Tesla-style Revolution Marks a New Era for the Automotive Industry

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The emergence of Elon Musk and the fast-growing Tesla Inc as the most valuable automaker—surpassing legendary automaker Daimler AG (parent company of Mercedes-Benz), General Motors, or even Toyota—could herald a new era for the global auto industry. Their achievements are shaped by a radical and revolutionary approach, which is commonly used in the startup industry in Silicon Valley (California, United States, USA). This approach seems to challenge the old, established system.

Tesla is currently valued at nearly 304.6 billion US dollars, more than six times Daimler's market capitalization of 41.5 billion euros (47.7 billion US dollars). The meteoric rise of Musk and Tesla surprised many people. How Tesla works came to the attention of Daimler AG after the century-old German company bought 10 percent of Tesla's shares in 2009 for around 50 million dollars.

Since then, Daimler designers and engineers have taken a closer look at how Musk and his team develop products. Since then, they know how Tesla dares to take the risk of launching an imperfect product and repeatedly improving it, including improvements, software updates, like how smart devices work, then downloads and upgrades , patching old software weaknesses.

Mercedes experts assisted Tesla in the development of the Tesla Model S, one of their best-selling models. In return, Mercedes can access Tesla's phenomenal electric battery design, especially battery technology, capacity and driving range.

Daimler and Tesla finally collaborate. Apart from ordering 1,000 battery units, Mercedes-Benz and Tesla are partnering in the development of the Tesla Model S sedan. This partnership makes Musk confident that the Model S will be a "super" vehicle, especially for beginner players like himself. The Tesla Model S was launched in 2012. Meanwhile, Mercedes-Benz launched the B-Class, their electric hatchback, two years later. However, in the same year, the partnership ended.

Three sources at Mercedes-Benz who were directly involved in the collaboration highlighted the cultural clash between Daimler, as an old manufacturer, and Tesla, which carries a new mechanical and industrial engineering culture. The German manufacturer still adheres to a long-term culture of safety and control, valuing evolution and an experimental approach. Meanwhile, Musk and Telsa are working with a more radical approach and rapid innovation. The two manufacturers are like two different poles. ”Elon Musk has been walking on a razor's edge in terms of aggressiveness in implementing new technology,” said one Daimler official.

In the collaboration, German engineers discovered that Tesla did not conduct long-term tests on their electric batteries. In contrast to Tesla, Daimler, as an established automotive industry, they have a blueprint for developing each product, including small things and then developing them over time. ”Tesla is not particularly concerned about this aspect,” said a second source at Daimler.

A number of journalists from Indonesia and several Mercedes-Benz market countries had the chance to chat with several members of the Daimler AG hybrid transmission development team when invited by Mercedes-Benz Distribution Indonesia (MDBI) to attend the 2019 Frankfurt Motor Show car exhibition. Matthias Klopler, one of the members of the transmission  development  team hybrid Daimler AG, said that the batteries used for C-Class to S-Class hybrid cars are third generation batteries.

The first time Mercedes-Benz introduced batteries for hybrid cars was in 2009, when it launched the S 400. Meanwhile for the A and B classes, this is the first time Mercedes-Benz has installed batteries for electric motor drives in their compact cars for mass production.

To dispel doubts about safety and security issues after a series of battery failures and fires, Tesla has just made a move. ”Making mistakes along the way does not get you penalized. However, failing to strive for innovation will bear fruit for you. You will be fired," Musk said in an interview regarding the importance of innovation in his company.

\Established automotive manufacturers are chasing each other with Tesla. They design their own software operating systems and build electric cars. Toyota, a giant from Japan, is also collaborating with Tesla. Toyota was impressed with Tesla's speed in determining new designs. However, Toyota decided that Tesla's methods were not suitable for mass production developed by established manufacturers.

From an investor's perspective, traditional players have to dig deeper into their pockets to restructure their businesses, especially changing production lines that still produce internal combustion engines to electric batteries. Instead, according to Mark Wakefield of automotive and industrial consulting firm AlixPartners, new companies get time from investors to learn, make mistakes and grow.

Ola Kallenius, supreme leader of Daimler-AG, the parent company of Mercedes-Benz, at the Mercedes-Benz Media Day at the  2019 Frankfurt Motor Show,  September 2019, revealed that his party chose an evolutionary path rather than the revolutionary one adopted by Musk. The policy that Daimler-AG has adopted and is trying to implement is to make vehicle production as environmentally friendly as possible and this will be done in stages starting in 2022.


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