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Connectivity will be key but luxury will still be in demand
Mr Eric Larsen, 53, heads research in society and technology at Mercedes-Benz Research and Development in Sunnyvale, California. His job is to think about how the carmaker can sustain innovation as technology transforms luxury cars.

Mercedes has taken steps towards robotic cars, with built-in computers and sensors that assist human drivers with things such as navigation and route planning.

Mr Larsen talks about his work.

How do you think about cars?

Smartphones and lots of wireless connectivity changed everything. Lots of other technologies - such as big data, autonomous driving - and new business models are possible because of connectivity. It's why almost all the carmakers now have offices in the Silicon Valley.

What has changed inside the car itself?

Screens have become more important. Will a driver's screen get lots of upgrades like a phone app? If you have a five-year-old car now, people know it by looking at the sound system and the screen. Leased vehicles may be refurbished more often, as dealers look to make them seem newer. Cars may become more modular that way, and there won't be model years in American cars the way there were.

There is more awareness in the controls. You can't input long addresses into a navigational system while you're driving. When a car knows it is at rest, it may allow you to put the seat back further, letting you work, sleep or watch TV from the driver's seat.

But there's also a tightrope of personalisation and privacy. Companies can know how fast you drive, how tight you corner. We've already seen startups that tell how fast you're driving and how you are braking by using the sensors in your phone. It can be a capability in the car itself. As you get into "pay as you drive" car businesses, that will become an issue. There are legal points that have to be worked out.

What about electric cars?

This part of the model isn't broken for most car owners. Internal combustion engines are getting better mileage. Natural gas is cleaner burning and is easier to install from a technology point of view.

People have anxiety over running out of fuel with electric cars. Tesla is building a network of fast charging stations. Cities are doing it too, with charging stations at a few spots in city garages. But if electric cars become popular, are they really going to put a charger in every space in the garage? Hybrids can do well in the suburbs, where everyone could have a charging station in the garage, with rooftop solar panels to produce electricity.

How do you sell luxury cars now?

In the industrial age, you got luxury based on income and showing off. Today, it's about wealth, status and projecting personal values. Knowing things, caring about certain things, is a status symbol. Wealthy people want to show that they care about saving the world. The Prius was generally bought by people who could afford a more expensive car. Tesla put that in an even sexier package - you get a high- performance car and it's green.

One of the challenges is that luxury wants to be heavy, with better seats, more safety features, more stuff in the car. Authenticity matters too. Wealthy people want things that are natural and handmade. In our AMG model, we have an idea of "one man, one engine", with the name of the person who made the engine on it.

Leather will never go out of shoes or handbags, and probably not cars.

There's a constant back-and- forth. It's hard to be rich without contradicting yourself.


A version of this article appeared in the print edition of The Straits Times on August 01, 2015, with the headline 'A look into the future'.
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