What a signal. On Wednesday, Tesla CEO Elon Musk announces the construction of a large factory for his electric cars in Berlin. Up to 10,000 jobs are to be created.
Not 48 hours later, Daimler CEO Ola Källenius promises investors and analysts in London to save more than 1.4 billion euros in costs. He wants to reduce jobs and cut back investments on a large scale.
The timing is coincidence, and the two announcements do not mark the rise of Tesla on the automobile Olympus, nor the demise of Daimler, the icon of the German car industry. But Musk's casually thrown ambitions make the misery in which Källenius is involved with Daimler even clearer.
For too long rested on successes
In ordinary times, one would have ticked off Källenius' savings announcements probably with a shrug, as what makes a new CEO in the first month just like that: It points out that not all was gold, what the predecessor has sold so brilliantly, then to clean up, costs to lower and - if it works - later to stand even more radiant. Källenius issued profit warnings in the summer, and now blood, sweat and tears are following suit to get the company back on track.
But the times are not normal, the problems at Daimler go deep and in a phase in which electromobility, autonomous driving and digital networking, the car industry fundamentally change. Daimler is not prepared for this change. This is less Källenius than his predecessor Dieter Zetsche, although Källenius of course has to answer for the misery as a long-time board member.
In the era Dieter Zetsche, Daimler has rested too long on the successes that the Group had until 2015. Because car sales and profits increased for a long time, the managers from Stuttgart underestimated how quickly and how deeply the industry would change. In addition, more and more shows that not only VW, but also Daimler is deeply involved in the diesel exhaust affair. This will continue to burden the Group, not just financially.
Now Källenius is under massive pressure from four directions.
- Firstly, there are the new competitors such as Tesla and Waymo - the Google offshoot and specialist in autonomous driving - as well as Chinese competitors such as Geely. They attack with some aggressive strategies and take advantage of the opportunity offered by the switch from internal combustion engines to alternative drives such as battery and fuel cell. Here the market is not yet distributed, the old achievements of German manufacturers count little. Most electric cars currently sell Tesla and Chinese suppliers worldwide.
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- Secondly, the shareholders put pressure on Källenius on Thursday with his austerity program in particular: You see that the profit margins are falling, the stock price stagnated for years at best, and fear for future dividends.
Tesla's shareholders have become big with losses, they comfort themselves with the fact that Tesla is growing and hopes that profits will eventually follow. At Daimler, investors have a different attitude, they want continuous profits and high dividends. Both are now massively endangered and Daimler does not show a real growth perspective.
For this reason, Källenius has now promised its shareholders to cut costs so that the shrinking profit margins will grow again. Gereicht does not have the investors what the Daimler boss announced - too little ambitious they find his savings goals, he takes too much consideration for old-fashioned.
- This leads to the third group that puts pressure on Källenius: the employees , led and represented by works council chief Michael Brecht. If Källenius wants to make its shareholders happy, it may well have to break with the consensus traditionally cultivated by management on the one hand and works council and IG Metall on the other. They insist that Daimler adhere to the employment agreement, which excludes redundancies until 2030.
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The conflict is about more than a few jobs here and a few jobs there. The workers fear that Daimler could close entire factories in the medium term or relocate production. The concern is not unfounded.
- Because not only Tesla and other automakers try to use the technological change to derail the top dogs Daimler, BMW and VW market shares. Even the major suppliers are fleeing to the front. This is the fourth front on which Källenius fights. Bosch, ZF or Conti are losing a lot of business that they have made with components for the internal combustion engine. Battery drives consist of much fewer parts. The cake, which is to be distributed to the suppliers, is much smaller. That's why the big suppliers are developing the entire electric powertrain themselves, sourcing parts from low-cost countries. ZF builds the complete drive for Daimler's EQC, the group's first electric SUV. The works council fears that the heart of the car, the drive permanently could not come from Daimler itself.
Dare a little more Musk
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Especially the premium manufacturers Daimler and BMW have defined themselves in the past especially about the engine. The era of e-mobility therefore plunges them even more than VW into an identity crisis. VW is trying to build e-cars as cheaply as possible and to sell them in maximum quantities - and through cooperation with Ford. Because of the sheer size of VW this bet could end up in the end. A similar path is taken by Fiat-Chrysler with the planned merger with Peugeot.
Daimler and BMW can hardly save their profits on the high number of units, since they would have to merge or merge with other luxury providers. It is unlikely that it will happen. Through cooperation, they can improve their situation, but at the core they are concerned with something else: they must prove their right to exist as a premium manufacturer again, they must define the luxury of something other than the drive.
That's why it's far more important for Daimler and BMW than for VW to continue to develop automated driving and take advantage of the opportunities offered by networking over the Internet. There, however, the competition from the American technology companies is extremely hard and financially strong.
Källenius has announced that he wants to position Mercedes as a "pioneer of sustainable modern luxury". What this phrase means, the Daimler CEO has not yet explained. But he has to. Only with a clear strategic vision can they attract workers to their savings plans and keep shareholders in line. You do not have to conquer the universe, but a bit more Musk might do Källenius good.
