Ola Källenius on Mercedes-Benz’s Next Transformation: EVs, AI, and Modern Luxury

The opening asks whether Mercedes has lost ground in China, whether luxury still matters, and whether gasoline cars will disappear. CEO Ola Källenius calls this a transformation unlike any he has experienced, while insisting the company can adapt without abandoning its identity.

Zhang Xiaojun introduces herself as a technology editor and podcast producer, then welcomes Källenius. The introduction’s automatic transcript mistakenly calls him the CEO of Toyota; the title and description identify him as Mercedes-Benz’s global CEO, and the conversation is about Mercedes throughout.

Källenius says the whole auto industry is at a turning point, though only the first chapter of a fundamental transformation has begun. One force is the step-by-step journey toward zero-emission vehicles, moving at different speeds across markets, with China leading in electric vehicles.

The second force is intelligence and AI. Pointing to the new CLA, Källenius describes supercomputer-class hardware in the car, including a chip capable of more than 270 trillion calculations. He sees this computing capacity as part of what makes the present moment so exciting.

Asked what he has learned from China, Källenius names speed and digital innovation. He points to automated driving, smart cockpits, and language understanding, and says Mercedes needs to work with leading local technology companies so the vehicle reflects what Chinese customers already expect from their phones.

Zhang asks about falling market share and electric sales that missed expectations. Källenius puts the figures in a longer view: Mercedes grew from a few thousand locally produced cars to roughly 600,000–700,000 a year, selling around 680,000 the previous year despite intense competition.

Rather than fight for every sale through discounts, Mercedes wants to protect the value customers retain in their cars. Källenius says a Mercedes is not something a buyer should discard after three years, so preserving resale value can matter more than maximizing the latest sales figure.

Källenius rejects the idea that Mercedes has lost China’s electric-vehicle market. Electrification first grew in entry-level city cars and is moving into volume segments; Mercedes says it has strong shares in the top end but needs a much broader portfolio to participate in the next phase.

He names SUVs and core models such as the GLB, GLC, C-Class, CLA, and E-Class as important areas for growth. A long-wheelbase E-Class launched in China has performed strongly, and Källenius promises a major electric-product rollout, with more vehicle launches in the next three years than ever before.

Mercedes aims to offer electric options across all relevant segments by the end of the decade. Källenius calls the next five years crucial for building electric share, but rejects the suggestion that a luxury strategy means retreating from electrification.

Electrification, Källenius says, runs from the top of the range to the entry models. Mercedes has launched an electric G-Class and is developing an electric architecture for AMG; growing the high-end business remains valuable because it generates cash for technology and new products.

The company does not plan to exit core vehicles such as the C-Class, E-Class, GLC, or GLE. For Chinese buyers, Källenius says the recognizable Mercedes lineup will remain broadly intact while receiving a substantial technological upgrade.

Asked about large screens and spacious interiors in Chinese-brand cars, Källenius points to Mercedes’ own pillar-to-pillar display. The aim is a welcoming cabin with a living-room feel, while making efficient use of space even in an entry-level car.

China’s fast pace and competitive pressure make it a demanding test for Mercedes, and success there can improve its chances elsewhere. It is also the company’s largest market. Källenius says Mercedes plans to invest 14 billion RMB in its next generation of Chinese products.

Mercedes has expanded its Beijing R&D center and added an engineering center in Shanghai. These teams are linked to central R&D in Germany, forming a global network that can collaborate around the clock rather than relying on a one-way flow of decisions from headquarters.

Källenius says more technology now originates in China. He cites parking software that lets a driver press a button and have the car park itself, as well as a new rear-seat entertainment system. Both are examples of local development that can be brought to markets worldwide.

The interviewer asks whether a product might someday be designed entirely by the Chinese team. Källenius says Mercedes has not done that yet, but cautions against ruling it out.

Responding to the claim that Mercedes is late to electric cars, Källenius cites the CLA’s expected range of more than 850 kilometers under the CLTC cycle, consumption around 11 kilowatt-hours per 100 kilometers, and an 800-volt architecture that can add more than 300 kilometers in ten minutes. He says the car pairs efficiency with Mercedes’ safety work.

Källenius says the CLA should not be treated as a single-model rescue plan. Its launch also introduces a new electric drive system and a comprehensive software and hardware platform, linking chip choices, computing power, the vehicle software stack, cloud services, and generative AI.

Mercedes calls this approach “chip to cloud.” The underlying platform is intended to spread through a portfolio of more than forty models, which is why the CLA matters as the start of a new generation of technology rather than only as a new car.

Asked whether relying on technology partners could weaken Mercedes’ control over luxury, Källenius compares the process to cooking: ingredients can come from different places, but the company must be the cook. Mercedes writes core software itself, including battery-management functions, and brings that expertise together in its MB.OS stack.

He argues that even a tire is a high-tech product when its traction and braking performance are tuned to a specific vehicle. Mercedes needs competence across physical and digital systems, from tires and safety to driver assistance, smart cockpits, virtual assistants, and AI agents; partnerships should remain flexible.

On solid-state batteries, Källenius says Mercedes works with several partners on different approaches, including high-silicon-content anodes. A demonstrator built with one partner used a battery in an EQS to show a possible range of 1,000 kilometers.

Källenius says Mercedes will remain a physical-product car company, while AI can make that product significantly better. He expects AI-supported systems to improve decisions on the road and reduce human error, advancing the company’s long-standing ambition to reach zero accidents.

AI is also about convenience. Mercedes says it was the first automaker to bring a certified Level 3 driving system to market, first in Germany and then the United States, raising its permitted speed from 60 to 95 kilometers per hour. The benefit, Källenius says, is giving drivers valuable time back.

That time could be spent checking messages, talking with a passenger, listening to music, or watching a movie when the system permits it. Källenius then describes the Mercedes Virtual Assistant, which has evolved from simple voice interaction into an assistant supported by AI agents in the cloud.

He imagines an in-car assistant as a personal butler or “Jarvis,” and predicts that people may eventually have AI companions that help with a wide range of tasks. In his view, AI will change every industry and reshape the way people think about cars over the next five to ten years.

Asked whether Mercedes would work with DeepSeek, Källenius says yes. He recalls first wondering whether the news was real, then praises the team’s original thinking and its ability to advance technology without spending as much as expected. For a technology user and integrator, he says, more capability at lower cost is welcome.

Källenius is certain consumers will continue to want luxury cars. Building one, he says, is like mastering a decathlon: electrification and digital AI add even more disciplines. The product’s appeal comes from the combined recipe, including engineering, safety, design, and a feeling of having reached a new stage in life.

Mercedes does not aim to become a volume brand. Källenius expects space for products that feel special, while the company continues combining luxury and technology rather than choosing between them.

Reflecting on the founders, Källenius contrasts Carl Benz’s more rational approach with Gottlieb Daimler and chief engineer Wilhelm Maybach’s sense of aesthetics and desire to create something exceptional. He sees that duality—engineering and technology alongside desirability and timeless beauty—as part of Mercedes’ identity.

Asked about his leadership during a turning point, Källenius recalls knowing months in advance that he would become CEO. The responsibility felt different once he took office: when the decision rests with the chief executive, there is no one behind you to take it instead.

Some decisions feel nearly certain, but others are closer to 51–49 because no one knows how a market will develop. Källenius says leaders should accept that uncertainty, avoid dwelling on a wrong call, and be willing to change course when new information arrives rather than protecting their pride.

Professional managers must preserve an entrepreneurial spirit while responding to financial pressure and industry transformation. Mercedes is investing heavily in R&D, factories, tooling, and technology partnerships, while also simplifying processes and making the organization more efficient.

Källenius compares product launches to a football team’s attack: new models help protect or grow market position. But delivery must become faster and less costly, so investment in growth has to be balanced with operational discipline.

A company of 160,000 or 170,000 people cannot move like a startup of 150 or 200. Källenius says transformation requires questioning processes that once worked and checking whether the organization is still fast, agile, and efficient enough.

After 32 years in the auto industry, Källenius says he has never found a period more exciting, though it is also uncertain. Anyone who needs to know exactly what will happen five years from now may not enjoy working in the sector.

Källenius defines success as stewardship of the Mercedes brand. His job is to hand it to the next leader in better shape, accounting for technology, customer opinion, brand value, and financial performance.

He takes established rivals and new Chinese competitors seriously, and sometimes drives their vehicles to learn what they are doing. But benchmarking cannot replace original thought: Mercedes must imagine what customers will love several years from now, not only copy current leaders.

The history of Mercedes creates a sense of responsibility, but Källenius says leaders must stay calm, curious, focused, and determined. He calls the work a lifelong learning game. Asked what he would say to Carl Benz, he jokes that he would ask how he likes the car.

Källenius believes mobility is moving toward zero emissions, with electric drive currently the most efficient route, but says Mercedes is not married to one technology. For the foreseeable future, customers will have multiple options; technologies change, while the Mercedes brand remains.

In the CLA, Källenius points out the wide “super screen,” the camera that monitors whether the driver is watching a movie, and the designers’ attention to interior details. He describes the cabin as a place where new technology should still feel like a considered piece of Mercedes design.

The group tests the Chinese-language voice assistant by asking it to open Tencent Video and search for a comedy film. The assistant responds, and Källenius jokes that he needs to improve his Mandarin to understand it. Zhang and Källenius close the demonstration by returning to the new CLA.