Annual Report 2016

Research and development

Research and development as key success factors

Research and development have always played a key role at Daimler. Gottlieb Daimler and Carl Benz invented the automobile more than 130 years ago. Today, we are shaping the future of mobility. Our researchers anticipate trends, customers’ wishes and the requirements of the mobility of the future, and our development engineers systematically implement these ideas in products that are ready for series production. Our goal is to offer our customers fascinating products and customized solutions for needs-oriented, safe and sustainable mobility. Our technology portfolio and our key areas of expertise are focused on this objective.

The expertise, creativity and drive of our employees in research and development are key factors behind our vehicles’ market success. At the end of 2016, Daimler employed 24,200 men and women at its research and development units (2015: 23,300). A total of 16,300 of those employees (2015: 15,500) worked at Group Research & Mercedes-Benz Cars Development, 5,600 (2015: 5,500) at Daimler Trucks, 1,200 (2015: 1,100) at Mercedes-Benz Vans and 1,200 (2015: 1,200) at Daimler Buses. Approximately 5,400 researchers and development engineers (2015: 5,100) worked outside Germany.

Our international research and development network

Our global research and development network comprises 35 locations in 15 countries. The biggest facilities are in Sindelfingen and Stuttgart-Untertürkheim in Germany. In November 2016, we opened our new technology center for vehicle safety (TFS) in Sindelfingen. The center offers entirely new possibilities for car and truck crash tests, the configuration of assistance systems and PRE-SAFE®, and the validation of vehicle concepts that use alternative drive systems.

The Vehicle Safety Technology Centre

An ultramodern testing and technology center is under construction in Immendingen and is scheduled to be completed in 2018. This facility will be used to refine and optimize combustion engines and alternative drive systems for hybrid vehicles and electric vehicles powered by batteries or fuel cells. Most of the test drives that now take place on public roads will be shifted to the new proving grounds in Immendingen after it is completed. Our most important research locations in North America are Sunnyvale, California (home of the headquarters of our research facilities); Long Beach, California; Portland, Oregon; and Redford, Michigan. Our most important locations in Asia are our facility in Bangalore, India; the Global Hybrid Center in Kawasaki, Japan; and our research and development center in Beijing. Mercedes-Benz Research and Development India (MBRDI) with headquarters in Bangalore is Daimler’s largest research and development center outside Germany. Activities at MBRDI, which celebrated its 20th anniversary in 2016, focus on digitization, simulations and data science. Ten years after it opened, Mercedes-Benz Research & Development China is now an integral part of the Daimler Group’s research network and also plays a key role in understanding Chinese customers’ expectations and local requirements. This expertise directly gives us a sustained competitive edge and the capability to develop tailored products for the local market. Back in 2013, our van joint venture in China, Fujian Benz Automotive Corporation, opened a new product development center in Fuzhou. This facility, which is the first Mercedes-Benz Vans product development center outside Germany, has a design and calculation department, proving grounds, test labs and component and complete-vehicle test rigs. In 2016 we also opened a new Technology Center in Tel Aviv that focuses on research projects related to digitization.

Along with our internal activities, we also maintain close contacts with external research institutions. For example, we cooperate with various renowned research institutes around the world and participate in international exchange programs for up-and-coming scientists.

Targeted involvement of the supplier industry

In order to achieve our ambitious goals, we cooperate very closely also with research and development units from the supplier industry. Daimler must be closely intermeshed with supplier companies in order to deal with the rapid pace of technological change in the automotive industry and the need to quickly bring new technologies to market maturity. Such cooperation is all the more important in light of the increasing digitization of processes throughout all stages of the value chain. Strong partners from the supplier industry are also indispensable for our efforts to develop and offer new concepts for future mobility. As part of our joint research and development work, we make sure the Group retains key technological expertise it needs to maintain the uniqueness of our brands and to safeguard the future of the automobile in general.

Intellectual property rights secure our leadership in technology and innovation

We invented the automobile: On January 29, 1886, Carl Benz registered a patent for a “vehicle powered by a gas engine.” In the 131 years since then, we have refined automobiles with more than 110,000 patents and have set standards that point the way towards emission-free, accident-free and autonomous driving. We continued this tradition in 2016 by registering a total of approximately 2,000 new ideas for patents, as we did also in the previous year. These patents are important to the company primarily for two reasons. First of all, they enable “exclusivity,” whereby the goal is to establish exclusive positioning of selected Daimler features on the market, thus setting ourselves apart from the competition. Secondly, the patents secure Daimler a certain amount of “freedom of action” that enables us to manufacture and sell our products around the world and avoid legal conflicts with third parties. In addition to industrial property rights, which safeguard our innovations for future mobility over the long term, the unique visual aspects of our products are protected with approximately 9,100 designs registered in 2016 (2015: 9,000). Furthermore, with a portfolio of more than 32,800 trademarks worldwide (2015: 31,300), we protect the renowned and valuable Mercedes-Benz brand, the three-pointed star and all of our other product brands in each relevant market.

€7.6 billion for research and development

We want to continue shaping mobility through our pioneering innovations in the coming years while moving ahead with digitization throughout the Group. Daimler seeks to play a pioneering role in the future-oriented strategic fields of connectivity (Connected), autonomous driving (Autonomous), flexible use (Shared & Services) and electric drive systems (Electric), as well as for systems that intelligently link these fields. As announced in Annual Report 2015, we therefore increased our very high level of investment in research and development by 15 % to €7.6 billion in 2016. Of that amount, €2.3 billion (2015: €1.8 billion) was capitalized as development costs, which amounts to a capitalization rate of 31 % (2015: 27 %). The amortization of capitalized research and development expenditure totaled €1.3 billion during the year under review (2015: €1.2 billion). With a rate of 4.9 % (2015: 4.4 %), research and development expenditure was also at a high level in comparison with revenue. Research in the year under review focused on new vehicle models, extremely fuel-efficient and environmentally friendly drive systems, new safety technologies, autonomous driving systems and the digital connectivity of our products.

Key areas at Mercedes-Benz Cars were the new models in the compact class, the ongoing model updates of SUVs and coupes, the new EQ electric brand and the new generation of diesel and gasoline engines. We also invested in vehicle connectivity, autonomous driving systems and the development of additional innovative safety technologies. Mercedes-Benz Cars spent a total of €5.7 billion on research and development in 2016, which once again marked a significant increase from the prior year’s figure ( €4.7 billion). Daimler Trucks invested €1.3 billion in research and development projects (2015: €1.3 billion). The division’s most important projects were in the areas of emission standards and fuel efficiency, as well as new products and the successor generations of existing products such as the new Freightliner Cascadia. R & D expenditure at Mercedes-Benz Vans focused mainly on ongoing product updates, the new Sprinter generation and the expansion of the portfolio with the new X-Class pickup. Daimler Buses primarily focused its development activities on new products, the fulfillment of new emissions standards and the creation of alternative drive systems. (See B.38 and B.39)

B.38 Research and development expenditure

B.39 Research and development expenditure by division

  2016 2015 16/15
In millions of euros     % change
       
Daimler Group 7,572 6,564 +15
thereof capitalized 2,315 1,804 +28
Mercedes-Benz Cars 5,671 4,711 +20
thereof capitalized 2,008 1,612 +25
Daimler Trucks 1,264 1,293 -2
thereof capitalized 57 26 +119
Mercedes-Benz Vans 442 384 +15
thereof capitalized 238 153 +56
Daimler Buses 202 184 +10
thereof capitalized 11 13 -15
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