Mercedes-Benz CEO Ola Källenius on the New Electric G-Wagen

Ola Källenius is standing in a cold, bare workshop just south of the Arctic Circle in his native Sweden. A heavily disguised prototype of the new electric G-Class SUV—not yet launched when we meet—has just returned from high-speed, low-grip testing on tracks cut into the frozen lakes nearby and is being hoisted into the air on a hydraulic lift for inspection. As it drips meltwater onto the concrete floor, Källenius, CEO of the Mercedes-Benz Group, eats his lunch (today, a premade sandwich and a carton of juice) and speaks in fluent German to the mostly Austrian engineers who spend months in this bleak locale ensuring that the company’s new models can cope with the types of conditions in which vanishingly few customers will ever actually drive. They discuss the truck’s handling on ice and the progress of its test program. Källenius compliments them on the car’s dynamics—how stable it remained even at speed, how safe he felt driving it—and asks them how long they’re here. 

“There are some harsh realities to this job, and to the car industry,” he tells me later. “But this is what I love doing: spending time with our designers, or driving with you on an ice-lake in Sweden, or talking to these engineers. I wanted to congratulate them on what they’ve achieved. We get to enjoy a nice couple of days here, but they’re here for a long time.” 

At six foot four and a half, Källenius might tower over most of them physically, but there’s nothing in his demeanor that hints at the disparity in their corporate statuses. Nor is this the kind of place you’d expect to find the head of one of the world’s great luxury brands: a man paid $13.9 million last year to lead the 166,000 employees of a company valued at $75 billion, whose founder, Carl Benz, invented the motor car and whose genuinely iconic logo has graced the nose of everything from popemobiles to Lewis Hamilton’s Formula 1 racer to the most expensive automobile ever sold at auction. In a recent report, investment analysts Bernstein described Mercedes-Benz under Källenius’s reign as a “four-wheeled cash-generation machine.” 

But the celebrated car marques are not like luxury brands that make watches or couture or accessories or Champagne. Look beyond the alluring badge and bodywork for a moment: The objects Mercedes-Benz and its rivals produce are insanely complex, ever-changing, and hugely capital-intensive—and must succeed in an utterly cutthroat market. Their impact on the environment and the economy has always made them perennial hot-button issues politically. But the electrification of the automobile has put these companies in the geopolitical crosshairs like never before, as governments swap tariffs and risk a global trade war to ensure that they keep their respective shares of the car industry, even as it undergoes an unprecedented transformation. 

And of course, the cars need to be remade, too. Add the impact of electrification to Källenius’s own manifesto for Mercedes-Benz, and this storied marque is likely to change more in the next decade than it did in the previous 138 years. “It’s a once-in-a-century transformation,” he says. “We are reinventing our original invention.” 

So who is the guy steering Mercedes through this tumult? What’s his plan? And what cars will he give us? Källenius has sat for plenty of interviews in his five years as CEO (his second five-year term is set to conclude in 2029), but this is the first time that he has offered anything more. Robb Report was invited to spend the weekend with him in Arjeplog, the tiny northern-Swedish town whose population swells fourfold each winter as the global car industry descends to test its secret new models on the area’s frozen lakes. Spy photographers abound, but to reduce the chance of its future lineup being scooped, Mercedes rents its own private expanse of sheet ice from a local landowner. I watch Källenius as he test-drives the electric G at his empire’s oddest and most northerly outpost, meets local staff, and records social-media footage. He drives some other, more secret new electric AMGs that I am definitely not allowed to see, whose debuts are much further off and which, when not on the ice, remain hidden beneath their heavy covers outside the workshop. 

Källenius has a reputation for being fearsomely intelligent, rational, and efficient, but also not the type of hyper-alpha asshole who too often comes to lead a carmaker. Over the weekend, I see that sharpness not just in the logic of his answers, but in the nuance of the English prose, as perfect as his German, in which he delivers them. 

I’m not sure I’d want those piercing blue eyes and that high-wattage intellect turned on me in a meeting if I didn’t have my numbers straight, but his non-asshole character dominates. It comes through in the easy egalitarianism he displays with the engineers in the workshop, or how he notices and thanks waitstaff, or the way he’s enjoying a casual dinner and a beer with a long table of employees of all stripes when I first arrive at the unglamorous Silverhatten hotel where he’s staying—a glorified bunkhouse for the United Nations of engineers and test-drivers who flock here. This is clearly a leader who sees the obligations of his office as clearly as its privileges: an attitude underpinned by a natural Nordic modesty and reserve. 

“I guess your personality is something that forms in younger years, and I’m not sure you can fundamentally change it,” he tells me over coffee one morning. “There is a Swedish core in the way I act, and maybe most Swedes are not kick-the-door-down types. I believe this should be true for anybody who is at Mercedes or has the privilege to lead Mercedes: We are custodians of that star for a brief moment. It’s my job to hand it over safe and in better condition. The person is not the brand.”

Perhaps not, but the brand will look very different by the time this person is done with it in 2029. And you can add loyalty to that list of his qualities: Källenius has never worked anywhere else, having joined Mercedes-Benz in 1993 straight out of the Stockholm School of Economics, where he founded an American football team called the Traders, for which he was captain of the offense. True to form, he studied tapes of the Chicago Bears and New England Patriots in order to write the team playbooks. At Mercedes, he was a finance guy at first; an early posting took him to Alabama, to help set up the Mercedes factory in Tuscaloosa, where he became—and remains—a Crimson Tide fan. 

It’s a once-in-a-century transformation. We are reinventing our original invention.

In 2003, at the age of just 34, he was put in charge of the Mercedes-Benz SLR McLaren supercar project; two years later, he was given control of Mercedes-Benz High Performance Powertrains, the firm’s in-house Formula 1 engine-maker. After a year as vice president and CEO of Mercedes-Benz U.S. International back in Tuscaloosa, he was recalled to Germany in 2010 to become vice president and managing director of AMG, Mercedes’s high-performance road-car division. Then came two board positions to prove his breadth of ability—sales and marketing, followed by research and development—before he ascended to the top job in 2019 at the age of 50. 

The electric G-Class we’re about to drive together (now officially if awkwardly named the G580 with EQ Technology) is a neat encapsulation of many of the things Källenius has tried to do at Mercedes. First, it’s an EV, which fits his initial plan to make everything electric— “where market conditions allow”—by 2030. Second, it’s expensive, with a starting price in the U.S. of $161,500. Another critical if controversial part of his manifesto is to shift Mercedes upmarket; he spun off the truck business early and is currently in the process of dropping high-volume, low-margin models including the A- and B-Classes. And lastly, he wants new models to still feel like Mercedes vehicles, even if the design that underpins them is radically different from what came before. And the G-Wagen—with its gloriously anachronistic overengineering that you can feel and hear every time you clunk a door shut—epitomizes the Mercedes ethos whether the vehicle is gas or electric. 

Other new Mercedes EVs go much further in their innovation, gaining greater advantage from their electric drivetrains given that they were designed as EVs from the outset. They use Mercedes’s new MB.OS operating system with built-in A.I. and receive fresh design cues inside and out—not least the mad, vast, almost full-width hyperscreen user interface—rather than the same upright, rectilinear lines first sketched out to suit the needs of farmers and soldiers when the G-Class was introduced 45 years ago. 

But as shorthand for old Merc meeting new, the electric G is perfect, and it’s pleasing to be driven in it by the CEO on whose watch it was conceived and executed. “Yes, this is an electric G,” he says as he drifts it across the glassy frozen lake, “but it’s 100 percent G. The most important box for any G-Class to tick is the Schöckl mountain in Austria, to earn that Schöckl-proven plaque they all have. I did five trips up and down it in the electric G in the fall, and not only can it do the Schöckl, I felt it could do the Schöckl best of all.” 

His stints at AMG, in Formula 1, and with McLaren have turned this “spreadsheet guy” into a skilled driver, though most Swedes seem to have the ability to safely slide a car on ice coded into their DNA. Even with the G sideways at nearly 70 mph, a plume of snow and ice billowing high behind it, Källenius has enough spare mental-processing capacity to adjust the screen settings while telling a funny story about the very first time an electric G even crossed his mind. 

The electric G-Class we’re about to drive together is a neat encapsulation of many of the things Källenius has tried to do at Mercedes. 

He was at the Detroit Auto Show in 2018, when the company was first showing the revised G-Class. Arnold Schwarzenegger came to the unveiling and asked Källenius’s predecessor, Dieter Zetsche, if an electric version was in the cards. “Dr. Zetsche said, ‘Yes, of course,’ ” Källenius recalls. “I was head of R & D at the time, and one of my colleagues turned to me and said, ‘Do we even have an electric G in the plan?’ I said that I guessed we did now.” 

Those less keen on electric cars than Arnie and Ola might be pleased by the fact that the ambition to be battery-only by 2030 has fizzled fast. Mercedes now predicts that EVs and plug-in hybrids will account for only half of its sales by the late 2020s, and the company is refreshing its range of gas engines to keep them relevant and selling deep into the 2030s. This is a systemic issue and no reflection on Mercedes products; Källenius has always averred “where market conditions allow,” and market conditions currently don’t. But the retreat is still slightly awkward. 

“The early adopter phase is over,” he tells me. “Now we need to convince every customer. I think it would be a mistake to say, ‘Okay, electric is growing a bit slower, let’s sit back, wait, and not do anything.’ Because if you put product into the market that is so convincing that most customers go, ‘Yeah, maybe I didn’t have iPhone 1, but iPhone 4 looks pretty good,’ you can get very quick, even exponential growth. And if you were the one that said, ‘I’m not going to set sail here; let’s wait and see what the weather does,’ all the other boats would be out on the ocean, and you’d miss the race.” 

But if buyers are going to be sold on EVs by the technology rather than by brand power, what does Mercedes’s 138 years of history count for? With customers attracted to new EV marques that are able to innovate unconstrained by precedent—and one of those brands having a market cap 7.5 times that of Mercedes, despite selling a few hundred thousand fewer cars per year—does heritage become a liability rather than an asset? 

“We also do unconventional things,” Källenius insists. “With blow-your-mind–type features like the crazy hyperscreen in the EQS and the EQE, a lot of people are looking at Mercedes who perhaps didn’t look before. We are one of the biggest automotive sponsors in e-sports. Formula 1 is off the charts; 53 percent of F1 fans are between 15 and 35, and 37 percent are women. When we do crazy things like the G-Class collaborations with Moncler or the late Virgil Abloh, you go beyond the traditional auto crowd to one that buys from other luxury brands. My test is if one of my kids sends me a picture and goes, like, ‘Dad, what is this?’ I got their attention.” 

I wonder how the former finance guy now handles running one of the world’s great luxury brands and to whom he looks for inspiration. He acknowledges that he meets with Bernard Arnault at LVMH and Jean- Frédéric Dufour at Rolex but is coy about the nature of their discussions. 

“We also reach out to people in other luxury businesses to understand how they think,” Källenius notes. “I had the good fortune to meet Brunello Cucinelli, and he invited me down to Solomeo, the hamlet which he has helped to restore. It’s one of the most beautiful villages I’ve ever seen. I learned a lot about fabrics, quality, stealth luxury, sometimes not emphasizing the brand so much. A fine gentleman like that has a very clear understanding of what luxury means in his business. We brought some secret new-vehicle designs to show him and to get his input.” 

“Maybe you can’t compare a high-intensity, high-engineering, high-capital-investment good like a car to a piece of clothing,” he adds. “They are different businesses. But good chefs eat in each other’s restaurants even though they have a totally different style of cooking, just to see what the others are doing. But when you go back into your kitchen, you’re still the chef, and you put together the recipe.” 

I sense a slight frustration from the hyperrational Swede—perhaps that he believes he has gotten the recipe right but has to wait a bit longer for diners’ tastes to catch up. In many cases, judged on any objective criteria, the new Mercedes EVs will be the best cars the company has ever made, including the electric G. The customers, though, are as busy trying to get their heads around this brave new world as the automotive CEOs are. 

“This is definitely the most transformative decade since the inception of the company,” Källenius agrees. “But we’ve always done this. The Swabian engineers who founded Mercedes didn’t look at the horseshoe and think, ‘How do we make this lighter to make the horse run faster?’ They wanted to get the horse out of the equation and do something new. That attitude hasn’t changed. We’ve always looked through the windscreen, not in the mirror.”