DUBLIN – Tesla has the distinction of being the company that put electric cars on the map. Before Tesla, no one believed that electric vehicles (EVs) could be commercially viable. Tesla proved both that consumers have an appetite for EVs and that the infrastructure necessary to support them is possible. But Tesla’s first-mover advantage may not be enough to sustain its lead in the EV space. While Tesla has struggled to produce a mass market EV – the average sticker price for a Model 3 is around $60,000, a far cry from the promised $35,000 – other companies have been launching low-cost EVs like the Nissan Leaf and the Chevy Bolt. And although Tesla continues to dominate the market for high-end EVs, luxury options are now available from Jaguar and BMW, to name a few. Tesla has a strong brand, but so do many other car companies, and other car companies have a far greater capacity to scale up production, manage costs, and deliver reliable vehicles. And they are increasingly moving into the EV space. Consider, for example, the news that Daimler’s new CEO is the man who has been leading the company’s push into EVs and self-driving cars. Tesla may have led the way into the future, but other companies are snapping at its heels. – Felicity Duncan
Daimler Changes CEO as It Focuses on Electric Future
By William Boston
(The Wall Street Journal) BERLIN— Daimler AG on Wednesday said its long-serving chief executive will step down and will be succeeded by its current research and development chief, who has been leading the car maker’s push into electric vehicles and self-driving cars.
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Ola Källenius will take over as CEO of the German car maker from Dieter Zetsche next year, who leaves after 12 years as CEO. The choice of Mr Källenius, whose career began as a Daimler management trainee in 1993, follows Daimler’s decision to keep the reins of its core Mercedes-Benz unit in the hands of the CEO of the entire company.
Mr Källenius, a 49-year old Swede, has held various executive positions at DaimlerChrysler in the U.S. before Daimler sold the struggling U.S. business. He became CEO of Mercedes-Benz’s U.S. division in 2009 before moving back to Germany to join the board of Mercedes-Benz as sales chief in 2013.
Two years later he was promoted to the executive board of Daimler, a move that analysts said showed he was being groomed to succeed Mr Zetsche.
“Ola Källenius has earned not only my respect but also the recognition of his colleagues in very diverse realms,” Mr Zetsche said in a statement. “He contributes a valuable international perspective.”
Arndt Ellinghorst, an auto analyst with the brokerage Evercore ISI, said Mr Källenius was a “good choice” to run Mercedes, but that he needs time to learn the rest of the business. “He is a charismatic and fresh leader and understands Mercedes Cars very well. As a Group CEO, he will need to spend a lot of time dealing with the other businesses and, importantly, shareholders,” he said.
Daimler’s Chairman Manfred Bischoff will step down from the position in 2021, and he intends to propose to shareholders next year that Mr Zetsche succeed him. Under Daimler’s internal rules, Mr Zetsche must serve on the supervisory board during a cooling-off period of two years before he can be elected as the board’s chairman.
Shareholders are expected to approve the changes at the next the next annual general meeting in 2019.
Under Mr Zetsche’s tenure, which began with his appointment as CEO of DaimlerChrysler in 2006, Daimler has seen considerable growth. It has expanded in the U.S. and caught up with rivals BMW and Audi in China.
But the company’s momentum has stalled, Mr Källenius takes over as Daimler faces headwinds on many fronts. Revenue growth has slowed considerably this year, rising 1% to €80.5 billion in the first half of 2018, while earnings before interest and tax plunged 21% to €5.9 billion.
Daimler warned earlier this year that earnings would be lower than expected as a result of global trade disputes and rising costs to meet tougher emissions standards in Europe and to develop new technology for electric vehicles and self-driving cars.
The company is also preparing a major reorganization next year that will split its divisions into separate independent business units, a move that analysts say could lead to spinoffs of Daimler’s trucks business and possibly of its new car-sharing and ride-hailing company that will be called Daimler Mobility AG.
Daimler also faces a major challenge and potential threat from Li Shufu, the Chinese billionaire who stunned the company earlier this year by secretly amassing a 10% stake in the auto maker.
Mr Li controls Zhejiang Geely Automotive, a fast-growing auto maker that is keen to become China’s first global auto manufacturer. He has maintained a hands-off strategy with Daimler, but he and Mr Zetsche have been engaged in talks for months about developing joint projects.
“The big issue for Daimler is Li Shufu,” said Ferdinand Dudenhöffer, director of the Center for Automotive Research at the Duisburg University. “How will they deal with China and Geely?”
Write to William Boston at [email protected]
