Good morning. Good morning, everybody, and welcome to our Mercedes-Benz Tech Center here in Sunnyvale, California. Also a warm welcome to all of you that are joining us virtually from around the world. Today, we are going to talk about the Mercedes-Benz Operating System, MB.OS, and lift the veil and look behind what is behind these four letters, MB.OS. It really starts with our strategy. We have set as the mission in our strategy, we will build the world's most desirable cars. If you think about the Mercedes brand promise for a second, what is Mercedes all about? It's always been this perfect blend, symbiosis between innovation and technology on the one hand, but also modern luxury on the other hand.
We wanna use MB.OS to fulfill this brand promise, take it to the next level as far as digital experience is concerned, in our products, but also in our whole company. When I say we will build, how does that fit into MB.OS? Well, we're a car company. We make things, both in the physical world, but also increasingly in the digital world. If you're a builder and you start on this endeavor to develop an operating system from the ground up, you gotta choose your role. The role that we have chosen for ourselves is that we are the architects. We are the architects. What does that mean to be the architect of MB.OS? Well, it means we specify, we design, of course, we develop what this whole operating system is gonna be all about, but we also procure and partner.
If you're an architect, partial builder, you don't have to lay every tile yourself. You select the best partners around the world. You work with the best to build this software house, this operating house. We integrate it into the vehicle, the sophisticated high-tech cars that we build. Of course, we keep it fresh with constant upgrades. Let's talk for a few minutes about what are the principles that we set out for ourselves when we made the first architect drawing of MB.OS. Let's start with the first principle. Yes, it is purpose-built. Yes, it is Mercedes that controls the digital marketplace in the car. It is we that have the one-to-one relationship with the customer. As I said, we work with the best.
I see we have some of our old friends here in the audience today with Jensen and Sarah from NVIDIA, and Austin, and everybody is here. We're gonna have some new guests as well. We're also going to announce a new partnership that is new to the team on MB.OS, and that is Google. Markus Schäfer, who runs our R&D department, he's gonna talk more about that together with Thomas Kurian later in the presentation. First principle, purpose built, but open to partners. It's really important. Second principle, and I talked about the one-to-one relationship with the customer. It all centers around a unique customer ID. The product is directly in contact with the person. It gets personalized services. The car knows you. It know who you are.
I mean, already today, if you take the Mercedes me app, I can open up here and I see my car. I'm driving an EQS 580. The car knows who I am. And my profile is stored in the cloud. When I step into my car, it recognizes me, it puts the seat in the right position, it chooses the radio station that I like to listen to. It puts the heating into the right spot, all of those different things. This digital universe really centers around the customer, and to be able to serve the customer, you have to have a relationship with the customer through a unique Mercedes ID. Not just for the car, also for the enterprise.
We will hear Britta on the marketing and sales side, talk about what this means in the wider context of the Mercedes-Benz universe. Third principle, privacy by design from the very beginning. We take data privacy, data security very seriously. That is why we are transparent vis-à-vis our customers with regard to this. In the Mercedes-Benz Privacy Center, you can choose your settings and decide what you wanna share. We have, I would say, a basic philosophy, always work in the interest of the customer. When you receive data, what are you gonna do with that data? You use that data to improve the experience for the customer, to improve the lives of the customers.
Privacy by design is very, very important, and I think it goes without saying that in terms of cybersecurity, encryption, and so on, we use the highest standards that are available, state-of-the-art in the market today. Fourth and last principle. If you buy a Mercedes, sometimes it could be like, I don't know, buying a very good French wine. It ages with grace, and it gets better over the years. Imagine now in the software space that you know the master winemaker, and for every year's new harvest, he comes with a couple of new bottles and puts it into your cellar. That is what OTA, over-the-air upgradeability, is all about. The product doesn't get old. It actually gets better over time.
We will talk extensively about this, especially when we talk about automated driving later on, how you can decouple hardware from software and make sure that the product practice alive over the whole lifespan of the car. If I then put that together and say we, let's try to sum up what is this architect's drawing? What is this building? It is what we call a service-oriented chip-to-cloud architecture. Sounds complicated, but I have two very qualified people, Markus Schäfer and Magnus Östberg, who is here today, our Chief Strategy Officer. They will go into all the nuts and bolts of what that means and how we have done this at from a technical point of view.
For the customers, the domains, and these are the application domains, that's usually what you see when you use the product. You have infotainment, the obvious thing is what most people think about when they think about the digital car, but it's only one of four domains. Of course, automated driving, maybe the most exciting domain where there's so much going on, and we wanna take it to the next level. Body and comfort, it is a physical product. We are physical beings. How do you create a well-being for the humans in the car? Then the obvious thing for a car, driving, charging, the battery management software, everything that's going on there. It is a proprietary operating system, but it's open. It's open to partner with the best. Now, have we done MB.OS? Are we doing technology here for the sake of technology?
No, we're not. It's all about the customer and to deliver a superior product experience for the customer. If we do that successfully, we build economic value for the company and ultimately our shareholders. If you take that approach, you put the customer at the center of all things, you're also going to have economical benefits from it. Let me just give you a few glimpses of what I'm talking about, and then the other guys are gonna go into more details later. Well, at Mercedes, if we now peek into this building here, what's inside the house? For Mercedes and for a car company, of course, the hardware is crucially important, desirable hardware. Think about the interior of your car as maybe as your living room.
You have now just gone out and bought the most expensive TV set, that is in the market. That TV set is not just sitting there alone in a naked living room. You put the right designer furniture to go with it. When we launched now two years ago, 1.5 years ago, what we call the Hyperscreen in the EQS and in the EQE and EQS family, many customers told us, "You know, that's insane. What are you doing here?" It just blew them away and it opens up, you know, so much more that you can do in the front. We thought to ourselves, hmm, there's a hint there.
Why don't we create a full dashboard screen, pillar to pillar, in the future for every single Mercedes, so that every single Mercedes can have the option of going pillar to pillar? Said almost done. Starting with the first generation car that has MB.OS and already in the sneak that we're gonna see later, you will get access to Hyperscreens. I see some people nodding here that provide content to that, and they're smiling. I think that's the point. You can buy the most expensive TV set, but if there's nothing going on on the TV, if you're just looking at a black screen, it kind of defeats the purpose of the whole exercise. Yes, we will put a world of entertainment into this. It will be also specific for the different regions.
I mean, if you live in, if you live in China, maybe you're looking at a different soap opera than if you live in my home country, Sweden, or in the United States. You gotta go around the world and provide the infotainment content that people want. We're making some good progress on that. Because we're a car, we also need to talk about driving. How do you marry automated driving with navigation? Can you even get into fusion here and make something that is even safer, even more intuitive, even better, even smarter? We think you can. I think this canvas, it can be so many things. It is a window into a world of opportunity and experience for our customers.
Yes, for the people in the room, one of the one more thing moments of today, we're gonna give you a sneak preview of the new E-Class. You can look at the interior of the new E-Class and the big screen and everything, what's going on here. That in itself is big news. But even bigger news that some people might not know is that actually, this is the precursor of MB.OS in the infotainment domain. Our team, our R&D team, has programmed the complete software for this infotainment domain for the first time in our company's history to take on that big of a software task, and do it comprehensively. Yes, Magnus, Markus, the pressure is on you guys now to kind of do the finishing touches here. We're gonna launch the E-Class later this year.
Markus is gonna give us some glimpses of what's behind that, what are we gonna offer. As I said, maybe even more exciting, the autonomous drive domain. We have been working for working on assisted driving and assistant driving system for more than 20 years, almost 25 years. We've always been looking at this, you know, how can we make driving safer? How can we make it more convenient? How can we put all these little angels in the background that if you get into a situation, the car helps you negotiate the situation. In a conversation that I had with you, Jensen, a few years ago, we sat and talked about the philosophy of where are we gonna take this next.
Here comes a big change to the technological strategy and the business model that we have had previously. From MB.OS 1.0 forward, we're literally gonna put supercomputer-like performance in every single Mercedes. For those of you who don't know the MMA architecture, it's an internal code that we use. It's actually the next generation entry luxury vehicles in the Mercedes portfolio. It's like where you get into the Mercedes brand and then you graduate up, and eventually maybe you end up with an S-Class or something like that. Every single Mercedes from that point forward will have a supercomputer in it, number one. Number two, every single Mercedes will have a very comprehensive set of sensors, the eyes and ears of the car, to figure out what's going on to be able to deliver assisted driving and automated driving.
That sensor set, the base sensor set in future cars, even in the entry vehicle, will be significantly more comprehensive than the most expensive sensor set that you can buy in the S-Class today, bar maybe the Level 3 vehicle, which is in a little bit of a special category. The third thing of the business model is when you have separated hardware from software, over-the-air upgradeability, the product never gets old. We can just keep on developing and make sure that the customer gets a better product. This is something that we're doing with NVIDIA. Let's just have a quick look at this video here.
With this, I would like to invite our business partner, good friend, Jensen Huang, Founder and CEO of NVIDIA to the stage. Jensen, good to see you.
Ola, it's great.
How was your trip over here this morning?
Well, first of all, I came in an EQS, my own EQS. I have two EQSs. The first two in the United States, I understand, one for my dad and one for myself. If I could just tell one short story real quick, real quickly. When NVIDIA went public, the thing I wanted to get for my parents more than anything was a Mercedes. I bought them a Mercedes S 500 when NVIDIA's stock price was $13. My mom to this day tells me it is the single most expensive car any human has ever purchased.
You should have held on to the stock? Yeah.
I should have given you stock. You should have received stock instead of money. Anyway, it's a $200 million Mercedes. My father still has it.
There you go. Maybe even more expensive than the French wine. Jensen, when we sat down and talked about this and we decided, "Let's go into a strategic partnership.
Yeah.
What was your vision for us working together in this space and taking automated driving to the next level? How do you see this playing out?
First of all, you, what you're doing with Mercedes is really incredible. This is a luxury company now being infused with software through and through. The thing that is really amazing about the decision that you made to put AI supercomputers in every single car and to enrich it with a cocoon of safety sensors around it so that every single car becomes part of the Mercedes fleet for the rest of time. You're building up a fleet, a giant fleet of upgradable cars that, as you said, never gets old. This endeavor is really quite amazing. The first thing is we start from building the most ambitious, safe computer the world's ever known from the ground up.
From the chip to the system, to the operating system, MB.OS, to all of the applications on top, even the artificial intelligence AI models are designed to be functional safe. Safety principles from the bottom all the way to the top. I just mentioned this, the cocoon of sensors. This entire car is completely programmable, and we're building the car computer and the cloud computer together, chip to cloud. For the rest of time, this fleet will be upgradeable.
That is very exciting.
Yeah.
When I visited you on Monday, you let me peek into some of the stuff that you guys are working on beyond this relationship here with autonomous drive. We have a couple of pilots going now for Omniverse, you know, building the virtual factory before we even build a factory. Tell us a little bit about Omniverse. What's that all about and how can this help us and others leverage their business?
Well, you're reinventing Mercedes, the automotive industry, from the beginning to the delivery of the car, to the support and the updates of the car, from end- to- end. From styling to design to engineering, manufacturing, the digital smart factories, the robots in the factories that build the cars that are robotic, that will be updated with software. Your entire company is going to be software-defined from end to end and artificial intelligence-powered from end to end. This is one of the things that's really, really quite amazing about the digitalization strategy that Ola and the management team of Mercedes has for Mercedes. It's gonna reinvent the company to become a luxury-focused, technology-driven, software-driven company. I think it's just really a great pleasure to be part of it.
For us, the way we participate is creating a system called Omniverse that understands physical things that, of course, Mercedes builds. The software world and the artificial intelligence world that we are in, Omniverse allows us to bridge that, to fuse those two worlds from end to end, from beginning to the end.
Sounds great. Again, Jensen, good to see you. Thanks for coming.
It's great to see you Ola,
looking forward to seeing you again soon.
All right.
Have a great day.
Thank you, guys.
Give it up for Jensen Huang. On that note, I was talking about MB.OS being all about delivering a superior customer experience. As this one example here with the Omniverse illustrates, it actually is more than that. It is a platform that connects all parts of our business. If we go from the architect's drawing of this one house and look a little bit at what the neighborhood is looking like in a simplified way, you could say that this is your neighborhood. You have MB.OS at the center of things. As we said, it's a chip-to-cloud architecture, our so-called Mercedes Intelligent Cloud is what holds the profiles of the customer.
So much information and intelligence sits there, and it's available around the clock, and then when we have upgrade features over the air. Of course, it is the device. You can control your car via the device, or you can hook up your car to your smart home and do all sorts of different things with different devices. It also has connection into the enterprise. If we talk about product creation, operations, and commerce, the whole point of using Omniverse to create a digital twin for manufacturing is, before you pour the first concrete of slab, you have actually built the whole factory digitally, and you have tested every process.
When you look at it on a screen, if you would take a photo of the factory and you look at the digital representation of it, and you take away the label which is which, you really have trouble to distinguish which is which. That idea is something that we have been working on, Markus, in engineering for many, many, many years, moving the boundary of what simulation can do and go into hardware later. We can be faster in development cycles, and we can also reduce costs in the product creation process. Britta will touch upon commerce, omni-channel, you know, how does this link? I mean, it is obvious, right? That if you have this unique Mercedes ID, you don't just use it for the car and for the app.
You use it in your CRM systems and in every touch point in the Mercedes universe, if you can. Enough from me now. I know you're excited, but about seeing the details of the technology. Markus, Magnus, the stage is yours.
Thank you, Ola, and welcome, ladies and gentlemen. Our house is built to last, which means it must be fit for purpose, not just for now, but also for the future. That is the vision that we had when we set up how to develop MB.OS. We knew that to achieve something at this scale and depth, the only way is to be in control of all levers. To take a completely new approach, and as Ola said, to be architects of our own house. Magnus and I are going to talk about the details, what it means to set up MB.OS. We will explain exactly what MB.OS is and show you how it will help us to take our customer experience into a new dimension. Let's start with the what. Technically, MB.OS is a chip-to-cloud architecture.
That's because we see software and hardware as two sides of the same coin. At the same time as the architecture of MB.OS, we are able to decouple them. This gives us great flexibility, actually in two aspects. The first relates to time. We are able to separate the software and hardware innovation cycles, and the second relates to scope. We can use one platform across our entire portfolio from small cars to large vehicles. In our house, MB.OS has a technical foundation on the one hand, and a luxury living space, Ola, you explained that, on the other. Let's start with the technical foundations and what they are made up of. Our chip-to-cloud architecture, our scalable proprietary platform, it enables us to decouple hardware and software and is designed to ensure safety and privacy. Ola, you said that.
To talk about this in detail, I would like to introduce my dear colleague, Magnus, the Chief Software Officer. Magnus, you joined us in September 2021, and Magnus brings nearly 25 years of know-how in automotive software from infotainment, telematics, satellite architecture, automatic driving, and I think way more than that. I think you have already made your marks designing and being the architects of MB.OS. Magnus, over to you and to the foundations.
Right.
Thank you, Markus. All right. MB.OS is an entirely new approach for us here at MB, Mercedes-Benz. It will speed up software and hardware development and allow constant flow of innovations into our vehicles. That means a better product for our customers. Starting with our MMA platform, we will have our own standardized software and hardware base layers. Let's start with the hardware base layer, which is designed on a blank sheet of paper. Its architecture is service-oriented, and it contains the domain computers and the connectivity module, and they host all of the intelligent functions in the vehicle. The specification of each domain computer is precisely tailored to its functions and performance requirements, where the services are abstracted to the domain computers.
The GPU of our infotainment computer can power more than three high-end gaming monitors, and the hardware architecture of our automated driving computer is capable of ASIL D. That failure rate is close to the flight control system of a commercial airplane. Besides these high-end computers, our architecture designs includes the controllers for exterior and interior driving and charging functions, as well as the connectivity module to the Mercedes-Benz Intelligent Cloud. With this architecture, it gives us a deep integration of the vehicles and the central control of every sensor and actuator. Due to the standardization, it's scalable, right? It scales from compact cars to full-size cars like Markus just said. At the same time, it decouples the innovation cycles of the MB.OS from the vehicle platforms. Of course, our hardware approach goes hand in hand with semiconductors.
As the architects of the MB.OS, we are deeply involved in all aspects of the chip strategy. It's completely different to the historical model of any OEM. Our infotainment and automated driving computers, they do have state-of-the-art high-performance SoC like Jensen and Ola just said. Also in the microcontroller space, we are maximizing standardizations while driving performance and efficiency. We're able to cover more than 90% of our E/E architecture with chip families from a very, very small number of suppliers. With that, we have categorized all the chips and derived tailored strategies. These strategies consider future applications of the requirements, as well as the learnings from the chip crisis. Key elements are direct sourcing, long-term sourcing, and increased in-house development. In the high-end computing cluster, we are driving even further engagement into the chiplet technology.
We see the potential of chiplets primarily in the energy efficiency, latency, bandwidth, and flexibility. To maintain economics of scale, we recently became the first OEM to join the UCIe Consortium. That is in order to push standardization for chiplet interconnects. This will be instrumental in setting industry standards for automotive for us, in particular those used in automated driving technology. That was all about the base layer. Let's take a look at the software base layer. Here, MB.OS also marks a radical step change, so we are leading its design and construction, maintaining overall control, but using proven standards. Between the domain computers and the connectivity module, we use an Automotive Ethernet connection. This is a high performance up to 10 Gbps. It enables full updatability of the entire MB.OS platform within minutes.
Communication is based on vehicle APIs that are independent from our car lines, as I said, and it contributes to the scalability of MB.OS. Together, the building blocks of our software-based layer enable service-oriented communication for our applications, diagnostics, over-the-air updates, security functions, and across the entire MB.OS platform. Let me now guide you through the key principles of our software base layer, and I'm gonna use our infotainment computer as an example here. Starting at the bottom, the first sub-layer contains the driver and security functions. These enable Ethernet communications as well as firmware and hypervisor that sits on top of the SoCs. On top of that, we're stacking the operating system components. Here, we're using open source Linux, and it gives us the development speed for new functions with a very robust rollout and capability options.
On QNX, we run the safety critical functions for the driver displays. Then we have AUTOSAR Classics, which we jointly adapt with our partner Vector. On top of that, we have the middleware layer. It's designed to enable flexible integration of features developed in-house as well as third-party content, including regional heroes. To integrate apps then seamlessly on top, we are using Android container interfaces. It is especially relevant in markets where Android apps are increasingly popular, such as China. I'm gonna zoom out now for a moment and look at another building. This is the Mercedes-Benz Intelligent Cloud that Ola talked about. It is really the game changer with this new approach. The Mercedes-Benz Intelligent Cloud is a modular connected service platform that opens up a world of new possibilities, and it's also the backbone of our software tool chain, right?
Along the entire vehicle life cycle, we're using this tool chain. Let's look at our cloud infrastructure starting from the bottom. Today, we host our worldwide cloud solutions from hyperscalers such as Microsoft Azure and Amazon Web Services. In the future, our multi-cloud strategy will be complemented by partnership with Google Cloud Platform for the West and Tencent for China. On top of these hyperscalers, we build a container-based microservices mesh platform using zero trust concepts. It is made up of four layers, each with its own functions, which I'm not gonna go into detail now, but what we do though, we develop more than 80% of the software for the Mercedes-Benz Intelligent Cloud Stack in-house. This gives us short release times for new features and an endless learning opportunity based on customers' usage. Owning the Mercedes-Benz Intelligent Cloud gives us the data, right?
This data gives us many, many benefits. One of them is the ability to perform targeted data collections and analytics to improve our products and services. It is how we leverage this data that is key to digital luxury. By 2025, we will have access to data for more than 16 million cars, up from the 10 million that we're already hosting in the Mercedes-Benz Intelligent Cloud today. Because we own the system, we also have full transparency over the use of customers' relevant data. With the Mercedes-Benz Privacy Center, the customer has full control of all the data, be it personalized or anonymized. That is how we leverage the data. Where and how are we doing all of this? At the center of our development network is our electronic software hub in Sindelfingen.
This is where we do all the integration, validation, and testing. The electronic software hub was built to facilitate workflow and communication, super close to R&D as well as our headquarter production experts. From top to bottom, the process starts with the integration of software code, right? The next level down, we interact directly in a virtual world before the physical hardware components are added. The lower floors then is where we then carry out complete mock-ups and vehicle testing. The electronics hub, software hub is a highly efficient integration machine. It brings cost savings as well as help us leverage our global team. Speaking of global, we are maximizing our software and hardware competence within our networks of hubs all over the world. Here in California, we emphasize on autonomous driving software as well as UI/UX design and telematics.
Tel Aviv, we have expertise in cybersecurity, and in Asia, we really focus on our regional heroes and local content. That rounds up the foundation of the MB.OS house. As the architects of the MB.OS, we control our service-oriented chip- to- cloud architecture. Our scalable, it's decoupled, it's gives hardware the flexibility to live its separate life from software. MB.OS is a proprietary platform built on standards. At the same time, we retain the sovereignty of all aspect of strategic importance. This includes management of our own data tree, as I said, as well as safety and privacy. Finally, we have the freedom to work with our partners of choice. I'm going to hand back to Markus soon to explain what this means to the living space.
First, to wake you up after my long speech here, let me give you a taste of what these great things have in store with this video. Enjoy.
I'm on my journey. A bright gleam, not a dream echoing in the streets. My mind is a dam that stills the raging river of the world. No, my mind is a raging river that bursts every dam the world builds to stop it. My microphone is a blank page. My voice, full of optimism, set the stage. I'm in a movie in one, two, three, 4 D. Feels like Batman is sitting next to me. Strong ideas have a supernatural thing. Wear it like a second skin. Sometimes it needs a light bulb to switch up the plan in blue or green. Feel the breeze. I'm at ease. Quiet is mighty. On my journey, I'm in my car. I feel protected. 360. Safe never felt so powerful. I feel seen. I lift my eyes for a fine future.
We'll watch birds fly high and yet stay grounded and teach trees about our roots. On my journey, things become talks, and talks become music, and dreams never fade, only accumulate. I'll make a post to my mama with a letter, and I'll let her know, "Mama, never have I been better." I'll live life like a mastermind, a creator. Distance won't stop me. I'll let the road navigate far away. Follow fate in my car, on my journey to my future. By itself, it'll update. Pioneers are found. I shake the ground. Less obsolete, more absolute. People have potential to be powerful. In my car, on my journey to my future, I'll meet with brilliance, talk to millions. I'll rise and never stop trying. Find the prospect far too enlightening. To infinity and beyond, as they say. This is my future, and I'll reinvent it. Mama, every single day.
All of this will make our house the most desirable in town because the living space is where our customers can really feel the benefits of our vehicle functions across our four domains. Let me start with body and comfort, where we are creating a truly personalized luxury experience. To do that, we need control of all actuators and sensors, every single one. MB.OS gives us that. To assure you, this would not be possible with a third-party provider. With MB.OS, we are able to create a true multisensory experience by orchestrating all vehicle functions from video, motion, light, climate control, and even fragrance. The result can be a stunning, immersive entertainment experience. Those of you here with us today in Sunnyvale will have the chance to find out what that feels like in our demo vehicle outside. I promise you, it will blow your mind.
Another area where this overall control via MB.OS can benefit our customers is our ENERGIZING COMFORT and ENERGIZING COACH. We are taking them to the next level by enabling connection to variables. Our energizing app uses data such as heart rate, stress level, and sleep quality to recommend a personalized comfort program. Likewise, we can bring together comfort functions such as massage, active ambient lighting, and 4D surround sounds for enhanced well-being. If it is not enough, for added convenience, we can also offer a digital vehicle key for smartphones. Coming now to the broader domain of infotainment. When it comes to automotive digital luxury, first-class route guidance remains absolutely a top priority. We have been driving innovation here for many years, providing our customers with the latest solutions. Today, we are announcing a major step forward.
For almost everyone in North America, and Europe, Google Maps is actually the go-to. Now we are bringing it into Mercedes vehicles. Our collaboration with Google in geo-positioning takes in-car navigation to a whole new level. It's a world first. We are reinventing the route guidance experience by bringing together the very best from automotive and the tech sectors. To talk more about this, I would like to welcome Thomas Kurian, the CEO of Google Cloud. Thomas.
Thank you.
Thomas, great to have you today with us here on stage. Actually, we are neighbors, right?
Yes.
For many years.
Yes.
We did a couple projects over the last couple of years, but now we're taking it, really to the next level.
Thank you for having me. It's a privilege to be here and delighted with the collaboration we've had.
You brought your team with you. We're working with the team now for many months. I would try day and night, actually, we're working on new products, and it was the target to create a new customer experience.
Exactly.
We're talking about the new products, and, let me start with the first one, Place Details by Google. I would say POIs, but it's Place Details by Google. Can you tell us, what this would offer to our customers?
You know, it represents every Mercedes car will now have the trusted, reliable information about 200 million places around the world. If you're a driver, you can, one, find the place that you're looking for. If you are not totally comfortable that that's the place you wanna be, you can look up a rating and review. If you drive up and you're a little bit trying to find it, you can see a photograph of the place. It brings together the trusted information that so many people are comfortable with Google Maps, with the luxury experience that they have in a Mercedes vehicle. Most importantly, we're doing it right now, isn't it?
Yeah, just look at this video here, that's the beauty of it. You don't have to wait. Our custom system is able just to incorporate this feature as we speak.
Exactly.
But that's not all. I mean, we're expanding our partnership, and the next step for us in the next years is to go to Google Navigation, and I think that's gonna open up a whole new world of experience to our customers. As we said, that's the trusted source in the Western world for our customers, and that's the move we are going to make. What are the advantages there?
You're our first, very first partner in this initiative. What we're doing is bringing the next phase of evolution of Google Maps Platform with the amazing display and navigation experience in Mercedes vehicles. Think about somebody's driving, and they want to find the most optimal route. They will be able to do that. If traffic conditions change, the car will automatically adjust and give them a better route to take. If they want to take information, for example, turn-by-turn instructions, they can do it with voice-assisted steering. If they're approaching a roundabout and they want to get guidance on how best to navigate the roundabout, the system will automatically help them by adjusting vehicular speed and things like that. It's really taking the notion of place that we're starting with to now include all the information-
Right.
that a system like Google Maps can provide, but integrating it into the way that assisted driving can help people, and with the amazing display, providing very high definition visualization as well. We're super excited to have you as our very first global partner in this. We think we can redefine how, you know, people experience the vehicle and also driving itself.
As you said, it's a brand-new product, we're joining forces there to give luxury experience in navigation, keeping the beautiful canvas that we offer in the car.
Right.
Combining best of two worlds actually here. Another way of collaboration is in your home field actually on Google Cloud and using data and AI to enhance driving and navigation in the future. That's the next what we explore together. Can you tell us what we are doing there?
Well, couple of things. One, additional thing we're doing with you is bringing YouTube into your infotainment experience so that people can watch and experience all the amazing stuff that is uploaded every second of every day on YouTube. They experience it in Mercedes vehicles, something we're really thrilled about. More and more as I listen to you talking about the vehicle, it's becoming more and more software-powered as well, and there's a lot of data, fleet data coming off the vehicles. We're also thrilled to be bringing Google's AI and cloud technology to help you, one, build AI models faster. They can help you understand customers' driving experiences, et cetera, but also give the data platform for analysis and to look at vehicular data in a new way. These are all the next stages of evolution as you software-power a vehicle.
We want to be the partner giving you the platform to do all of this with. We're super excited. Our teams are thrilled to be working with your team. We think the combination of your strength in a premium luxury vehicle and our technology is a great promise in all these different areas. We couldn't be more excited to be working with you.
I couldn't explain that better. Thank you, Thomas Kurian. I promised my team at home that we are virtually pressing a button now for our firs`t product, which is Places, and that's exactly what's going to happen. I mean, they're flipping the switch now in Germany, and we're going to have this over-the-air download worldwide, and can you imagine that? Gives you goosebumps. They're downloading and all these little small Gs are dropping into the screens of our customers, and they will have the great service of Google Places now literally today. Great to have you here.
Thank you so much.
Looking forward for our cooperation in the future.
Thanks a lot. Thank you.
Thank you. Thank you. Thank you. Ladies and gentlemen, as you've heard, this strategic partnership will definitely keep us at the forefront. We will work with Google in those markets where they are dominant. That means North America, Europe, Australia, Japan, India, and others. For other key markets, we are working with regional heroes. For example, Amap in China and soon T MAP in Korea. We are bringing the best real-time 3D graphics into our cars and combining navigation with stunning experience. One example is the highly advanced technology from the Unity game engine. In China, we aim to deliver an enriched UI for automated driving functions based on map data from Amap. This includes a fantastic lane-level map view, and soon it will be able to offer navigation-based system-initiated lane change.
I'm going to hand over to Magnus now to explain in more detail what MB.OS means for the other aspects of infotainment and experience. Magnus?
All right. Thank you, Markus. We are keeping UI at the forefront. The MBUX Hyperscreen was just the beginning. For instance, a pillar-to-pillar one-piece displays, as shown in our Vision EQXX outside, will find its way into our series production vehicles. UI is more than just displays. Our Hey Mercedes voice assistant is here a great example. Data shows that customers already interact with our Mercedes me several times a day. Those figures are growing very, very fast. MB.OS enables us to anonymize data from those interactions paired with AI to keep evolving this to create a more human-like conversation. That's why we're introducing Just Talk. This is a feature coming up in our next MBUX. When customers are alone in the car, they don't have to say, "Hey Mercedes," to activate the voice assistance.
We think that is going to be an amazing new natural experience with the car. We also think of these touchpoints in our living space here a bit like UI in our vehicles.
There are many, many partnerships that come into play to create the services and the features and the content that our people love. That's why we invited A-list guests into our living space. Everything from video streaming, music, gaming, conferencing, and social media. To do this, we're building a system that makes it fast and efficient to enable fresh content and third-party apps. That we are doing by using what we call the MBUX API for Android. This enables us to implement large number of Android-based apps very efficiently. For example, we have a dedicated app offering to meet the China preferences. In the Western market, our customers can look forward to a steady stream of new apps fueled by the FORVIA Group with the Aptoide Automotive App Platform, which is an independent Android app ecosystem.
Our vehicles are already equipped with the best-in-class displays, such as the MBUX Hyperscreen and Rear-Seat Entertainment. Our customers will have their favorite video content on this beautiful canvas wherever they are in the world. In China, we will offer regional-specific content via Tencent Video. Because entertainment and digital technology are extremely important in China, we are using our Abacus AI engine, which is a scenario-based AI integration platform. It provides an experience that is just right for China. This includes video recommendations and hot playlists on QQ Music. Across all markets, we are constantly improving our streaming offering with exciting new content. We will also upgrade our hardware situation with Amazon's Fire TV Stick for rear seat passengers starting this year as an add-on.
As you know, we have already integrated video content provider, ZYNC, with more than 400 titles and nearly 2,000 hours of runtime. Here's a short message from our ZYNC CEO, RJ.
Hi from L.A., the epicenter of entertainment. I'm RJ, the founder and CEO of ZYNC. ZYNC's partnership with Mercedes-Benz has raised the bar on in-car entertainment and how users experience digital luxury. What makes us so unique? A natively integrated interface to the world's best content and new innovations merging hardware and software to create cinematic in-car moments. With this foundation, we've created the infrastructure necessary to generate new, untapped in-car revenue streams. The stage is now set, and as a result, we're excited to announce an incredible new media partnership very soon. Stay tuned, because we're just getting started.
RJ, thank you for being here in person, and it's about content and speed of implementation, by the way. Just like video streaming, MB.OS will allow us to open a whole new world also of in-car gaming. We already offer mini-games such as Tetris, Sudoku, and Pairs. With Antstream platform of arcade games, our customers will soon have larger access to 1,500 classic games and 500 mini games, and there's more to come. We want to bring triple A gaming into our cars. Stay tuned, we have some news for you pretty soon. Speaking of tuning, our music collaboration with Dolby, Apple Music, and Universal Music Group is already bringing unmatched audio excellence. We intend to introduce this unique feature to our entry segment too.
In a first for Mercedes, we are bringing video conferencing into our vehicles, integrating the popular services of Webex and Zoom. We intend to bring digital art into the car for the first time. Our mode for digital art will have a unique UI design tailored to the car, as well as customer preferences. An MB Exhibition feature will enable customers to create their own private art gallery. They can choose their art, a collection curated by Mercedes-Benz. What's more, with my NFT feature, we enable them to exhibit their own NFTs in the car. A great living space is somewhere you spend time doing the things you want to do. We feel the best way to give back time to our customers is through automated driving. Our driving systems have evolved over many years because we focus on safety.
Our latest level two development is the system-initiated automatic lane change feature for an even better highway experience. It starts this year in North America, followed by China. Further enhanced level two systems are in the pipeline. We are at the forefront with our pioneering achievements in level three and level four. We were the first manufacturer to put a level three system with internationally valid certification into serious production. In Germany, our level three DRIVE PILOT has been on the market since May of last year. This year, DRIVE PILOT received certification from the state of Nevada. Very soon, we expect California to certify it too. This generation of DRIVE PILOT enables conditionally automated driving at up to 60 km per hour in Germany or 40 mi per hour in the U.S. where allowed.
We are working to increasing this using a step-by-step approach, with safety always at the first priority. Next year, we aim to increase speeds to approximately 90 km per hour on German Autobahns. That's roughly 55 mi per hour. To achieve this, our sensing technology is based on multiple systems, including radar, cameras, LiDAR, and more. Redundancy of major components is an important factor here. I should point out we are not just working on automated driving for the road. We are also at the forefront of automated parking. Our INTELLIGENT PARK PILOT is the world's first Level 4 parking system. That's the current status. Now we're going to look at the important role of MB.OS in the future of automated driving of Mercedes-Benz. With our in-house competence, we have made great strides in software and hardware developments.
To expand the use cases for conditionally automated driving, we have to go from a rule-based approach of today to a machine learning approach in the future. For this, we turn to external partners with lots of experience in their field. A new generation of our level three system is already at an advanced stage. It has also been optimized for quick rollout in terms of markets and models. Our strong partner here is NVIDIA. I will hand over to Magnus for some further details. Magnus?
All right. Thank you, Markus. A core feature of MB.OS is that it will enable lifetime learning powered by data, as I said previously. Our system will enable to learn on the road, taking advantage of our best-in-class sensor setup across the entire vehicle fleet. Our vehicles are able to collect up to 300 PB of data every year to further train our deep neural networks. Our adaptability in vehicle AI automatically chooses a fraction of this data that is the most useful to improving our software stack. It means our next generation automated driving will learn about and handle infrastructure changes and continue to improve throughout its life. We are working on algorithms and software stack that will provide completely new driving and parking functions. This will be able to deal with the diversity of different geographics from Europe to China, U.S., and beyond.
They will continue to improve their performance, adapting to safe human-like driving behaviors. As Markus said, we are working with a very strong partner to realize all of this. To look at it in more detail, I'd like to welcome on stage Sarah Tariq.
How are you?
Head of autonomous driving software at NVIDIA.
Thank you. My pleasure being here.
Great to have you here. All right. Let's just get into talking about software architecture, because that is our passion, both of us are sharing. Can you please elaborate on the architecture that we're now building together?
Sure. We're building a full stack AV platform that's everything from the OS to all of the middleware and the software on top that gives us the capability of doing advanced autonomy and all sorts of different ODDs. The key aim of our architecture is to create software that can comfortably but also safely drive our customers in their day-to-day commute all over the world.
That's an excellent point there on safety. Safety is a big concern. This has always been the forefront of Mercedes. What are we doing really then to ensure safety in this new approach of machine learning?
Right. Like Jensen Huang said, all of our architecture from the hardware, the SoC, the OS, middleware, software, everything is built, certified, designed to be safety first. In addition, the state-of-the-art algorithms, the AI that we're running on top, it's built and trained not just to deal with the expected, the what should somebody do, but the unexpected, what could happen. In addition to this, we have a lot of monitors and redundancy algorithms that are checking inputs and outputs, making sure everything is going as expected. Again, like Jensen Huang and Ola Källenius talked about before, we have the sensor suite that is redundant, right? Like cameras, radar, LiDAR, and 360 all around the vehicle.
This provides us with an extra level of security, safety, and the data that we are seeing from these sensors, up to a terabyte an hour per vehicle, we can also use offline to further harden our system.
Right. Speaking of data then, how exactly is the data, this immense amount of data that we're collecting from the sensors actually then being used?
Data is the lifeblood of complex AI, right? The very first thing we do, all of these networks that we're running on our vehicle, everything from perception, understanding what's happening in the world to predicting what people are going to be doing, to generating the automated maps that you were showing, all of that requires training with all of this data that we are seeing worldwide. The next step, we take all of this data, and we create from it offline tests and metrics, everything we can do to ensure that any time we're making an update to the software, we can test it offline against these scenarios even before you put it on the road.
Right. To doing this at speed, simulation is a very key factor, right?
Give an example of what we're simulating?
I just talked about using all of the sensor data to replay and test whatever we saw in the world. Actually, like we were discussing before, we are using Omniverse to also generate all sorts of new scenarios, a vast variety of scenarios that you could encounter in the world. Everything from differences in weather conditions, locations, people's behavior, different scenarios. We can simulate all of that end-to-end synthetically, we can also simulate the sorts of scenarios that you never want to see in real life.
Yeah.
You know, dangerous things, people sitting on the road and so forth. We can simulate them, and we can test against them.
Okay. Excellent.
All of that is a focus on our safety.
Excellent. conclusion, the more the system learns, the better it gets, right?
Exactly.
Okay. Excellent. As you see, the partnership with Mercedes-Benz and NVIDIA is already living up to its promises and has potential going forward is just huge. Right? With that, thank you very much, Sarah.
Thank you.
Great to have you here. Thank you.
My pleasure.
Yeah. Thank you, Sarah and Magnus for this insight, actually. Starting with our new MMA platform, we are moving, as we said, from the rule-based approach to an AI-powered and data-driven approach. Together with our sensor setup, including redundancies, this enables us to meet the high demands of urban environments, and it will be augmented by a crowdsourced HD map to handle the most complex situations. The result will be an enhanced level two system for automated driving. We intend to progress towards point-to-point assisted driving, active lane changes based on navigation, and that includes the very start and the end of journeys, where we plan to introduce new parking features. All of this calls for highly advanced technology and, of course, LiDAR technologies in combination with radar and cameras.
We are convinced that redundancy is the right approach for Level 3 automated driving and beyond. By using the best-in-class LiDAR tech from Luminar, we can achieve high range for the smallest and see smallest objects with a low reflectivity. Dynamic steering of high resolution also allows us to focus on specific areas, similar to the way human vision actually works. The sensor setup for our Level 3 system will be even more comprehensive. We will have two times the compute performance of our Level 2 system. There will be additional redundancy in sensing modalities, braking, steering, and power supply. This will help us to ensure our high safety standards and customer satisfaction. Customers will be able to benefit from the Level 3 system, automated system at higher speeds. Our ultimate goal is 130 km per hour or around 80 mi per hour.
Functionality will include automatic lane change and highway-to-highway transfer. We intend to roll out these features worldwide. Now I would like to invite Luminar CEO Austin Russell for some further discussions on the stage. Austin, please join me. Good to have you. I like your shirt, Austin, already so.
How's it going?
Austin, taking a short break from a, I think, very intense day of developing LiDARs.
Exactly.
Austin, we talked about the importance, and I talked about the importance of LiDAR for Level 3 driving. How do you see that?
Yeah, I mean, LiDAR is definitely a critical part when it comes to autonomous driving more holistically. The whole point is that, you know, this LiDAR sends out, you know, millions of pulses of this laser light out in the environment, knowing exactly how far away the objects are, gives you a ground truth view of everything going on. That accuracy and reliability makes all of the difference. You know, 99%, you know, accuracy gets you so far, but when it all comes down to that last 1% for autonomous driving and understanding, you know, the implications of what's around you, it makes all the difference to have that.
That's where I think it's great to be able to see, you know, Mercedes take a lead, just as, you know, being at the pinnacle of performance and safety, you know, on the car side, to be able to do that same strategy when it comes to autonomous driving and as well as assisted driving too.
Well, when we met, it was not only about getting a LiDAR, right?
Right.
The best possible LiDAR. We want to drive fast, maximum speed there, highest safety. That's how we came together, right? Looking at your technology.
Absolutely.
Your technology is called Iris. Just explain what Iris, the Iris LiDAR is?
Yeah, absolutely. This Iris LiDAR, you know, basically you can see, actually yeah, they have a blowout of it on here too. You can see it, see it out on screen, even through the transceiver, through every aspect of it. We're actually delivering this next generation of the Iris technology, you know, specifically to Mercedes here, starting out as the lead customer for this. That takes it even a step further in terms of functionality for performance and safety and capabilities. The key is being able to now operate for autonomous driving functionality, not just for lower speeds, but also being able to move it to higher speeds, while at the same time, being able to substantially improve the performance and safety around assisted driving systems concurrently. That's the beauty.
It's the same hardware that can help enable all of that. Of course, when in conjunction with the right compute systems like the NVIDIA systems and the software that they're doing to enable that, it makes all the difference.
I think it's important we work as a team here. NVIDIA, Luminar, Mercedes, this is real teamwork, right?
Absolutely.
I mean, the whole name of the game is to scale also. Not only one car we want to equip, of course, with LiDAR. We intend to do it really in a broad range of vehicles. Scalability is important. Again, it's not your first generation of LiDAR, it's the next generation of LiDAR. The idea was to make it really, really slim.
Yeah.
With a nice fit to the cars, not to destroy. Gorden is here, our Chief Designer. Gorden, right? Not to destroy the nice beauty and aesthetic of the vehicle. We're making it really, really slim, absolutely functional. The idea is to scale it, right?
Absolutely. I think that's the whole point around what we're doing together is it's one thing to be able to put it on, you know, one flagship vehicle to be able to start out. I think the key is that you guys have this bigger picture vision and accelerating that across the, you know, as you said, a broad range of vehicle lines. That makes all the difference because, you know, when it comes to safety and autonomy and making it accessible for everyone and all the customers, that makes all the difference. We're, we built this LiDAR and this architecture with scalability in mind from the ground up, you know, designed for manufacturability. We built this to scale, starting off into millions of sensors and ultimately tens of millions of sensors with this next-generation LiDAR architecture.
That's what makes all the difference there to be able to, you know, scale alongside Mercedes here. With that, we'll actually even be expanding our capacity and even building out a new facility in Asia to support the additional volume.
It's big. R&D is important, industrialization is important. That's all what we are caring for, right? As a team here.
Absolutely.
Austin, great to have you here on stage. Thanks, for being here. Thank you.
Absolutely. Great to see you guys taking huge leadership.
Ladies and gentlemen, if you have some energy left, we're going to the basically last domain, and the last domain is driving and charging, and that contains the system, all the actuators relating to the drivetrain. It includes, of course, the battery management. The combination of route guidance and range management is also very, very crucial to the user experience. The range exist function in our EQS is a good example of our approach. Having our own operating system actually allows us to access all vehicle data. For instance, state of charge, energy consumption, and so on. This would not be possible with a third-party system. By aggregating all available data, including environmental information, maybe such as wind speeds, we can achieve a whole new level of range prediction. By integrating the charging infrastructure into range management, we can create a seamless first-class charging experience.
Our global Mercedes-Benz High-Power Charging Network, starting here this year in the U.S., is a perfect example. As we announced at CES in January, this will be one major step to globally supporting electrification. Our efforts were even acknowledged recently by the White House. MB.OS will help ensure it's a fully connected service. To sum it up, as the architects, we can report that our MB.OS build project is making excellent progress. Our living space is already well ahead of schedule. MB.OS gives us the freedom and scope to create a personalized luxury experience. With the right partnerships, we are providing our customers with the best content and navigation. MB.OS can help us to retain our leadership in automated driving and ensure intelligent and seamless driving and charging. As Magnus said earlier, we have a strong foundation based on our service-oriented chip-to-cloud architecture.
It is a highly scalable architecture and enables us to decouple software and hardware. MB.OS is a proprietary platform built on standards designed to ensure safety and privacy. It also gives us the maximum flexibility to work with our partners of choice. MB.OS is a game changer for the company and our products, most importantly for our customers. In a moment, my colleague Britta Seeger will talk about the customer perspective in more detail. First, we have something very special for you. You see, our latest generation of MBUX is also a precursor to MB.OS. It already includes elements of the MB.OS architecture, it brings our customers some fantastic new features. Ladies and gentlemen, it's my great pleasure to present to you the interior of our brand-new E-Class. Isn't it purely intelligence and digital world are coming together?
Earlier, we gave you a deep dive into our high-performance infotainment computer, and we have pulled it forward into the E-Class. A variant of it already runs interior systems such as infotainment, instrument cluster, and cameras. This differs from approach, previous approach of multiple control units in a car. It enables us to increase an immersive entertainment experience that is more interactive than ever. Our new MBUX API for Android compatibility layer in the E-Class makes it easy, right, to install third-party apps. It offers a far better user experience than with mirrored apps. For example, you can run a Webex or a Zoom call while the car is parked. The centerpiece of the digital experience inside the new E-Class is our new MBUX Superscreen. A large glass surface extends across the entire width of the vehicle. It seamlessly integrates a central touch display and passenger touch-screen.
The new E-Class is a stunning combination of luxurious home and digital office, and many new features allow customers to create their very own personal space. For example, our routines feature is completely new in the car. It enables customers to configure their E-Class for their own everyday needs. You can create and edit a wide variety of routines on the main display. Lots of combinations are possible. For instance, switch on the heat seating and heating, and the ambient lighting to warm orange every time the cabin temperature is less than 12 degrees. Thanks to the over-the-air updates, the new E-Class and its MBUX interface will get even smarter with time, unlocking more and more benefits for our customer. On that note, Britta, the floor is yours, please.
Markus, thank you very much. Warm welcome from my side. All of these digital developments that you've just shown have just been designed to fulfill a mutual goal we share with our customer, which is creating the best experience in our living space. Our goal is to build a house where our customers can truly feel at home in. With software-enabled upgrades that are continuously evolving over time, our customers can fully adapt their Mercedes-Benz living space to their needs. In everything we do, our focus is on making the Mercedes-Benz digital house easily accessible, where our customers love to stay. Let's have a look.
Hey, are you in control of your life? Take control of your car too. Mercedes-Benz digital extras make everything about owning a Mercedes as luxurious as driving one. Send your destination to your car and let navigation with augmented reality guide you there. Wow, now that's augmented. Mercedes-Benz helps you avoid traffic, find charging stations, parking spots, and even your car. It pays your gas bills and parking for you. Now, isn't that helpful? It makes your life more chill, more fun, and more safe. That's digital extras by Mercedes-Benz.
When we ask customers about the importance of digital services, more than 80% said digital extras are very important. That's reflected across all markets and all demographics. The digital extras play a fundamental role in the decision to purchase a car. Our customers have high expectations about their Mercedes-Benz digital experience. They want it to be simple, intuitive, and functional. How do we know this? I mean, by utilizing data-driven feedback in real-time with over five billion data points per year. This is how we gain a better understanding of how our customers use our products. Moreover, they expect their vehicles to be always up-to-date, thanks to regular over-the-air updates. The Mercedes me ID is both the basis of our house and the key to accessing the Mercedes-Benz living space.
It is a unique customer ID that gives us a strong and direct connection with our customers. Easily accessible means just a few clicks. After registering for Mercedes me ID, you need to accept our terms of use, enter your pin, and activate the services. Our customers have the choice of which services they want to use and which data they want to share. Personal settings and profiles gives customer a high level of individualization. As mentioned before, privacy by design means privacy and data protection are prime focuses. We already have a strong customer base, which we are building upon to further expand and improve our offers. Mercedes me is currently live in 50 markets.
In total, that represents a network of more than 10 million connected cars worldwide. Mentioned already, by 2025, we aim to expand to over 65 markets, and our fleet of connected cars will grow to more than 16 million. That would represent 60% growth in only two years. With over 15 million downloads since its launch, our customers love using the Mercedes me app, making it the best rated app in the industry with 4.8 stars. On top of great customer feedback, J.D. Power also awarded us as having the best app among automotive OEMs. The app offers far more functionalities than just remote control. It's also a tool for communication and other customer engagement and sales.
Looking at sales, we had 60% of 1.5 million Mercedes me Store purchases last year already made via the app, which means an increase of 87% compared to the previous year. Our customers enjoy the high flexibility in choosing how, when, and where they want to access the Mercedes me Store, whether via the smartphone, app, or our web store, or even directly in car, our customers have easy access to our stores. In-car purchases are just as easy using the Mercedes pay fingerprint feature, and we are simplifying the customer journey even further with our Mercedes virtual assistant. Leveraging the latest conversational AI capabilities within the Azure OpenAI Service, we are able to deliver best-in-class customer service along the entire digital customer journey, starting the end of March 2023. However, any store can only be successful if it provides great offers.
As you just saw in Markus and Magnus presentations, we have already a lot of great features today. For example, within our entertainment portfolio, our customers can enjoy the most popular streaming services such as Apple Music, Spotify, or Amazon Music. We are well aware that local services are highly popular, which is why we offer entertainment features that are tailored to local and regional markets. For example, Tencent Video, QQ Music, and Himalaya are market-specific offers in China. Additionally, we're the first car maker that has integrated ZYNC in-car video streaming, giving our customers a growing selection of movies, TV series, and more to choose from, as we just heard. Of course, ZYNC also offers the regional content.
ZYNC will also be available as an over-the-air update for selected models later in 2023. That's just the start of where we're going with entertainment. On top of that, GUARD 360 includes services that enable the remote protection and monitoring of your car. These were just a few example of our wide range of attractive and exciting software-enabled upgrades. We have continuously expanded our offers to date, including remote navigation and entertainment products and services. These product selection will continue to grow. What we offer won't grow in complexity. We are giving customers a simple, intuitive, and transparent experience. Starting with the launch of MB.OS, we will unite all our digital extras into one single package called MB.CONNECT. For maximum ease, a generous data plan and regular over-the-air updates are also included.
We'll offer flexible contract options, so customers can choose to activate their MB.CONNECT subscription at the time of purchase or at any later date. In the MB.CONNECT environment, we anticipate greater than 80% customer retention for vehicles in the one to six year age. In addition to MB.CONNECT, we will expand our offer for charging and automated driving with MB.CHARGE and MB.DRIVE. Let's first have a look of what we offer with MB.CHARGE. With three MB.CHARGE packages, our European customers can currently choose from flexible, transparent, and attractive offers depending on how much they drive. According to our forecast, we expect more than 80% of all customers to use one of these three MB.CHARGE packages in the future. MB.DRIVE will incorporate assisted driving, enhanced assisted driving, and conditionally automated driving.
It's expected to become our largest revenue driver in the software-enabled environment. We have set ourselves ambitious targets. Starting with our MMA platform, we aim to make all new models hardware ready to enable assisted driving or enhanced assisted driving functionalities. Selected models can even be ordered with conditionally automated driving with a fixed term contract from the factory. All driving levels will be continuously improved via over-the-air updates as it has been illustrated. As we've mentioned earlier, our connected car park is forecasted to grow by 60% in the next three years. This will have a huge impact on our software-enabled revenue. In 2022, digital extras generated revenue of more than EUR 1 billion. MB.CONNECT features comprised the largest software-enabled revenue share in last year. By 2025, we are targeting more than EUR 2 billion from our connected car park.
In addition, automated driving functions are expected to emerge as our largest software-enabled revenue driver by 2030. The digital transformation in sales and marketing goes even beyond. As outlined, software-enabled upgrades are an important pillar for us and for our customers. The online to offline experience is essential to a growing eCommerce environment. The fast rollout of our direct sales model will strengthen our overall customer interaction. As of now, we already have seven markets, with the U.K. having gone live January 2023 and three more markets to come later this year. As a consequence, we are working on optimizing our retail footprint to be ready and effective for the future. All of this will make quite an important impact on our future business. With this, I will hand it over to Harald, who will give us an outlook on the key financial aspects.
Harald, thank you.
Yeah. Hello, and welcome from my side. You have seen three packages for our software-enabled, I mean, upgrades in Britta's part, the MB.CONNECT, the MB.CHARGE, and the MB.DRIVE. I will now dive a bit deeper into the revenues from MB.CONNECT And MB.DRIVE. I will not talk about, I mean, MB.CHARGE Today, since majority of MB.CHARGE is part of a separate unit within the recently announced High-Power Charging Network. We will talk about that at later point in time. First, let me talk about MB.CONNECT. Today, we have already great features available generating software-enabled revenues such as navigation services, online map updates, live traffic, vehicle monitoring system. Most of today's features are embedded in our vehicle sales and margins. The customer sees the benefit, and the pricing is embedded in the overall vehicle with finite durations.
With these embedded mean revenues, we think we have achieved approximately a bit over EUR 1 billion revenues in 2022. These revenues grow slightly but are very stable over the years with decent margins embedded in vehicles margins and revenue. Now, there are great things coming on top. For example, music and video streaming like ZYNC, features like Webex and then Zoom or on-demand like dashcam or MBUX Augmented Reality. On top revenues, we will offer both ways, as initial vehicle factory sales and as store sales. In case, I mean, the customer chooses factory sales, features come with different durations ranging from months up to several years. At the same time, any point thereafter, we offer it as one-time purchase or subscription with renewal options as the so-called store sales, e.g., as monthly subscription. These features have a price tag and can generate recurring revenues over life cycle.
We think these features are very attractive, and offer substantial benefit to the customer. The customer does not want to miss that. That's why we expect a high take rate when the vehicle is sold from the factory with a high renewal rate in the following years. Main part of these features starts with MMA and keeps growing with MBA. We expect with the on top to generate less than EUR 1 billion revenues by the mid of the decade and more than EUR 1 billion of annual revenues in the second half of the decade. We also expect healthy margins on these. It remains to be seen, however, which way the majority of customers prefer the purchase via factory or the purchase via store. Both is fine for us. I said it before, if customers may choose factory sales, it is part of the vehicle profit.
Only if they choose to buy them later, it will be incremental profits such as profits from subscription schemes. The customer behavior is probably a bit difficult to predict at this stage. Through MB.CONNECT, we think that total revenues out of embedded and on top will add up to more than EUR 2 billion in the second half of the decade. Now let's have a look at the MB.DRIVE and our partner for that. Before we look at the revenues of MB.DRIVE, let me walk you through the business model with NVIDIA. We have entered the partnership with NVIDIA because we're convinced this is an intelligent and an economically efficient way to deliver world-class ADAS capability. We join forces with an extraordinary capability technical partner, while at Mercedes, we're already leaders in ADAS as our L3 DRIVE PILOT attests.
With NVIDIA, we have access to software development, AI, and processing skills that will take us to the next level, as Markus, Magnus, and Jensen explained already. We're happy to have them as a trusted partner in a win-win relationship. NVIDIA puts focus on AD-based software updates, and SoC integration, as well as the back end of the system. We put focus on vehicle integration, application development, and vehicle equipment. Two powerhouses with different roles, joining forces and thereby speeding up development times. By that, both of us enjoy financial benefits of the cooperation in a fair and a balanced way, giving us a profitable ADAS business. How does it work? Each partner bears his own costs and investments. NVIDIA has a majority of upfront investments, especially on the R&D side.
We equip the vehicles with our level two and level two only features and carry the respective hardware costs, including favorable SoC pricings from NVIDIA. Due to the high attractiveness, we assume a high take rate for these features. In the end, we as Mercedes generate 100% net sales and share roughly half of it with NVIDIA, depending on the region. Even by doing so, we still expect a decent contribution margin from this business, but lower than the one on our MB.CONNECT. However, L3 features are only available on demand, meaning only as an option. Therefore, we have no risk in terms of take rates. You see, this is an intelligent and equitable partnership. What does that mean for our MB.DRIVE revenues? The structure of these revenues depends on what the customer chooses.
It depends whether they go for factory or store purchases. Clearly, we expected to ramp up with MMA and later MB.EA to a low single-digit billion EUR figure by the mid of the decade. However, with the scaling of the portfolio, we expect this to grow to a mid-single-digit billion EUR revenue figure later in the decade. Depending on the customer choice, factory or store sales, the results will be visible as part of either our vehicle margin or separately as subscription proceeds. Let's have a look at both together, MB.CONNECT and MB.DRIVE revenues. First, we have the embedded revenues with around EUR 1 billion in 2022. Second, we have the MB.CONNECT revenues coming on top. Third, the MB.DRIVE revenues. All in all, we expect roughly a low to mid single-digit billion EUR figure by the mid of the decade.
This we expect to evolve to a high single-digit billion figure by the end of the decade. On EBIT, when looking at the mid of the decade and what we have in our embedded, connect, and drive, we expect definitely more than EUR 1 billion EBIT in 2025 altogether. However, as I also mentioned before, at current point in time, we can say if we will see it as part of our vehicle sales or separately. It depends on customer preferences. With all of these things I said before, we expect these amounts to grow further in the years ahead. We are on track versus our 2025 target, and all of the above is already part of our profit tables and weather chart ambitions. What are we doing in the invest side? We rebuild our house within the financial framing we gave ourselves.
The investment needed for the transformation are given priority. Looking at our R&D investments now, we see a significant step up and an increased share of EV and software-related spending. The R&D cash spending for our MB.OS software and corresponding hardware is at a run rate of roughly EUR 1 billion-EUR 2 billion a year. This investment is for our Mercedes-Benz Operating System, where the largest amount is accounted for in the infotainment and in the ADAS integration. We plan to increase the software share to around 25% of our R&D investment by the mid of the decade. At the same time, we reduce the investment in ICE as any new platform development will be BEV only.
Total invest of R&D and industrial CapEx will be reduced by 20% versus 2019 by the mid of the decade as planned. Don't nail me down whether it is 2025 or 2026. Let me summarize. We don't tell you fantastic stories how software-enabled revenues will reshape the business model completely. We just told you something more prudent, but not less important. We are focused on one thing, offering the world's most sophisticated way to move from A to B. Combining luxury and tech is the main part of the Mercedes sophistication and a key element to spark desire. It supports our luxury position of the brand and the respective pricing of the vehicles. We create outstanding features, making our products be even more attractive. Thereby, MB.OS is an important enabler for our strategy as well as for our margin ambition.
MB.OS supports pricing and margin, and yes, it has a potential for additional revenues and margins. At the same time, we're doing it within an existing envelopes in a fair risk-reward sharing model. Maybe, Ola, you see even a bit more potential in it than me. Thank you.
Thank you. Thank you, Harald. We have now come to the conclusion of this presentation, and I just want to sum up some of the insights from our point of view. What is this all about? I started with talking about, it is about our strategy, our ambition to build the world's most desirable cars. What we have seen today with MB.OS is really an opportunity. It's an opportunity to create outstanding products, create stickiness with Mercedes, create revenue opportunities, and it goes beyond the product and the product sphere. It also gives us a chance to improve the cost situation, productivity, speed, time to market on the enterprise side. Our conviction is software is a core competence for a car company.
It's a core competence for a car company. We are building this core competence and have been building it over several years now. We're also realists. You cannot do everything yourself, nor should you do everything yourself. It would not be the quickest and not the most cost-efficient way of implementing a complicated system like MB.OS. We partner, and we partner with the best. If we get that right, what are we really doing? We are future-proofing the valuable real estate of our vehicle. The interface, the one-to-one connection with our customer, and that is then underpinning the revenue opportunity that Harald was talking about. That's what it's all about. That is MB.OS in a nutshell. I would like to mention the last piece, and no pressure here, Markus Schäfer and Magnus, but now we have to deliver.
I know, I know we have the E-Class that is coming this year. It was no small feat to get that up and running. We have to deliver this whole thing. We are now laser-focused in the next 18, 24 months to get this journey to its 1.0 stage with the MMA architecture that we will present towards the end of 2024, go into the market in 2025. Thank you for listening. Thank you for coming today. This is just the beginning of a journey. Thank you very much.
Thank you everyone for your presentations before. Now welcome back to our analysts' and investors' Q&A. Ladies and gentlemen, a warm welcome to everyone who could join us here in person in Sunnyvale, California, and also to everyone who's following us on the Internet. That's quite a few. My name is Steffen Hoffmann, heading treasury and investor relations for Mercedes. We are very happy to have all the speakers with us, Ola, Markus, Magnus, Britta, Harald. Great that we are here for you for the Q&A. I'd like to remind you that presentations and Q&A are governed by the so-called safe harbor wording that you'll find in our published documents. What is this all about? Please note that the presentations and comments contain forward-looking statements that reflect management's current views with respect to future events.
Such statements, and you know that, are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect, obviously actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made. For the Q&A, we will answer questions from the audience here in this room. Those who are following us on the internet are invited to send their questions via the MEETYOO chat function. You can find the link in the IR release that was sent to you yesterday. Always, a few practical points. Please ask the questions in English. A matter of fairness, please limit the number of questions to a maximum of two. State your name of the institution, before asking the question.
For the media representatives in the room right now, we have to ask for your understanding that this is an investor relations Q&A. Now, please raise your hand if you wanna ask a question. We start with Tim Rokossa from Deutsche Bank.
Thank you. Yeah, thank you. Great presentation, I have to say. Really like the condensed format, but also how you explain things that were very technical, Magnus, in particular from you also, for none of us who really understands much of that. I'd like to start with two questions, please. The first one is a little bit twofolded. On the software revenues, just to understand your assumptions, right? I now pay more than EUR 70,000 for a Mercedes. You very successfully increased your price. Harald, you know we like that. It also means as a customer, I would expect my Mercedes already to be able to do quite a bit.
For that price point. When you do your calculations, how do you determine, Britta, maybe to you or Ola to you, what are customers still willing to pay for on top of their price that they have anyway done, and don't they just expect the vehicle to always have the latest and greatest and remain very fresh? Related to that also, Markus, perhaps for you, all of your partners here today, great to have them all here. A big respect for you, certainly. They all made it very clear that you are only their first partner and the lead partner maybe, but they will roll this out with other guys as well. How much of a technological edge gives you this over one year, two year, three years? What should we expect? Then as a second question block, can we.
We found ourselves a little bit in this absurd situation this morning that we were trying to find a traffic jam to actually learn how the Level 3 feeling is. When you talk about 130 km driving and all these type of things, is that something that's gonna be very near term? Is this 2025, 2026, or are there still so many corner cases that you have to fix that this will remain an ambition for a few more years to come? Is it really applicable immediately and not just if we're trying to hunt for a traffic jam? Thank you.
Okay. Britta, do you wanna start?
Yeah. Basically what we see, and this is why we flexibilize our offer, the customer want us that we flexibilize for him the possibility to choose. As of now, we have this embedded, but what we are seeing as of now is customers as well asking for more flexible solution how to use the car. Not everybody is buying it for lifetime. Not everybody is asking in future to lease it for three years. We are increasingly offering more subscription model for cars as well. With this wish for flexibilization, this is as well going on the because you are referring to the MB.CONNECT package, obviously.
We are flexibilizing our offer, which still would bring us into the position that by going to market, we are still free to decide what is then the right go-to market for which model. The nice thing is that we are flexible. We can give the flexibility to the customers, but as well to us.
Markus?
Just to the question of the partners. We are in a company that lives of innovation. That's a big pillar of this company, to innovate first, to be first in the market, and to drive innovation with partners. I mean, this has been our DNA, and it's gonna be our DNA. Now in the digital space, particularly, and that's why, you know, we're working with these partners here, developing new products. Not taking existing product. We're working on the next level. Enhancing what map and navigation is in the future with these partners. Our interest also is that they are able to scale. That's absolutely okay that we start with them and develop a product, be first in the market, and have this advantage for quite some time.
Also our interest is the scale, so that they go on the scale over time. We're gonna move to the next level here.
Of course, building on standards, new innovations can easily then be added on at speed. That's the importance, right? Being first, they continue to innovate, adding new features at speed.
That concept, Tim, is not new. You can go back decades in history, I don't know, from inventing the airbag or ABS or whatever. We do something, it then some years later become perhaps even an industry standard. It's the same thing here. When it's an industry standard, we're on to the next thing.
We build partnerships that will be explained today. We build the core system, and then we pick and choose. We have our interfaces where we pick and choose the best. Customer preference is changing also as we see, and it's different from region to region. This gives us flexibility also over time to stay flexible there. Your question on 130 km. I would go back to the current system, the DRIVE PILOT, and one of the news today was the increasing speed. We said we're always gradually going to improve the system safely, and safety is utmost importance here. We're going in from 60 km that we have today. We feel confident that we can go to higher speeds with the current system today.
We have some confidence in what we are doing here, taking the speed up from 60 to around 90 km, around next year. This gives you an idea that we judgment and have a judgment what happens if you go to higher speeds up to 130. We do see this possible. It needs compute power. It needs latency that will go down, the bandwidths and all what Magnus explained here. It need great sensor technology. We need new sensor technology actually to look just further down the road, 600 m, a capability of a LiDAR. That's not existing today. Today's LiDAR can't do that. Future technologies of sensoring can do that.
We feel confident as we're gonna start with MMA and MB, and then we introduce in the next step then the higher speeds of Level 3.
We haven't nailed down a specific date, but it's not like we're putting it so way out that it's not relevant. It is, it's a serious development project. Yeah.
Okay. Thank you very much. We continue with Horst Schneider from Bank of America.
Yeah. Thanks for taking my questions. I want to come back to the slide seven from Harald, where you have shown all the revenue potentials that you want to achieve. You said also that the margins on MB.CONNECT is higher than on MB.DRIVE. My understanding is the reason why other car makers didn't want to take NVIDIA as a partner is they had to share revenues. Therefore, can you maybe shed some more color on what is the margin potential you want to achieve from that? Putting now this new revenue potential into the context of the 2025 targets. 2025 is more a midterm target. I ask myself, what is the long-term target, potentially?
I don't expect you now to give a precise margin target, but just to say, is the margin then more flattish or is it up? We talked about that last night, that you said that profitability is still not as great as it could be, maybe. What's the path from 2025 to 2030? Then again, coming back on this Level 4 driving, since you don't want to commit to a specific date. I remember from Porsche, they said they do not want to offer that before 2030 or they're not able to offer that before 2030. Would you agree to that for Mercedes as well?
Level 3.
Level 3.
Level 3.
What? Level 3.
Yeah.
Yeah. Okay.
Okay. Level 4.
On the revenue and the margin, when I explained to me the business model within the media, it became clear that, I mean, there is a, there's a fair sharing, as I mean they have really made the lion's share of the investment up front. I think it's only logical and fair to share also, I mean, the benefits from it over time. That means obviously that, I mean, once you do that, I mean, the margin, I mean, is a lower one compared, I mean, to the Connect, where basically we have more of the vertical side of things and therefore have more margin. I think that is self-explanatory, I mean, as such. I mean, what is the margin exactly? Maybe I keep the lips a bit tight on that one.
Anyhow, I mean, what I think we explained here today is that you need to see all together. You mean the embedded revenues from the Connect?
Mm-hmm.
The on top and the Drive and all of that, I mean, together, I mean, we confirm, I think you could see it as well, more than EUR 1 billion by 2025. Frankly, we don't know today. As Peter said before, we offer the optionality to the customer. Is it part of the vehicle price at factory? Is it part of, I mean, a store later? I mean, is it, I mean, a purchase ex store? Is it a subscription? We give the full flex.
Mm-hmm.
You guys wanna nail us down then later, I mean, for sure, and see where is this line in the P&L. No. I mean, it will be either, I mean, in the vehicle margin or it will be, I mean, in a separate item. That's why we give it, I mean, as a holistic main perspective I mean here today. Well, when we say it's more than EUR 1 billion by the middle of the decade, I think I said, it should grow, obviously, by 2025. I mean, if we are on the revenue side by mid-single-digit EUR billion number, towards the end of the decade, a high single-digit EUR billion number, probably there's a case that the EBIT will grow a bit beyond the EUR 1 billion.
The key point here, I think today is much more it supports, I mean, the strategy. It supports, I mean, the positioning of the product and how we're going to monetize. We leave that to the customers. I think what we, what you can take away here, there's a great potential from doing so.
Let me help you, Horst, with your spreadsheet, because we know how to do spreadsheets as well. I'm gonna be one more notch specific. Do you do a risk and reward partnership, or do you do a classic just buy technology and pay the full price partnership? Let's start with that, which is a well-known model. In the well-known model, you pay a significant amount of supplier development cost. You have your own cost. The supplier has all of his other base development cost and the other fixed cost associated with the business model. Of course, in this case, it's hardware and software. You pay the full price in that case, if you would go to classic of the chip. That number is a very sizable number. We pay none of that. Nothing.
Only pay a heavily subsidized chip. Together figure out how do we maximize our joint revenue. The reasons why the margin is lower than on the Connect side is that if you still add up everything, this is the most sophisticated technology in the car by a country mile, is that the total of the variable cost that goes into that and the amortized fixed cost is higher than showing a movie in the car. Unless you think you can have unreasonable pricing, but I think the whole point of Harald's presentation was not to go to, you know, pie in the sky type of pricing assumptions, but still think that there is some kind of an equilibrium here, then automatically, mathematically, you have.
Mm.
A little bit lesser margins than you would have on a Connect feature. We have thought through this very carefully.
On the question, I understood why we are not more ambitious. I think we are pretty ambitious when it comes to automated driving. How many companies are out there today that have Level 3? It's a huge problem to solve because that's why there's only one company that has a Level 3 certification, at least, in Germany and for Europe, for 48 countries, that's Mercedes-Benz currently. It's a huge problem to solve, and we want to solve it safely. Safety is always in the forefront of what we are doing here. I think it's pretty ambitious to commit to level three with our next generation of cars based on the MB.OS system here and going to 130 on Level 3. That's pretty ambitious.
The Level 4 was the parking scenario, which we have obtained also as the first company, and that, of course, we're going to transfer also in the future. All in all, to do it safely, I think a huge ambition. To elaborate on the Level 3. Today, we are the only company that has a Level 3 certification, and this is on the highway. On the autobahn. What we're doing right now is to using machine learning and AI in order to solve that use case in the urban environment. It's a very, very difficult problem to solve on level three. That's why we're using this partnership. Others are doing fantastic safe, but that's level two systems. That's a very different thing.
Just small add on, maybe. Yeah, I didn't want to say that you are not ambitious. You are very ambitious. Just the revenue potential you have outlined does not include at all Level 4 driving, correct?
No. If your definition of Level 4 is true Level 4, I'm gonna make an example for you. You are asleep in your car while your car drives you from Stuttgart to Hamburg. That would be Level 4.
Yeah.
That is not included.
That's automated. That means it's beyond 2030, right?
That I didn't say. I just said it was not included.
Nice try, Horst. We work ourselves to roll through, so we continue with Tom Narayan from RBC.
Thank you. Yeah. Ola, in Monaco you said, you kind of set up the event today to prove how owning your own operating system, why that's important. I think you guys did a great job, obviously, today. You're one of a few, a handful of automakers really seeming to do it in-house, let's say, with partners, but really in-house. Some others are using third parties to completely outsource ADAS capabilities. The question is, I don't know if you agree with this premise, longer term, as some of these features become mandatory, right? Just safety, like you mentioned, airbags or, you know, rear view cameras. What if a lot of these features just become mandatory? Wouldn't the pricing come down that you could charge your consumers?
In that sense, would it not make sense to outsource completely ADAS capabilities to somebody else, like some other automakers are doing? Then, the second question is on Google Cloud. It's kind of the opposite of the first question. By doing that, presumably, yeah, other automakers would also use that. Does that in any way harm the Mercedes brand or not harm the Mercedes brand, but you guys wanna differentiate the experience? Does that in any way impair the ability to differentiate the driving experience?
On the first point, I think, especially in the presentation of Markus Schäfer and Magnus, we made it absolutely clear that MB.OS is so much more than just one of the domains. Quite often, people, when they talk about an operating system, they just jump onto one domain and talk about that specific domain, but it's not. The full integration effort, both on the hardware side and on the software side, it's not something you can buy from anybody. The OEM is not gonna be able to release that responsibility of the full integration. In one way or another, you're going to be involved. We have just chosen to make sure that we with very clear, let's say, technological strategy and rules, have figured out how we're gonna manage this.
Inside the domains, you can then decide partnerships. You asked specifically about automated driving. There's really the full spectrum here. Some car companies are trying to do everything themselves, like literally every single bit of it. Some car companies, they go out and see, what can you buy? Let's see if I buy that. They still have to do the vehicle integration and the application of it. We have chosen, in our point of view, kind of a best of both worlds. We have 20 + years of experience in assisted driving. We know a lot. We know a lot about both the hardware, the software, the application and everything. You really need a compute partner that is the best you can find, in our view, NVIDIA, and with their software capabilities in the business model that we have just described.
We think that what we have chosen for us is actually the fastest and economically quite intelligent way of solving this problem. We'll take it from there.
In MB.OS, I think the key is to combine the different domains to a whole new experience. It's not only what one domain can do, what ADAS can do, but to combine several domains to a new experience, that's the trick actually here. To combining ADAS with a drive domain, for example, and creating a new experience for the customers or additional benefit. I know what's going on in my drivetrain while I'll navigate or I do assistance using the assistance or combining the infotainment with the navigation to have a new combined experience for the customer, which we'll show actually in the near future.
Just being able to do that, to put this all together and coming up with a new product, and we are in the driver's seat, and that's the beauty of MB.OS.
Regarding the second question on Google Cloud, we want Google to offer this new product that they're coming out with to the mass market, because this gives just a larger user space that gives us better data for the Places situation. What's so exciting about is that Google coming out with this new product, because now we can really start to innovate. We can start to see how does it put together with our 3D game engine ? How does that work together with the other domains? How can we elaborate this? This is something that only we can do.
Thanks a lot for the answers, and we just go to the next gentleman, George Galliers from Goldman Sachs.
Thank you. Thank you for the very insightful presentations earlier. I had two questions. The first one was really just on the standardization, Ola, that you mentioned with respect to the sensor set and the compute on the vehicle, starting with MMA. Does that include everything from the LiDAR through to ultrasonics, or will there still be some differentiation between vehicles that are equipped for Level 2 versus those which are capable of Level 3? The second question I had was really just on MB.DRIVE and MB.CONNECT. Just to be clear, if, as a customer, you subscribe to these, do those subscriptions belong to you as a customer, and you can therefore use that functionality in any Mercedes-Benz with the appropriate hardware and software, or do they belong to the vehicle?
Which do you actually think is the bigger addressable market, attaching it to individuals or attaching it to the cars?
Should I start with the second one briefly?
Go ahead.
Very clear. The license stays and is with the car because it's the feature that we need to authorize via the MIC for the car. It stays with the car, because it's as well depending on what features do you have in the car and what features can you buy for the car. It stays with the car, and the customer buys it and the license for the car.
With regard to the sensor set, I'm gonna call it base sensor set for Level 2+, as I mentioned in my part of the presentation, in terms of how much sensing technology we're putting in the car, it sits above the most sophisticated assistant system that you can buy in the S-Class today, bar the Level 3. Sorry, bar the Level 3. That will be for every single Mercedes then going forward from that point, including the supercomputer. Level 3, where you have the LiDAR and even more of the other sensors, that is a high version that is an option that we're not gonna put in every single car, because the variable cost of that is very high.
Great. Thank you.
Okay, we go on. More in the middle of the room, I saw Henning Cosman raising their hand. Henning Cosman from Barclays.
Yeah. Thank you very much. Thanks for taking the question. We or I at least come away, thinking you're really at the forefront of a lot of the things that you talk about, right? Therefore I'm almost asking myself, are you almost depriving yourself of an opportunity with a use case where you're obviously a luxury, premium luxury manufacturer with a with limited annual sales and a growing but limited fleet size? Is there almost a scenario where you could think about licensing all your significant development effort and being at the forefront of that technology, perhaps making that available to car manufacturers with significantly higher volumes than yourselves that you're perhaps not directly competing with?
Is that in any way an opportunity, or why would it not be an opportunity considering that you yourself are also investing a lot in these things, or would that opportunity fall to your partner? Somebody asked before, you're gonna be the first partner. There's gonna be other partners. When are you losing your edge? Is there perhaps an opportunity for you to leverage your own investment costs into licensing opportunities going forward? That's the first question. I don't know if I'm gonna get an answer, but just to take advantage of having Britta on the stage as well. Horst asked about the margin trajectory in the context of the additional revenue opportunities, margin opportunities, offsetting some of the battery electric dilution.
We didn't talk much about the direct sales model today, but that is of course something that for sure qualitatively you're thinking of having an offsetting, positively offsetting margin effect as well. Because we have you and we don't have you that often, could you help us quantify that opportunity perhaps as much as you can from today's p erspective? Thank you.
On your first question, it's not something that is on the cards today. I have to admit for these guys that have to do the work and the thousands of people behind them that do the work to enter yet another cookie into the kitchen, excuse me, would just complicate things. It is so sophisticated that for these next few years, we will definitely concentrate on ourselves. Whereas one should never say never, philosophically, though, if I think about your question, it's nothing less than the brains and the central nervous system of your vehicle. That is the core of your vehicle. I find it in a way difficult just to comprehend, at least from our philosophy, that you would buy the brain and the central nervous system from another OEM.
I'm not gonna say that it's not gonna happen, but at least for us Mercedes people, that feels strange.
We might give it to the van people, right?
Yeah, they have it. Yeah, that's van. Yeah, that's us, you know. Yes.
Sorry.
Yeah.
We're not saying anything about pricing here, right?
Yes. Well, basically, just a second, Steffen and myself, we had yesterday a discussion, maybe I would be prepared to go even in deeper discussions about all the transformation in sales and marketing if you want to. Just trying to give a short answer. The overall starting point for doing the direct sales was controlling the pricing when you go more and more digital, because if every dealer would go digital, then you have the full transparency. If you have the strong belief that di ogital sales will become more oftenOf, essence for our customers going into the future. This was the starting point. We said, "Okay, obviously, there are two other big levers you control, because that's the key as a result.
You control the price because your formerly dealer is now an agent, you can set the price. What we see currently as we are running both models in parallel, in the recent two years where we have seen our current dealer model versus the direct sales model, is that obviously when you control your own price, we had a better perspective on how we control the price than if you are doing this via the dealer. This was the first very positive effect. Some of these effects are built in the weather chart already with the forecast. I still do believe there is much more that we can see over time when we are getting now into the bigger markets, when we are adding more markets in Europe.
The, the efficiency in the model, we are just starting to see. I think we are still at the beginning, and I think it's the right way to go, and it's one of the key levers of sales and marketing to, which is built in the weather chart of Harald.
Let me come back to the weather chart shortly. You know that basically the origin of the weather chart is a transition into BEV. I think we all know the challenge of going there with structurally lower margins given the high variable cost on the BEV vehicle. We pulled together, I think, a comprehensive plan, I mean, another part of which you saw here today, how we're going to address that challenge. What, I mean, we saw today, what you, I mean, you heard in terms of the margins, I mean, coming from Connect or coming from Drive, I mean, the benefits coming from direct sales, I mean, the benefit coming from-
Sure.
-digital sales. All of that is part to manage the challenge of the transformation going to BEV. Therefore is completely embedded, I mean, into the weather chart. I mean, this is really, I mean extremely important I think for us that we are all on the same page here.
Yes. Thanks for your answer. Thank you, Britta, for the offer to do a follow-up on direct sales.
Yes.
At a later point in time. I think we continue over there. To my left, I see Harald Hendrikse from Morgan Stanley.
Thank you, Steffen. Thank you all of you. That's the most comprehensive presentation we've had on these technologies from any legacy OEM. Thank you very much. Two quick questions. Firstly, you talk about putting the compute and chipset into every car. Again, sounds like the right decision, but it's also a brave decision, right? You don't really know the revenue profile of the investment you're gonna have to make. How are you gonna deal with the extra costs of putting those chipsets and computing power and the sensors in all of the cars prior to getting any of those revenues? Is that gonna be just the cost of manufacturing, or is it gonna be sort of seen to be an investment CapEx toneype of spend?
The second question, sorry to go back to Google, but not specific to you, but the German industry, I don't think has been super keen to get Google into the car from day one on this whole project. I think your decision is practical, and I think it supports the strengths of the car and the brand in the future. I like the decision. Can you maybe talk us through the thought process where we've gone from, I feel like we've gone from a situation where Google is never gonna go into a German car, and now it's gonna go into your car. Maybe talk a little bit through how you made that decision, please.
On the first point, here comes the beauty of the business model. If you are not in an all buy scenario, but you actually are in a, both parties are interested in maximizing the revenue and the profit of the thing. As we hinted to, even though we're not gonna give you the exact numbers, if you get that supercomputer at a heavily discounted price, actually the variable penalty should the customer not turn on any feature, is not that high. It's not an investment.
Yes, it sits there in the variable cost, but you make an economic model around how high do you think the take rate will be of the different offerings that you have, plus the opportunity to enhance it over the lifetime of the vehicle and upsell, in combination with which price you think you can charge for the different levels of service. It's a change in business model, and I realize it's a bet. It's an unusual bet compared to how we have been doing business for a long, long time. I mean, it's no secret that prominent startups started with that bet from the word go. The more we thought about it, we said, "This is a bet we wanna make," because it sends another message.
Every single Mercedes has a capability in terms of its assist and safety that goes way beyond where we are today. Even if you're the customer in the beginning and you're maybe very financial-oriented, you don't buy it, the guy that buys the car off of you, as Britta said, could just turn on that feature later on. We think that this lifts the brand. We have always been about safety, and you get a super comprehensive sensor set with a supercomputer. Isn't that fantastic? Starting with the entry vehicle, it's crazy good for the customer.
Well, to the second point, maybe I start and then I hand over to Magnus. It's all about customer experience, right? That's what we said. We're building the core of the system, and then we plug and play the best players, the local heroes, wherever they are in the world. That's what we're doing in China with AMAP. We went to AMAP there because this is the most trusted map provider in China. If you look at points of interest today.
In our current system, yeah, you get some nice point of interest, but it's not what a smartphone customer experiences today when they are looking for point of interest and look for great ratings. A lot of people judging about a place, a restaurant, or something, and that's what Google provides, definitely. That's the most trusted source in the Western world. That's what it is. We are not implementing GAS, Google Automotive Services, in our car. There's a change to the business model, and that's the result of our discussions with Google, that we said we need to come up with a different model, not the traditional GAS model that they're offering today. We were sitting together, pulling our heads together and developing a new product that's different from GAS and that we plug and play into our system.
Maybe you talk about how we do it?
Yeah, that's right. Having a dialogue with the tech community and being here in the Valley, having those discussions currently, when we're talking about the vision, what we are trying to create, we're trying to create this digital luxury and what does it mean and how could you do that? I mean, having that dialogue, it became clear in the dialogue we were having that, okay, this needs to be a new type of offering that can elevate and broaden the portfolio of Google. They talk about that in the talks we're having jointly later.
For us, that opened up completely new doors, because all of a sudden, you know, we have a partner that we can innovate with, we can continue to improve. When we talk to partners, when we talk to all kinds of people out there, we're not looking for vanilla. We're not looking for. We want to look at tech partners that we can together create something new and unique for our customers. That's what digital luxury means for us.
We have a question here, very close to the camera.
Yep.
Yeah. Thank you. Can you hear me?
Yes.
Yes.
My question was about the Mercedes-Benz DRIVE. You included in the revenue share, base software. I was just curious where the line is for that. You know, who brings parts of the DRIVE software to the table, the perception part, localization part, those type. Where do you draw the line where it's Mercedes-Benz versus NVIDIA?
Well, maybe I jump in. We are mainly-
Yeah. No.
On the financial side of things. You can't do that in the financial terms. It's one software that we have co-developed. Full stop. Yeah.
All the components are co-developed?
Not all the components, but many of them.
Got it. Just, you know, coming to market, you know, some people are coming to market with software like Mobileye or, Qualcomm are gonna come to market with driver software that was kind of independently developed. What are the components that are not yet developed here, within the driver stack that still have to be kind of either acquired or developed between yourselves and NVIDIA?
Okay, I can answer that one. Sarah and I have a very tight joint team that we call mixed team that we're working on together to bring it this. The issue is, or the problem statement is really how can we do this safely? How can we prove this so that it is basically living up to the Mercedes-Benz pledge of always having a safe approach. To prove this, you basically need a lot of data, as we said, and we need to be able to run through all of our models and the simulations and to do this. Basically to harden the system, to make sure that the system is there. You saw the video. It's driving. It's doing what it's supposed to do.
Making sure that this is safe, this is the challenge ahead.
Last question on that. I appreciate that. Is the kind of the goal, you know, one of my colleagues here asked about Level 4, and you said, "Look, that's we're not talking about Level 4 here." With regards to Level 2, is the target to deliver by the end of the decade, I think that's where the timing was, a Level 3 eyes-off urban type of driving? Would that be the appropriate target for that?
Level 3 urban, that's the target, absolutely.
Okay. Thank you.
Thank you very much. We continue with a question that reached us via the MEETYOO webcast app from José Asumendi from J.P. Morgan. I think it goes, Markus, to you. First of all, he's thanking the team for the great presentations. The question is about ADAS Level 2, Level 3. How far did you get in terms of millions of miles driven, number of disengagements on the highway, and how do you think Mercedes compares against peers? He refers to Tesla in ADAS experience. As the car becomes autonomous and the driver wins that time in the car, which functions do you think drivers will perform in the car, and how large is the business opportunity?
I mean, again, back to what we, what we said, where are we now? We're the first ones certifying a Level 3 system. Obviously, we are leading, absolutely leading the pack when it comes to autonomous driving. Even driver assistant level two system, our current level two system of Mercedes-Benz, if you're reading all these, tests around the world, I think, it's rated really highly. I think we are in a good shape there, and we just talked about what is coming. In terms of disengagements, if you look at the disengagement report, and if you look at the OEMs in disengagement report, probably there's only one on the top 10 which is an OEM. That's basically us. The other ones are basically robotaxi companies that have a completely different business model.
There's a whole mix of data going in this disengagement. Former projects that we're running with Bosch, the [EC9] project, which we discontinued, and some future. We are very happy actually with the actual performance of the system, and I would say, we are on track there, as we said earlier, to achieve our targets. What can you do in the car once you are in Level 3? It's about content and entertainment, immersive entertainment, and that's what you're gonna see in the workshops there, and that's exactly why we focus so much on the canvas, on the light, on the sound, on the massage, on the fragrance, and everything that touches your senses in the car and make it a whole concert. I mean, this just...
This world opens just up, and we need partners like ZYNC, we need partners like Apple. We're coming in new models with Dolby Music Universal. I mean, would we thought that we would come with these partners together in a project? Probably five years, we didn't think about it. Now we're tapping into a new pool of partners and thinking about new business models there, and that's just the beginning.
Thank you very much. On that note, thank you very much for that very lively Q&A. Yeah, thanks a lot to everyone on stage for answering the questions. To all participants online, have a nice rest of the day, and we look forward to talking to you soon. Thank you and goodbye. To all guests here in the room, there's still a few housekeeping things. We'd like to invite you in a moment to join us for lunch. I've just a few short remarks about the rest of the day. You can now continue your individual program over the afternoon. As you know, we'll be offering ride-alongs in level two, level three ADAS vehicles. There's an active safety parkour, and there's three different workshop stations to give you a precise picture of the tech innovations of the new E-Class.
You've seen that during the presentations. The meeting point for the workshops is in the cafeteria. That's over there. If you go out here and then over there. For the driving activities, please head to the info desk at the lobby. If you do not know what your program is, please scan the QR codes on the backs of your name badges for your personalized schedules. Obviously, please feel free to explore the vehicle displayed outside as well. A fleet of Mercedes-Benz vehicles is available for you to choose from and drive around the building. To arrange for a car, please speak with the team at the test car counter. Our board of management members and further experts will be available for discussions during this time.
Shuttles for departures at the end of the day will be leaving from the front of the building over there. If you will leave only tomorrow, please feel free to join us this evening for an informal dinner, at 7:00 P.M. at the so-called Wirtshaus Lautenschlager restaurant. Let us know if you're in. Once again, thanks so much for your attendance, for your interest. Enjoy the rest of your day with your individual experience slots. As always, our team is at your disposal. Happy for any follow-ups. Thank you and goodbye.