Mercedes Benz AG has resorted to Google to support with a new version of software-based functions which projects they will generate just under €10 billion (US$10.6 billion) in additional income by the end of the decade.
The new operating system which will debut around 2025 will be featured on models spanning the entire Mercedes lineup and will keep vehicles up-to-date throughout their useful lives, the luxury automaker said on Wednesday.
Although Mercedes is working with select partners, including Alphabet Inc., Nvidia Corp.. and Luminar Technologies Inc., the manufacturer plans to maintain a tight control over technology to prevent revenue from escaping to technological competition.
Mercedes Benz will charge a subscription to give the car more speed
“We made the decision to be the architects of our own operating system, a unique chip-to-cloud design, that takes advantage of your full access to hardware and software components of our vehicles,” CEO Ola Källenius said at a presentation of the automaker’s updated software strategy in California.
Automotive manufacturers have stumbled with developing their own software functions that are outside of their hardware expertise. Last year, Volkswagen AG delayed new electric models from Audi and Porsche because it couldn’t get the accompanying operating system to work in time. Deliberation continues as to who benefits most from the transformation to computers on wheels.
Auto revenues derived from software will reach about $700 billion by 2030estimated UBS Group AG last year.
Mercedes plans to invest 25% of its research and development budget in software by 2025. Last year, the company generated more than €1 billion in revenue from software-based offerings such as navigation services and live traffic. Cooperates with Nvidia on software and chips, as well as Luminar on laser-based radar systems for driver assistance functions.
Mercedes Benz will charge a subscription to give the car more speed
To keep margins strong through EV and software transitions, Mercedes has now shifted its focus to higher-end vehicles like the G-Wagon. While this has paid dividends in the form of huge price gainssubstantial discounts on flagship electric vehicles in China late last year suggest the company may have reached the limits of this strategy.
In addition to co-designing navigation with Google, which will be done through a license agreement, drivers will have access to the YouTube application and hands-free driving in urban environments where regulations allow. The company is also continuing its effort to offer automated driving at speeds of up to 130 kilometers per hour.
A precursor version of the new operating system will be presented on the E-Class sedan from the company that will go on sale later this year.
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