SUNNYVALE, CA – Mercedes-Benz and its German parent, Daimler, steadily are expanding their efforts to soak up the energy and knowledge of Silicon Valley by building one the largest automotive technical centers in the world-famous technology center south of San Francisco.

‟We have invested a lot in this building,” says Johann Jungwirth, president and CEO of Mercedes-Benz Research & Development North America, which is based in Sunnyvale, CA, and is the oldest and largest automotive research center in Silicon Valley.

‟We are right between Apple, Google and Microsoft and Facebook. It's really important our designers and engineers interact daily with these companies,” Jungwirth says while showing off Mercedes-Benz Research’s striking new offices, which it has occupied since last autumn after nearly two decades in nearby Palo Alto.

The interaction with the U.S. tech companies clustered nearby takes multiple forms and now is basically open-ended, he says. The employees at Mercedes-Benz include a handful of German citizens, but most are young and American.

Mercedes-Benz Research’s projects are diverse.

Social trends in the U.S. are examined by the automaker’s Society & Technology Research Group. A team from Business Innovation, a Daimler think tank, has been studying the development of new business models beyond automobile manufacturing since 2012.

‟We think beyond selling cars,” Jungwirth says.

The Sunnyvale center also concentrates on infotainment and telematics as well as apps such as the Mercedes-Benz Apps and Digital DriveStyle app. Another focus in Sunnyvale is user experience, which includes adapting driver-assistance systems to the U.S. market.

Jungwirth says Mercedes-Benz has had a formal partnership with Google for more than two years and Apple content will be available on the screens of Mercedes vehicles starting in mid-2016.

But informal relationships also are important. ‟A lot of what goes on in Silicon Valley is based on relationships. There is a lot of interaction socially” in addition to forums and conferences, he says.

‟Learning from these companies, especially about their user interactions, is very helpful,” Jungwirth says. ‟It's needed if you want to be a leader. We can show them to our upper management in Germany. It’s also unique. No other German (manufacturer) has this kind of freedom.”

R&D Presence Helps Marketers, Too

Jungwirth, whose youthful appearance belies the two decades he has spent with Daimler, also says the location in Silicon Valley offers insight into the U.S., which is critical to Mercedes-Benz's efforts to remain a leader in luxury vehicles.

‟The U.S. is very different in terms of demographics,” Jungwirth notes. ‟We still have an expanding customer base here in the U.S. These are facts based on demographics. We also know more growth in the top income segment.”

In addition, the ‟mindset and creativity” in Silicon Valley have helped nurture trends and lifestyles that have swept the globe. ‟The top five websites are from Silicon Valley or nearby San Francisco,” he says.

Jungwirth, who also is responsible for an advanced design center in Southern California and an engineering center in Redford, MI, outside Detroit, notes the U.S. suburban lifestyle exemplified by Silicon Valley, which stretches south from San Francisco, is unique. While densely populated megacities have expanded in other parts of the world, the U.S. population lives in megasuburbs ‟where the car is still king,” he says.

‟There is a lot of hype about urbanization, but on the ground it’s very different,” Jungwirth contends. ‟We only have only one megacity in the United States. New York is the one exception. Boston, Miami, Chicago, Los Angeles are all megasuburbs.”

Studies show the fastest-growing areas in the U.S. are in the suburbs and the trend is expected to continue well into the future. ‟People don't live in the city. They live in the suburbs. It's all happening in the suburbs,” Jungwirth says.

The new Mercedes-Benz R&D center, with its bicycle lockers, open snack bar and game tables for its more than 100 employees, is growing to meet the challenges posed by the combination of suburbanization, sophisticated customers demanding the best possible service and rapidly changing technology, which is expected to change the motoring experience in the next decade.

Thus, the center in Sunnyvale also pays close attention to trends in consumer electronics, Jungwirth says, noting hockey great Wayne Gretzky’s dictum that you don’t skate to where the puck is, but to where it’s going to be.

Big on Big Data

Another key area on which Mercedes-Benz Research concentrates is ‟big data,” which is collected, sifted and repurposed by companies such as Google and Amazon. Half of Amazon's revenue comes from ‟recommendations” created with a combination of big data and contextual awareness, Jungwirth observes.

With the consent of the owner, Mercedes-Benz can use the vehicle and customer data to create a unique profile of how the vehicle is used, Jungwirth says: ‟It’s the concept behind ‘My Mercedes.’

‟We can simplify things. The car becomes a concierge. The car knows their habit. Knows where you want to go and what music you want to listen to, based on the time of day and day of the week.”

The car also can be calibrated to ‟know” such things as when to turn on the seat heaters based on the season or the outside temperature.

‟The car should do it for you. This is really the next step. It also fits the Mercedes-Benz experience. We think it can create a passionate relationship between you and the car,” Jungwirth says. ‟We improve the embedded systems, but we also focus on the portable.”

Thus, motorists could use a service such as NEST, which manages the technology in a living space by programming home appliances, heating and cooling, security and lighting. NEST could send an estimated time of arrival so the house is properly heated or cooled and the lights are on upon arriving home.

‟It's up to the customers to decide what information they want to visualize,” Jungwirth says. ‟You can show if you're an eco-driver. We see customers are interested in this. The goal is to continue their connected life.”

Mercedes-Benz has experimented with the technology required for autonomous driving for the better part of two decades in Germany, but kept most of the technology under wraps. Now some of the expertise is being shifted to Silicon Valley, where autonomous driving is a topic of great interest thanks to Google’s flashy self-driving car project.

The world seems to be dividing into two schools: one that likes to drive and another for whom it’s a chore well-suited to automation, notes Axel Gern, who heads Mercedes-Benz’s autonomous-driving research project in Sunnyvale – and says he loves to drive.

Mercedes S-, E- and C-class vehicles already come with features such as adaptive cruise controls that allow semi-autonomous driving in stop-and-go traffic with the driver present. ‟We are improving these systems, and (our) goal is to launch a new system every two years” that can be updated with over-the-air software, Jungwirth says.

Remaining a leader in today’s automotive business means being an innovator in both autonomous driving and digital technology, he says. ‟We want to own the software. We think this is intellectual property. We’ve been among the first in all of this. I’m certain we’ll manage to stay ahead.”