Autos and IT Not Biting Into Apple's E-Car

Dieter Zetsche, the Daimler CEO, questioned whether Apple, rumored to be working on an electric car, intends to become a competitor or a collaborator in the e-car market. He shared his views with Handelsblatt in Portugal.
Mr. Zetsche welcomes competition - even from Apple.

Daimler's chief executive, Dieter Zetsche, just tested the most powerful version of his company's compact luxury C-Class sedan.

In spring temperatures, he drove a few laps around the Formula 1 Portimao racetrack in southern Portugal's Algarve region, demonstrating to the global press he is capable of handling Daimler's sportiest models. In an interview, Mr. Zetsche said he detects no sign of competition from Apple, the cellphone and iPad innovator, that is rumored to want to enter the electric car market.

 

Handelsblatt: Mr. Zetsche, were you surprised by the rumor that Apple might build a car?

Mr. Zetsche: I was surprised but not shocked. If someone were to speculate that we might be developing smartphones, I doubt the CEO of Apple would lose any sleep over it. I think it’s more likely Apple's supposed plans will not materialize as predicted. But if they do, we welcome the competition.

Do you think the rumor is unlikely because you don't believe that Apple could descend into the depths of rear-view mirrors, blinkers and decorative seams?

I don’t see the company benefitting from this sort of activity. In the bigger picture, we are actually beyond the age of conglomerates. The current belief is that specializing in certain capabilities makes sense. Besides, investors decide whether they prefer to be involved in short-lived consumer products or longer-term investment products. Returns vary widely in these industries. That’s why I also believe all of these issues wouldn’t generate much excitement in the financial world. At any rate, I can't imagine a plausible corporate strategy behind it. But maybe my fantasy is too restricted in this respect.

Video: An approximation of Apple's iCar concept.

Do you generally see the IT sector developing into a competitor for the auto industry?

First of all, I see the two industries entering common ground with technologies that are growing together and show great potential. At Google, the business model consists mainly of generating data relating to people to offer services to customers. People spend most of their time in three areas: at home, in the car and in the office. It makes sense not to allow any gaps to develop there. However, we have to pay close attention to when data is generated and for what purpose.

Do you have any concrete examples?

In the case of driverless cars, for example, the sensors supply large amounts of data to safely steer vehicles through traffic. But this data only serves to calculate the vehicle's path. It's a different story when we want to offer our customers additional services relating to the networked car, such as Google Maps. Generating and using data can represent an intersection between Google and us, but that's the extent of it. There is room for cooperation, but there are also potential conflicts of interest that need to be set aside. When it comes to safety, the trust customers place in us also applies to the safety of their data.

In the end, these issues in the auto industry all revolve around the new form of mobility. The IT sector is also trying to enter areas that the industry has been involved in for years.

Digitization is a huge area, especially in the entertainment industry, but it also has the potential to challenge known business models. Take Uber, for example. We need to ask ourselves whether there could be new opportunities for us in this area, for example, in sales. But for us, it's primarily additional potential that's developing. I believe that neither Google nor Apple intend to become an automaker, but that their sphere of activity overlaps with that of the auto industry in some areas.

As for the auto and IT worlds growing together, is more happening in the United States or in the Stuttgart-Munich-Ingolstadt cluster?

The Internet world, clearly, has its origins in Silicon Valley, where we, too, have had engineers working for the past 20 years. And more is also going on in the United States when it comes to start-ups. However, a few years ago, we heard the discussion that batteries would soon only exist in Japan and South Korea, and that the German auto industry would be left in the dust before long. That didn’t happen, because it isn't smart to isolate technologies.

Emotions have always played an important role with customers when it comes to cars. Would that be compatible with the world of an IT service provider?

I can certainly imagine it would. Apple's iPhone was a revolutionary product that could do things no other mobile phone could do. Today, that is no longer the case, but the brand is still emotional. I would never deny Apple’s emotional awareness. But there are, of course, different emotions. Even if we had suppliers like Apple manufacture all components for a car, it wouldn't produce the kind of product critical to our success in the market.

Would it bother you if Apple were to collaborate with one of your suppliers?

We don’t believe we can develop a reasonable strategy here by setting some sort of guidelines. We want to experience new things on our own. I'm generally more of an advocate of creativity and self-motivation than of obstructing others. For instance, we were warned for years that the Chinese would copy us. Instead, I’ve always made sure that we kept up a fast pace of innovation. If someone wants to copy us, they should go ahead, because by that time, we've already moved on to something new.

 

Christian Schnell covers the auto industry for Handelsblatt. To contact the author: [email protected]