summer 2019. In August we also celebrated the world premiere of the Concept EQV — the first purely battery-electric full-size MPV for the premium segment. It will be followed by many other EQ models, including compacts. And in the commercial sector, we launched the eVito – followed by the eSprinter, which will be available shortly.

Charging Mercedes-Benz eletric cars.
Charging Mercedes-Benz eletric cars.

From the cotton mill to the battery factory

Few people still deny that the future of mobility will be electric. According to E-mobil BW, seven to ten million electric cars will be on Germany’s roads in 2030. This would mean that electrified and electric cars will then account for around 50 percent of the total market. But how will this affect the people who work in automobile production today?

Frank Deiss manages Mercedes-Benz’ main plant, which was founded in Untertürkheim in 1904. Deiss is the boss of more than 19,000 employees, who work at facilities between Bad Cannstatt and Esslingen. These employees still mostly produce conventional combustion engines, transmissions, axles, and components. Will these systems soon be obsolete? Deiss expects advanced combustion engines to be an important part of the drive system mix for many years to come. “I expressly include the latest diesel generation in this mix, because it has lower CO2 emissions than comparable gasoline,” he says. According to forecasts, two thirds of the cars in Germany will still have combustion engines in 2030.

Frank Deiss, Head of powertrain production Mercedes-Benz cars and plant manager Untertürkheim.
Frank Deiss, Head of powertrain production Mercedes-Benz cars and plant manager Untertürkheim.

The Untertürkheim plant also assembles drive systems for hybrids and mild hybrids (vehicles with a 48-volt on-board electrical system). At the same time, we are making further preparations for an electrically mobile future. “Last spring, Baden-Württemberg’s Prime Minister Winfried Kretschmann joined us in laying the cornerstone for a battery factory at the facility in Brühl,” says Deiss. “This factory is one of nine within our global battery production network.” The company is investing more than €1 billion in battery production. Incidentally, Daimler wants to make not only its vehicles but also its production operations CO2-neutral. That’s why the battery factory in Brühl is designed to be supplied with CO2-neutral energy, using electricity from renewable sources.

Powertrain production in the Stuttgart-Untertürkheim plant.
Powertrain production in the Stuttgart-Untertürkheim plant.

The battery factory is an important signal for the region’s competitiveness and future viability. It also demonstrates how the location is changing. Says Deiss, “A cotton mill used to stand on this site. Today we are producing only a few hundred meters away the core element of our cars here. Moreover, we’ll soon begin to manufacture batteries at the plant. You’d be hard put to transform a place more than that.” But that’s not all. “The Mettingen facility has an e-technology center where we create prototypes for electric drive systems. We have also decided to assemble the electrified axles for the all-electric vehicles of the EQ product and technology brand at the plant in Untertürkheim,” he adds.

A few days before the winter holidays, there was even more good news for the employees: After intense negotiations between management and works council representatives, both sides have agreed that parts of the electric powertrain, the heart of the electric car, will also be manufactured at the plant. The start of the production for the EQ models is scheduled for the middle of the next decade. However, Deiss does not deny that the transformation process will also come with challenges. As a matter of fact, a transformation processes can only be successful, when the status quo is critically scrutinized and everyone is open to change. And that’s exactly why strategic measures for the transformation of the plant were initiated early on.

The recent decision shows that the plant will be transformed consequently. Various packages of measures were negotiated between the management in the works council for three future visions in order to make plant fit for the future. At the prototype plant for battery production in Nabern, 25 miles east of Stuttgart, colleagues are trained for their future assignment in Brühl. In a pilot project, the company is working together with the Böblingen Chamber of Commerce and Industry to offer professional training programs for electronics specialists and high-voltage specialists. A glance at the home plant in Untertürkheim shows that the transition to electric mobility is already well under way at the facility. However, the top priority for Deiss has not changed: “We have to respond flexibly and efficiently to demand, no matter whether it’s for advanced combustion engine vehicles, hybrids, or all-electric automobiles.”

The EQC has a compact electric powerpack at each axle, giving the vehicle the driving characteristics of an all-wheel drive.
The EQC has a compact electric powerpack at each axle, giving the vehicle the driving characteristics of an all-wheel drive.

Governments also have to take action

Nobody will claim that the automotive industry can successfully achieve emission-free mobility all on its own. It’s a society-spanning project that cannot be implemented against the customers’ wishes. Customers want to continue to benefit from individual mobility, on which they depend. This is particularly the case in rural areas, where the majority of the population still lives. Alternative mobility solutions such as carsharing are hardly cost-effective there, and rural public transportation is in no way comparable to that of big cities.

If people still want to be independently mobile, individual mobility will have to become more sustainable and governments will have to create and promote the conditions for making this possible. This applies to the transportation infrastructure for logistics and commuter traffic as well as to the expansion of the charging infrastructure. In addition, the switch to e-mobility must be made attractive for customers — by means of financial or tax incentives as well as by other measures.

According to the Bundesverband der Energie- und Wasserwirtschaft  (BDEW / German Energy and Water Industry Association), there were almost 21,000 public and semi-public charging stations in Germany in July 2019. Around 3,404 of these charging stations are located in Baden-Württemberg. Although this puts the state in the top tier nationwide, this by itself will not be sufficient. As a result, the state government has launched a funding program, which aims to create a comprehensive charging infrastructure within Baden-Württemberg. The program is fittingly called “Safe,” which stands for “Sicherheitsladenetz für Elektrofahrzeuge” (Safe Charging Network for Electric Vehicles).

It is run by a consortium that includes utility companies (the public energy heavyweight EnBW as well as smaller ones), energy suppliers, and municipalities. The goal is to set up at least one charging station with a charging capacity of 22 kilowatts or more in every 10 x 10 kilometer grid section and at least one quick-charging station with a charging capacity of 50 kilowatts or more in every 20 x 20 kilometer grid section. But even this program can only be a beginning if e-mobility is to become a mass market, because charging takes longer than filling a gas tank even if you are at a quick-charging station.

Mercedes me Charge also allows access to the quick-charging stations of the pan-European network IONITY.
Mercedes me Charge also allows access to the quick-charging stations of the pan-European network IONITY.

Not only the state government but also the German federal government will have to address this situation. Since 2009, the federal government has provided grants totaling around €5 billion for this purpose. For example, it subsidizes the purchase of an all-electric vehicle with €4,000 and of a plug-in hybrid with €3,000. In addition, it will invest €300 million in the installation of normal and quick-charging stations by the end of next year. And the tax on company cars that are wholly or partially electric has been cut in half to 0.5 percent of the equivalent cash benefit. Besides taking these measures, Germany has to forge ahead resolutely with the energy transition. After all, electric mobility only makes sense if the electricity comes from renewable sources.

However, the federal and state governments also have to take measures to safeguard jobs. Specifically, they have to promote advanced and professional training programs for skilled employees and support highly qualified young people early on. In this regard, scientific input is expected, among other things, from the new “Innovationscampus Mobilität” (innovation campus for mobility), which is an inter-university partnership between the Karlsruhe Institute for Technology and the University of Stuttgart. This partnership aims to more strongly tie together a variety of disciplines and topics: IT, electrical engineering, mechanical engineering, traffic engineering, digitalization, and climate change.

“Over the long term, fewer people will be needed to work on combustion engine components. Greater productivity as a result of digital manufacturing and more efficient development processes will also have a damping effect on workforce numbers,” says Franz Loogen from the State Agency for Mobility Solutions.. “However, there are also many employment opportunities in the area of new components, for example. These include power electronics, battery technology, electric machines, and software.”

Innovation requires cooperation

All of these examples clearly show that no matter how willing the automotive industry is to innovate, the transition to sustainable mobility can only be achieved in a joint effort. This is necessary so that the environmental situation can be improved and good prospects can be created for research and industry and thus for the safeguarding of jobs. Says Loogen, “Governments, business leaders, scientists, and employees must jointly strive to keep key technologies and the associated jobs in the state so that the economy of Baden-Württemberg and the central Neckar region can remain strong.” e-mobil BW is already closely networked with municipalities, scientists, and businesses in order to achieve this aim.

The future of Mercedes-Benz cars is electric.
The future of Mercedes-Benz cars is electric.

The Strategiedialog Automobilwirtschaft Baden-Württemberg (Strategy Dialogue with the Automotive Industry in Baden-Württemberg) that was initiated by the state government also promotes close collaboration between governments, businesses, scientists, employee associations, consumer organizations, environmental protection groups, and society at large. As part of the European economy, Baden-Württemberg plans to do more to form partnerships with other regions within the EU. Large, strong networks are also needed in order to create a climate in which innovations can flourish and pragmatic approaches can be taken to find solutions for sustainable mobility.

In this way, Baden-Württemberg and the Stuttgart region will remain one of the main automotive locations in Europe and the world. As a result “We in the South” will not only produce high-quality motor vehicles but also automobiles that are more sustainable and more in demand worldwide.

Christian Scholz

As a child, he once made it into the Mercedes-Benz customer magazine in the 80s with a car drawing. At that time he crossed off-road vehicles and coupés with each other. Completely crazy! And so, after studying, he preferred to use a pencil for writing rather than drawing. After various jobs in public relations, he has been writing for Daimler/Mercedes-Benz since 2012 – about off-road vehicles and coupés and everything else that moves the company.

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