Mercedes spends $8bn/year on R&D

Original Article ↗ Hacker News Discussion ↗

Scale and efficiency of Mercedes/VW R&D

  • Mercedes reportedly spends ~$8B/year on R&D; VW around $23B.
  • Some argue output appears disproportionate versus Tesla’s lower spend.
  • Others note VW sells about 5× more cars than Tesla, so higher R&D isn’t obviously waste.

Comparisons with Tesla and other automakers

  • Tesla is described as more vertically integrated and “tight ship,” doing batteries, chips, robots, and AI in‑house.
  • Legacy OEMs like Mercedes and VW are portrayed as bloated, with many managers and deadweight orgs, partly due to unions and job protection.
  • Counterpoint: Mercedes offers a broader lineup (including commercial vehicles) and delivers higher perceived quality and driving experience in mid/high-end segments.

Accounting and tax treatment of R&D

  • Several comments say large firms aggressively classify salaries and routine dev as R&D for tax advantages and balance-sheet optics.
  • R&D is often capitalized as intangible assets, not just expenses; some jurisdictions allow >100% tax deduction.
  • One commenter doubts German firms can abuse this as freely; another notes UK’s stricter definition that effectively narrows what counts as R&D.

Product quality, technology, and “innovation”

  • Mixed anecdotes: Mercedes seen as wonderful to drive but expensive to maintain, with electrical gremlins and some notable engine/brake-line issues.
  • Discussion of Mercedes’ proposed in‑drive brakes:
    • Proponents (via article) highlight reduced rust, dust, noise, and unsprung weight.
    • Critics say the “problem” could be solved by periodically using friction brakes via software, and that inboard brakes will be far more labor‑intensive and costly to service, worsening repairability and depreciation.

Battery and power electronics critique

  • A technical commenter argues the article’s explanation of cell‑level converters and 800V architecture is physically implausible (currents would be enormous), and likely misdescribes a down-conversion system rather than per‑cell boost.

Market positioning and affordability

  • Some argue Mercedes and VW over-focus on upper segments during inflation, while middle‑class buyers get squeezed.
  • Luxury demand is said to be resilient, but VW is characterized as an “expensive commodity” brand hit hardest.
  • Several comments praise low‑cost Chinese EVs and call for truly affordable, reliable cars instead of tech‑heavy luxury vehicles.

Labor, unions, and German economic model

  • One view: German unions and job protections create inefficiency and “deadweight” roles; political moves might eventually weaken unions.
  • Others respond that German/Japanese automakers remain world‑class; but critics counter with data points about Germany’s shrinking GDP share, high inequality, and declining purchasing power.
  • Automation and Chinese competition are seen as bigger medium‑term threats than US imports.

EV reliability and brand comparisons

  • Some commenters claim Mercedes and Tesla EVs are among the more problematic they’ve seen, while South Korean and especially Chinese EVs seem more reliable anecdotally.
  • Perception: legacy brands sometimes design EVs in ways that make repairs uneconomical, contributing to fast depreciation and insurance write‑offs.

Musk/Twitter, speech, and advertising (tangent)

  • Large subthread debates whether Musk’s cost‑cutting and “free speech” stance on Twitter/X is a strategic success (influence over elections) or a financial/operational failure (revenue collapse, bots, toxicity, advertiser flight).
  • Arguments cover:
    • Advertisers’ desire to avoid adjacency to “bad speech.”
    • The tradeoff between “free” and “good” speech, spam/noise vs signal, and the inevitability of some moderation.
    • Broader worries about propaganda, plutocracy, and the health of democracy; some participants defend democracy and promote reforms like ranked-choice voting.