BERLIN (Reuters) – Mercedes-Benz (MBGn.DE) said on Wednesday it has teamed up with Google (GOOGL.O) on navigation and will deliver “supercomputer-like performance” in every car equipped with automated driving sensors as it seeks to compete with Tesla (TSLA). O) and new Chinese arrivals.
Automakers new and old are racing to match the software-powered features Tesla has created, which allow upgrades to the car’s performance, battery range and self-driving capabilities from a distance.
The German automaker has agreed to share revenue with semiconductor maker Nvidia Corp (NVDA.O), its partner in automated driving software since 2020, to lower the upfront cost of purchasing expensive high-power semiconductors, CEO Ola Kaellenius said on Wednesday.
“You just pay for a heavily subsidized chip, and then figure out how to maximize shared revenue,” he said, explaining that sunk costs would be low even if drivers didn’t turn on every feature the chip allows.
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But Kaelenius said only customers who pay for an additional option package will have cars equipped with Lidar sensor technology and other hardware for “Level 3” automated driving, which has a higher variable cost.
Luminar Technologies Inc (LAZR.O), the maker of self-driving sensors, in which Mercedes has a small stake, said on Wednesday it had struck a multibillion-dollar deal with the automaker to integrate its sensors across a wide range of its mid-range vehicles. of the contract, sending Luminar shares up more than 25%.
Mercedes’ announcements at Software Update Day in Sunnyvale, Calif., detailed the strategy behind the automaker’s years-long process of moving from a patchwork approach integrating software from a handful of suppliers to controlling the core of its software and bringing in partners.
It generated more than €1 billion ($1.06 billion) in software-backed revenue in 2022 and expects that number to rise to the high single digits of €1 billion by 2030 after it began rolling out its new MB.OS operating system from the middle of the decade.
This is a more conservative estimate as a percentage of total revenue than others like Stellantis (STLAM.MI) and General Motors (GM.N).
“We are taking a prudent approach because no one knows the potential size of the pot of gold at this point,” Kaelinius said.
Mercedes said the collaboration with Google would allow it to provide traffic information and automatic rerouting in its cars.
Drivers will also be able to watch YouTube on the car’s infotainment system when the car is stationary or in Level 3 self-driving mode, which allows the driver to take their eyes off the steering wheel on certain roads as long as they can resume control if necessary.
Other automakers such as General Motors, Renault (RENA.PA), Nissan (7201.T), and Ford (FN) have built a full suite of Google services into their cars, providing features like Google Maps, Google Assistant, and other apps.
The company said on Wednesday that all vehicles on Mercedes’ upcoming modular architecture platform will also have so-called superscreens that stretch across the vehicle’s cockpit.
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(Reporting by Victoria Waldersee, Hyunjoo-jin in Sunnyvale, Jo White in Detroit); Editing by Rachel Moore, Sharon Singleton, Jane Merriman and Deepa Babbington
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