Daimler expects intense competition if Apple, Alibaba enter car market

LONDON – The CEO of Daimler in Germany believes the automaker will face stiff resistance from tech giants like Google, Apple and Alibaba if it decides to launch its own electric vehicles.

While the tech giants haven’t started selling their own cars just yet, reports suggest they could soon launch products that combine hardware and software if the electric vehicle race gets hot.

“There will be intense competition,” Daimler boss Ola Kallenius told CNBC’s Annette Weisbach on Thursday when he was asked if he was concerned about the entry of digital companies into the electric vehicle market.

“When an industry changes, I think it is natural for new players to look at the industry,” he said.

Kallenius said Daimler will “look at what the brand stands for and carry that into the next technological age,” adding that the company will be able to build on its position if it does well.

His comments come when Mercedes Benz, owned by Daimler, launches an electric version of its flagship S-class luxury sedan.

“It’s kind of the beginning of a new era,” said Kallenius, before adding that the new vehicle was very “curious”.

Prices for the luxury sedan will be announced this summer, but Kallenius said Daimler expects to make money on the vehicle from the time it is sold.

He added that the variable cost of vehicles with a large electric battery is higher than that of vehicles with a traditional internal combustion engine.

“Our task in this decade of transformation is on the one hand to reduce variable costs and restore margin parity in all of our segments,” said Kallenius.

Electric vehicle technology is “still in its infancy” and there is “a lot to be done,” he continued. “It will be scaled and we will have technological developments. I am optimistic that we can restore the margins to which we are accustomed.”

Daimler versus Tesla

Daimler’s shares have risen by more than 173% year-on-year in the past 12 months and were quoted on Thursday at 75 euros per share.

“We have positive momentum in our stock,” said Kallenius, adding that this was due to improved financial performance and the company’s “technology strategy for the future.”

However, Daimler’s market capitalization has fallen from around 185 billion euros today in 1998 to just 80 billion euros. Meanwhile, Tesla’s market capitalization has risen to $ 694 billion.

“Now if we look at the total market capitalization of every single auto player in the world, you get an impressive number,” said Kallenius.

He added, “We need to make sure that the distribution of that total market cap is moving more in our favor. We are working on that.”

Like other automobile manufacturers, Daimler’s business was negatively impacted by the global shortage of chips.

“We can currently sell more than we produce,” said Kallenius

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