Published on November 16th, 2019 | by Johnna Crider0
Daimler’s Crisis: Needs Something More Musk
November 16th, 2019 by Johnna Crider
In an analysis by the acclaimed German news site Spiegel, the author points out Daimler’s crisis and that it needs “something more Musk, please.” The article, written in German, made several interesting points, but the main point is that Daimler is facing a crisis and Tesla is just one part of that crisis. The author of the article believes (and so do I) that perhaps Daimler’s CEO, Ola Källenius, needs to be more like Elon Musk to help save his company.
Key Thoughts From The Analysis
Källenius has a goal to position Mercedes as a “pioneer of sustainable modern luxury.” However, he has not elaborated on what he means with this phrase. The article points out that you don’t have to “conquer the universe, but a bit more Musk might do Källenius good.”
Elon Musk took the auto world by storm when he announced that the Gigafactory 4’s location is going to be built in Germany, Berlin no less. With this, up to 10,000 jobs could be created in the country. Not even 48 hours later, Källenius made a promise to investors in London to save more than €1.4 billion in costs. Daimler’s crisis starts with his plans to reduce jobs and cut back investments.
Daimler’s Crisis Summed In 4 Points
Spiegel points out that Källenius is under a lot of pressure from four different points.
1. New Competitors. New competitors such as Tesla and Waymo specialize in autonomous driving, while Chinese competitors such as Geely attack with very aggressive strategies. They take advantage of opportunities that are given by switching from gas/diesel to electricity. Daimler, in a sense, is looking a lot more like Kodak in the age of new technology.
2. Pressure From Shareholders. With falling profit margins, a stagnating stock price and a fear for future dividends, shareholders may be a bit concerned. When it comes to Tesla, its shareholders know that Tesla is a company that is changing many industries, while at Daimler, investors probably want continuous profits and high dividends. Unfortunately for Daimler, it’s not showing a real growth perspective and this is why Källenius wants to cut costs — to grow the shrinking profit margins.
3. Employees. Daimler has already made plans to cut 1,100 jobs worldwide, and workers now worry that Daimler could close entire factories in the medium-term, or even relocate production. Another issue is that IG Metall insists on Daimler adhering to its employment agreement that, unless I am confused by the translation of the article here, expires in 2030. This means that there is some type of work agreement between employees and Daimler that ends in 2030, but there is a chance Daimler could break that agreement.
4. Fleeing Suppliers. With Tesla and other automakers using better and more cutting-edge technology, many major suppliers are fleeing. Bosch, ZF, and Continental have lost a lot of business. These companies helped create components for the internal combustion engine. ZF build the complete drive for Daimler’s EQC and the works council fears that this drive could no longer come from Daimler itself. Batteries and motors require fewer parts than an internal combustion engine.
What does the author mean by “more Musk?” We know he doesn’t want Daimler to stop using deodorant. No, the author is encouraging Daimler to open its mind to how Elon Musk thinks and directs his company. One looks at Elon and sees all that he achieves and thinks, “how in the world…?” Daimler could use a little more of that.
In the article there is a photo of Elon Musk with the caption: “You do not have to conquer space right away.” This caption provides just a glimpse of a solution that Daimler and even BMW could use if they opened their eyes. Tesla didn’t conquer the auto industry when it was first founded. In fact, just like a speeding train, one has to gain the right amount of speed for that company to “zoom.” Another analogy: Rome wasn’t built in a day. This problem won’t be solved by cutting thousands of jobs but it will be solved by embracing technology and becoming more innovative and agile.
Tesla’s challenge to the other automakers is simple: evolve or die. Tesla has even made it easier for companies such as Daimler to evolve by open-sourcing its patents. Tesla isn’t here to take down the auto industry, but to lead it into a more innovative future that doesn’t pollute our planet.
Daimler and the other automakers don’t have to die. They just need to evolve. Daimler’s crisis could lead Daimler into a rebirth if the company would allow that to happen.
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