Car manufacturing giant Mercedes-Benz, a division of the German company Daimler AG, on Thursday opened a new technology hub in Tel Aviv that will help the maker of world’s first automobile tap into the newest auto and security technologies being developed in the so-called startup nation.
“The R&D center in Tel Aviv will be fully integrated with our global R&D network,” Daimler chairman Dieter Zetsche said at a press conference in Tel Aviv. “We are very much looking forward to the value and contribution we will get from this new center in Tel Aviv…. I am already deeply impressed by this vibrant, optimistic and multicultural atmosphere here in Tel Aviv, and I can already say that this was a very smart decision to have a new member of our R&D activities located here in Tel Aviv.”
Mercedes-Benz has 25 R&D centers globally, employing some 16,000 people in 11 countries, he said. The Tel Aviv center will at the moment employ some 15 workers and the aim is to expand that number to 25 during 2018, said Adi Ofek, CEO of the Mercedes-Benz Tel Aviv Tech Center, at the sidelines of the event. She has been working for Daimler since 2000, and was flown back to Israel to head the local operations.
The role of the new center, Zetsche said, will be to unify the four mega trends impacting the automobile industry: connectivity, autonomous vehicles, ride sharing and electro-mobility (CASE).
He said Mercedez-Benz, whose sales volume has peaked to an all-time high this year as of October, has the ability to inject huge sums of money in keeping up and taking the lead in these evolving technologies while at the same time maintaining the strength of its core business of creating premium cars for consumers.
“The R&D center is the core enabler to get this task done,” he said.
Ola Källenius, a head of group research at Mercedes-Benz Cars Development, said that each of the carmaker’s R&D centers focuses on the ecosystem’s key abilities. In Bangalore, India, the team focuses on digital technologies and IT, while in the UK it focuses on making Formula One cars go faster.
In the digital era, car manufacturers must not only make sure that their hardware is crash-tested, “we must do the same with our software, to ensure that it is equally safe and secure.” Customers will embrace new technologies if they are confident that the software and hardware of their cars are protected, he said.
In Tel Aviv, the team will “play a crucial role” in researching innovative mobility solutions and state of the art software development and it will be also one of the “hot spots” in car and IT security, he said. “I have no doubt that our colleagues in Tel Aviv will strengthen our R&D network, and will make our product better.”
Large technology companies such as Intel Corp., Google and Apple have been working for some time on developing prototypes of autonomous vehicles, alongside car manufacturers such as Toyota, General Motors and Tesla and at times also in cooperation with them. In 2016, investors and corporations invested some $1.1 billion in auto-tech startups — representing a 30% rise in annual deal activity, according to New York-based data firm CB Insights. Investment is expected to soar to $3.4 billion in 2017, at the current run rate, CB Insights forecast.
Most car manufacturers have set the early 2020s as the target for entering the market with cars that will drive autonomously 90-95 percent of the time.
Some 450 companies in Israel are currently engaged in smart transportation fields such as travel sharing, communication, sensors and control systems, according to the Israel Innovation Authority. Israel represented some 4% of the global auto-tech deal share in 2016, the third largest globally after the US (68%) and Canada (7%), the CB Insights report said.
In October, both Volkswagen and Hyundai said they are seeking to set up hubs in Israel to tap into smart car technologies.
The Mercedes-Benz team in Israel will both develop in-house technologies and scout the ecosystem for products that could be integrated into their pipeline, either through acquisitions, long-term co-operations with startups, or investments.
“There are some 6,000 startups here and it would be very dumb if we go blindfolded though this environment,” Daimler’s Zetsche said. “So of course, one task of our team will be to monitor what is going on here.”
Addressing the huge competition for talent both in Israel and in other technology hot spots, Källenius said that great engineers are looking for things where they can “see inspiration and purpose of the task.” To be part of defining what mobility is going to look like in the future is a “huge, huge task” that needs a lot of imagination. “What we find here and in our other R&D centers, that the brightest people want to be part of that story.”
Mercedes-Benz has already invested in Israeli-founded companies in the auto-tech space. In September its vans unit said it was expanding its collaboration with Israeli-founded US startup Via, to enter the ride-sharing market and to introduce on-demand shared rides to the European market. The firm has also invested in StoreDot, a startup that develops battery technology. The German giant has also been active in Israel over the years collaborating with Israeli tech firms.
“We are looking for a very limited but highly promising number of partners in which we invest,” said Zetsche. “We hope we can add to the party.”
He added that the future of the automotive industry will be focused on two levels – making existing cars more automated but also developing from scratch fully automated vehicles. Källenius forecast that by 2025, some 25% of Mercedes total sales annually will be fully electric, while 75 percent will be a combination of combustion and electrification.