On the road to solutions for the mobile future.

Talking with Renata Jungo Brüngger, Member of Board of Management of Daimler AG, Integrity and Legal Affairs, and Ola Källenius, Member of the Board of Management of Daimler AG, Group Research & Mercedes-Benz Cars Development.

Daimler has realigned its sustainability strategy. How were you involved in this process?

Renata Jungo Brüngger: In order to make sure that sustainability-related activities have a substantial effect, they have to be regularly monitored and adapted to suit current developments. For example, we are conducting an ongoing dialog with our stakeholders. Through personal contact in particular, we receive open feedback and valuable suggestions concerning our sustainability-related activities. Our ongoing voluntary obligations, as well as the implementation of the UN Sustainable Development Goals (SDGs), are crucial to our continuing development. We have focused on the SDGs that are influenced by our business model and our value chain — areas where we can actually bring about change. The result of this 360° perspective is our Sustainability Strategy 2030.

Would you say that this is a new and more precise focus rather than a thoroughly new approach?

Ola Källenius: That’s right. Our involvement is in line with the principles and values that have guided us for a long time now. One of the basic guidelines for our business operations is provided by the ten principles of the UN Global Compact, with which we have a special affiliation as a founding participant. As an international frame of reference, it is an important foundation for our internal principles and guidelines.

Does that also include the respect of human rights?

Renata Jungo Brüngger: Yes, respecting and upholding human rights is an important basic principle at Daimler. That’s why the five sustainable development goals we focus on include “Decent Work.” We have developed an approach for the respect of human rights that includes systematic monitoring: our Human Rights Respect System. Through this approach, we monitor our own companies and our supply chains to detect any risks to human rights. In this way we create transparency beyond our direct suppliers and introduce appropriate measures wherever they are needed.

As a result of the public debate concerning diesel, criticism has also been leveled against Daimler. What’s your response to that?

Renata Jungo Brüngger: It’s true that confidence in the automotive industry has declined in the public’s perception. That’s one reason why we ourselves have an interest in creating transparency and clarity. And that’s why we are cooperating fully with the authorities. At the same time, we are playing a significant role in the improvement of air quality in cities. In this way we want to show that we’re also part of the solution. We are setting our sights on technological innovation, which we think is more effective than driving bans.

Will that be enough to regain the public’s trust?

Ola Källenius: We have prepared a whole package of measures to quickly and effectively reduce the emissions generated by road traffic. Most importantly, this includes voluntary software updates. To create these updates, we can draw on our extensive experience in the field and the development process of our new engine generation. We will significantly reduce the NOx emissions of the vast majority of our diesel engines in real-life operation.

Wouldn’t it also make sense to make changes inside the vehicle?

Ola Källenius: That wouldn’t create any improvements in the short term. You have to remember that we have several hundred vehicle configurations, and in very many cases not enough installation space is available. Besides, the development and validation processes would require between three and five years. Under these conditions, changing the hardware would not achieve quick and extensive improvements, especially because we’re talking about vehicles that are already owned by customers.

Is electric mobility the way to solve this dilemma? After all, Daimler is making massive investments in emission-free drive systems.

Ola Källenius: There’s no doubt that we’re moving toward emission free mobility in the long term. We’ve already flipped the power switch, so to speak, and we’re investing approximately 10 billion euros to increase the proportion of electric vehicles in our fleet. In 2017 we added the EQA to our EQ brand family of car models with battery-electric drive. The EQA is a concept vehicle based on the A-Class. We are systematically expanding our portfolio of plug-in hybrids. That also includes the GLC F-CELL (preproduction model presented at the IAA). The first units of this SUV with fuel-cell drive and a battery will be delivered to customers in 2018. The eVito, a fully electric series produced van, will also be available starting in 2018. It will be followed by the eSprinter and the eCitan. At Trucks, we’ve already put the first fully electric light truck on the road in a small series — the Fuso eCanter. It’s the first representative of our new E-FUSO electric vehicle brand. And Mercedes-Benz plans to follow suit in 2021 with the eActros, the first electric truck for distribution transportation with gross vehicle weights starting at 18 tons.

Many people are still hesitant when it comes to electric mobility.

Renata Jungo Brüngger: The longer the cars’ ranges grow and the better the charging infrastructure becomes, the sooner we’ll see the breakthrough of electric mobility. Of course the difference in price between electric cars and traditional combustion-engine cars plays a role too. We’re working hard to expand the range of our electric cars. The battery cells that will be launched on the market at the end of this decade will have a significantly greater energy density than the products that are available today. And they will make electric cars much more affordable. We’re also working on the charging infrastructure — for example, through the IONITY joint venture, in which we are working together with other automakers to create a comprehensive charging infrastructure in Europe by the end of 2020. I’m confident that the demand for electric cars will grow.

Ola Källenius: At that point, electric mobility will be able to make full use of its advantages. We want electric vehicles to be attractive vehicles. Range is not the only important factor. Driving pleasure, safety, services, connectivity, and suitability for daily use also count. Our EQ brand offers all of these qualities. EQ comprises a complete electric mobility ecosystem that consists of products, services, and innovative technologies. It ranges from the vehicle itself to wall boxes, charging services, and stationary battery storage systems for users’ homes.

Have you prepared for a boom in demand?

Ola Källenius: We’re investing very heavily in expanding our production capacities. We are investing 1 billion euros solely in the global expansion of our battery production for electric cars and plug-in hybrids. Beijing Benz Automotive (BBAC), our joint venture with the Chinese company BAIC Motor Corporation, is currently building a battery factory in China. This will create the basis for the local production of electric vehicles. We’re also building a battery plant in Tuscaloosa, Alabama. And we’re already building our second battery plant in Germany on the premises of our subsidiary ACCUMOTIVE in Kamenz. It will be one of the biggest and most modern such factories in Europe. In addition, we are continuing our electric offensive in the area of vehicle production. At the plants in Bremen, Sindelfingen, Rastatt, and Hambach, we already have four competence centers for the production of electric vehicles. Moreover, we are continuing to upgrade the Untertürkheim plant into a high-tech facility for electric drive components. In addition, the Mercedes-Benz plant in Hamburg will be involved in the manufacture of EQ production vehicles in the future.

When are you planning to put highly automated vehicles on the road?

Ola Källenius: Before such vehicles are ready for the market, they still have to go through several stages of technological development in the areas of sensor systems, map data, and artificial intelligence. They also have to overcome legal and social challenges. However, I think we’ll already be very close to our goal between 2020 and 2025.

Renata Jungo Brüngger: There’s a need for action at the international level as well. Progress should not come to a halt at national boundaries. That’s why we advocate international harmonization of the laws governing automated and autonomous driving. The clarification of legal and ethical issues is a prerequisite for public acceptance of this new technology.

Another important aspect connected with connectivity and autonomous driving is data protection. What’s your standpoint on this issue?

Renata Jungo Brüngger: Our customers can rely on us that data protection in our vehicles is of great importance. We are taking a holistic approach to this issue. On the one hand, data make new services possible and thus offer added value for our customers — for example, consider the possibility of finding parking spaces faster in the future because cars are sharing information about vacant parking spaces. At the same time, handling data responsibly is part of our corporate digital responsibility. We are focusing on transparency, self-determination, and data security. When our engineers develop new services and products, they sit down at a table with their colleagues from the corporate data protection and legal departments so that they can find solutions together. Data protection is a key factor in connected driving in particular, and also in customers’ acceptance of this technology.

The mobility of the future will be following a new set of rules. Don’t changes in business operations also have to be followed by changes in the work environment within the company?

Renata Jungo Brüngger: We’re already in the midst of this process. Daimler is transforming itself from an automaker into a provider of mobility services. We are accumulating expertise in areas that extend far beyond our previous core areas of business. This is also having an impact on our corporate culture. We want to have a culture of cooperation that will bring us success in the future as well. This is why we kicked off our Group-wide Leadership 2020 initiative in 2016. Through this initiative we are launching a cultural transformation, but at the same time we are preserving our traditional corporate values such as integrity. As part of Leadership 2020, our employees and managers at all levels examined our human resources development and decisionmaking processes, as well as our organizational structures, working methods, and tools. The measures that have been generated by this process and those that have already been implemented are impressive. For example, many of our colleagues are now working in swarms, and this is functioning very well.

What effect are these changes having on your relationship with Daimler’s stakeholders?

Renata Jungo Brüngger: Our dialog with our stakeholders is very important to us, and it will stay that way in the future. We’ve developed formats for this dialog that have proved to be very successful and sustainable. One important tool is the “Daimler Sustainability Dialogue”, an annual event in which our stakeholders meet with representatives of our Board of Management and other management levels. We split up into working groups and hold very open discussions, during which we of course also receive critical feedback. At the same time, we give our stakeholders insights into what the transformation of the automotive industry means for us. We listen to the external participants’ suggestions, work together with the stakeholders to achieve our agreed targets, and report on the progress we have achieved. In 2017 we held the tenth “Daimler Sustainability Dialogue” in Stuttgart, the biggest one so far. We also organize “Sustainability Dialogues” in other countries. For example, we held our fifth “Sustainability Dialogue” in China in 2017, and we’ve also held such events in Japan, Argentina, and the USA.