Home from home: Mercedes-Benz doubles down on China

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  • Mercedes-Benz to unveil new China tech centre this month
  • Germany automaker making China a ‘dwelling away from dwelling’
  • International automakers underneath stress from Chinese language startups
  • Mercedes-Benz strikes all its designers in China to Shanghai

BEIJING/SHANGHAI, Oct 11 (Reuters) – Mercedes-Benz, the German firm based by the inventors of the motor automotive, is pouring extra assets into its cutting-edge analysis and design capabilities in China because the centre of gravity of the brand new auto world shifts eastwards.

In a drive to create a “dwelling away from dwelling”, Mercedes-Benz is doubling down on bases in Beijing and Shanghai to remain forward of laws and client developments in a automotive market that outstrips the US and Germany mixed.

Three years after initially saying plans to strengthen its analysis and growth (R&D) within the nation, the posh automotive model owned by Daimler will unveil its new Tech Middle China in Beijing this month.

Reuters has spoken to 4 folks near the tech centre and the model’s Chinese language design studio who’re accustomed to the corporate’s new China technique. All declined to be named as a result of they don’t seem to be allowed to talk with the media.

With 1,000 engineers, the brand new tech centre is greater than 3 times the scale of the one Mercedes-Benz opened in 2014 and the primary outdoors Germany that may take a look at “all the pieces”, placing it extra “on par” technically with the far larger R&D headquarters close to Stuttgart, an individual near the centre mentioned.

Mercedes-Benz has additionally invested considerably in upgrading its Chinese language design studio and has moved the entire staff from Beijing to Shanghai, a megalopolis of about 25 million folks often known as the automotive design capital of China.

Mercedes-Benz has good motive to raise its Chinese language operations.

Its automotive gross sales in China jumped 12% final 12 months to a document 774,000 regardless of the pandemic, streets forward of its subsequent two markets, Germany on 286,000 and the US with 275,000.

About 80% of the vehicles it offered in China had been additionally made there, sometimes with an array of China-only options and fashions, and Asia general accounted for nearly half its international gross sales in 2021.

China’s auto market, the most important on this planet since 2009, is predicted to hold on rising steadily, with demand forecast to succeed in 35 million automobiles by about 2030 versus 25 million now.


However Mercedes-Benz, like all international automakers in China, is underneath rising stress from native EV startups resembling Xpeng , Li Auto and Nio and their fashionable automobiles with high-tech options tailor-made to Chinese language shoppers.

That is why the German carmaker’s “second dwelling” technique for China is targeted on making its design and expertise extra agile, to reply shortly to the ever-shifting panorama and to firmly entrench the Mercedes-Benz model, the 4 sources mentioned.

“The expectations in China are for the in-car expertise to be served by a localised digital providers ecosystem, and such options have to be conceived and constructed by people who reside in China and actually perceive the cell web,” Invoice Russo, head of consultancy Automobility Ltd in Shanghai, mentioned.

Mercedes-Benz prospects in China are 36 years outdated on common – roughly 20 years youthful than in Germany – and are extra tech-savvy, however they’re additionally notoriously disloyal, hopping from model to model as developments shift.

Mercedes has spent 1.1 billion yuan ($170 million) upgrading the centre, with a lot of the funding making certain it could possibly do an array of testing domestically – moderately ship new applied sciences again to the Sindelfingen headquarters in Germany.

“A key motive for the enlargement is to realize the proximity to these prospects and their wants,” the particular person near the tech centre mentioned. “Right here, we lastly have all the pieces we have to take a look at the automotive absolutely,” mentioned the supply.

The centre has fashionable chassis take a look at benches and others together with for noise, vibration and harshness, in addition to batteries and e-drive powertrains and it has the flexibleness to swap in new ones as expertise develops, two sources mentioned.

Mercedes has additionally added capabilities deemed necessary for Chinese language prospects, resembling a staff devoted to clever, related electrical automobile (EV) expertise.

“Tech savvy prospects right here require that you simply’re very native by way of intelligence, connectivity and autonomous driving,” one of many sources mentioned.


All 4 sources mentioned a sharper give attention to the shopper in China in recent times is already paying off.

A drive to create China-only colors led to analysis into the preferences of youthful luxurious items consumers. Whereas delicate to being seen as hip and tech-savvy, there was a revived curiosity in types impressed by China’s historic dynasties.

As a part of that analysis, the studio got here up with “rose gold metallic”, a variation on rose gold tones adjusted for vehicles first used as an exterior color for the Mercedes-Benz A-Class L sedan in 2018. New EVs such because the EQA and EQB now are available rose gold, and it is also an inside tone within the EQC.

“International concepts, impressed by China,” mentioned one supply near the studio, including that whereas Mercedes must cater to its China prospects first, some China-grown concepts will go international.

Shifting the studio to Shanghai was partly pushed by the necessity to considerably velocity up the design course of by making it extra digital, as most digital model-making distributors are based mostly there.

“Apart from, Shanghai is so much simpler a spot to recruit design expertise,” mentioned the supply near the studio, which is simply north of metropolis’s prime waterfront district The Bund.

Designers sometimes sketch a automotive on paper or a touch-sensitive laptop display and professional modellers then assist sculpt the designs into clay fashions. Mercedes-Benz plans to roughly dispose of these bodily fashions.

Underneath the brand new course of, the Shanghai studio will overview its designs utilizing digital instruments, apart from the occasional quarter-size bodily fashions, in accordance with one of many 4 sources.

If the studio makes it to the ultimate of inside competitions for automotive designs, it’ll ship designers and modellers to the principle studio in Germany to create life-size fashions for the final spherical, the supply mentioned.


Daimler’s drive to strengthen its expertise growth in China additionally comes at a time when the price of failing to be in keeping with Beijing policymakers has by no means been larger.

Beijing’s sweeping regulatory crackdown in latest months has wiped billions of {dollars} off the worth of among the nation’s best-known personal companies, and has weighed on the auto sector.

That is partly as a result of tensions between the US and China have created a difficult atmosphere for international firms to import expertise developed elsewhere.

And from battery expertise to new sorts of mobility together with sensible connectivity and autonomous driving, Chinese language insurance policies and laws are shifting and evolving quickly.

“Should you reply to vary after insurance policies and regulation kick in, it is too late,” mentioned one of many contacts near Daimler.

With that in thoughts, the tech centre works carefully with the model’s exterior affairs staff which retains its finger on the regulatory pulse – and that has proved key in the case of so-called vehicle-to-everything, or V2X, expertise.

V2X controls communications between a automotive and “all the pieces” outdoors, from 5G mobile indicators to low-earth-orbit satellites to sensible visitors lights and cameras on the street.

In China, automobiles will quickly have to return with full-fledged V2X capabilities to attain a high security rating underneath a brand new model of its automobile security analysis system, or New Automotive Evaluation Program (NCAP), which is predicted in 2025.

“We knew this regulation was going to be carried out. We began growing these self-drive applied sciences together with V2X to be in compliance with the brand new legislation and did so effectively earlier than new regulation kicks in,” one of many tech centre sources mentioned.

Enhancing by David Clarke


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