Mercedes And BMW Battle Uber With $1.13B At Edges of Smiling Curve

Mercedes And BMW Battle Uber With $1.13B At Edges of Smiling Curve

The Uber’s mobility operating system has redesigned the architecture of urban transportation. The implication is that car companies of the future can be abstracted within that operating system as citizens may not necessarily care which brand of car is moving them. Yes, all you care for is to be taken safely from one location to another. BMW and Mercedes Benz see that future and the associated risks, and are investing $1.13 billion to go to battle with Uber.

“Our mobility services have developed a strong customer base and we are now taking the next strategic step. We are pooling the strength and expertise of 14 successful brands and investing more than 1 billion Euros to establish a new player in the fast-growing market for urban mobility,” said Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “Further cooperations with other providers, including stakes in startups and established players, are also a possible option.”

“We are creating a leading global game changer. The 60 million customers we already have today will benefit from a seamlessly integrated, sustainable ecosystem of car-sharing, ride-hailing, parking, charging and multimodal transport services. We have a clear vision: these five services will merge ever more closely to form a single mobility service portfolio with an all-electric, self-driving fleet of vehicles that charge and park autonomously and interconnect with the other modes of transport,” Harald Kruger, Management Board Chairman of BMW added.

I have long maintained using the Smiling Curve that Uber is a better car company than Ford and most car brands just as Intel or Accenture is a better computing company than Dell or Lenovo. Yes, while Dell and Lenovo remain at the center of the curve, on computing, Intel and Accenture have operated at the edges where more values reside. Similarly, Intel, Nvidia and Samsung are better car companies than GM and Ford as they are supplying modern microprocessors to power the increasingly commoditized boxes called cars.

In this video, I explain how value is shifting from the traditional car manufacturers to the companies which are “retrofitting” cars to become driver-less vehicles. When Uber and Waymo receive cars from companies like Nissan and Ford, they take them through engineering processes, turning them into driver-less cars. Systematically, the value now moves from Nissan and Ford to the final products made by Uber and Waymo (this applies even as Uber and Waymo are not selling the cars to the mass market).

 

Today, BMW and Mercedes Benz want to move to the edges, away from the middle of the curve to find great value. Most car companies will do just that in coming years. In short, the redesign has started as Ford and General Motors are closing or plan to close plants around the world.

 

Smiling Curve Shift: Value Redesign in Global Automotive Sector

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