In an effort to contend with Tesla and Chinese newcomers, Mercedes-Benz announced on Wednesday that it has partnered with Google on navigation and will provide “supercomputer-like performance” in every vehicle equipped with automated driving sensors.
New and seasoned automakers are vying to equal Tesla’s software-powered innovations, which enable remote updates to a vehicle’s performance, battery life, and self-driving capabilities.
In order to reduce the upfront cost of purchasing pricey high-powered semiconductors, the German automaker decided to share revenue with semiconductor manufacturer Nvidia Corp, its partner on automated driving software from 2020, Chief Executive of Mercedes-Benz Ola Kaellenius said on Wednesday.
Lidar sensor technology and other hardware for automated “Level 3” driving, which have a greater variable cost, would only be available to customers who paid for an additional option bundle, according to Kaellenius.
Mercedes owns a small stake in the self-driving sensor company Luminar Technologies Inc, which announced on Wednesday that it had reached a multi-billion dollar agreement with the automaker to integrate its sensors into a variety of its vehicles by the middle of the decade. This news has sent Luminar shares up over 25%.
Mercedes outlined the strategy behind a long-running process at the automaker to switch from a patchwork approach integrating software from a variety of vendors to controlling the core of its software and bringing partners in, at the software update day in Sunnyvale, California.
Revenues that Mercedes garnered from software updates in 2022, generated for the German automaker $1.06 billion and the company’s expectation is to increase the figure even more by 2030 as it would launch its new MB.OS operating system sometime in the middle of the decade.
As a percentage of overall revenue, this estimate is more conservative than those made by companies like Stellantis and General Motors.
“We take a prudent approach because no-one knows how big that potential pot of gold is at this stage,” Kaellenius said.
What does the Mercedes-Google partnership mean?
Mercedes claimed that its partnership with Google would enable it to provide automatic rerouting and traffic intelligence in its vehicles.
When the vehicle is parked or in Level 3 autonomous driving mode, which permits a driver to take their eyes off the wheel on specific roads as long as they can resume control if necessary, drivers will also be able to view YouTube on the entertainment system.
Mercedes is not the only carmaker to have partnered with Google to update its automatic system, carmakers like General Motors, Renault, Nissan and Ford have also equipped their vehicles with a wide-range of Google services like Google Maps, Google Assistant and other applications.
