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Eric Larsen heads research in society and technology at Mercedes-Benz Research and Development in Sunnyvale, Calif. Mr. Larsen, 53, who joined the carmaker in 1995, wrote his thesis for a Ph.D. in sociology at the University of Washington on the failure of innovation in the Communist world. Now he thinks about how Mercedes can sustain innovation as technology transforms luxury cars.

Mercedes has taken steps toward robotic cars, with built-in computers and sensors that assist human drivers with things like navigation, route planning and “anticipatory driving,” which looks at the topography of the road ahead to improve the battery performance in hybrid vehicles. The company has also tested driverless trucks on Germany’s autobahns. Mr. Larsen recently talked about his work in an interview, which was condensed and edited.

Special Section: Transportation A look at how technology is changing how we get around

Q.

How do you think about cars?

A.

The most fundamental thing is that this is still a big market for family values. America has a robust demographic, a higher birthrate than in Brazil or China, and immigration. And the American lifestyle lends itself to vehicles.

The other thing is that smartphones and lots of wireless connectivity changed everything. Lots of other technologies — like 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.

Q.

What are the implications of those two trends?

A.

The suburbs are still very important. You hear about people moving back into Detroit, but the urban areas that are growing larger in size are in the South and West, and they are suburban-born. They have downtowns, but they’re empty at night. That has implications for transporting goods and people.

Young people have had their adulthood postponed by the recession, but most of them will still get married and move to the suburbs. They want children, and they want home-based lives. They like to have space around them. They fill up a car with kids, dogs and stuff from big-box supply stores. That means people will still want big cars.

Q.

So tech changes everything, and nothing changes?

A.

The suburbs aren’t going away, but they are not like the suburbs in the 1950s. Both parents are working more often, and after-school activities aren’t at school anymore. Kids go 20 miles to a soccer coach or a violin teacher. That is a pain point for affluent parents, our customers, people who have more money than time.

The solution is, there will be privately shared vehicles. We have a business called Boost, where minivans drive children after school. They are like school buses, but door to door, and parents can track them with a phone app. They have a concierge as well as a driver, because the driver can’t leave the bus and walk the kid right to the door. A 7-year-old needs that. In this case, we’re selling a mobility service rather than a product.

Mostly, we don’t think people will give up their own cars. Americans like to do everything in the cars. They eat in cars, they drink in cars, they have entertainment in cars and they change clothes in cars — people who leave the office at lunch and sleep in their cars, or wait in their cars for an hour at a time for their children.

Driving is really the distracting thing we do in cars.

Q.

What has changed inside the car itself?

A.

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 personalization and privacy. Companies can know how fast you drive, how tight you corner. We’ve already seen start-ups 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.

Q.

What about electric cars?

A.

This part of the model isn’t broken for most car owners. Fracking has been a strong influence, keeping gas prices low. Internal combustion engines are getting better mileage. Natural gas is cleaner burning and is easier to install from a technology point of view.

Refueling with gasoline is five minutes, once a week. People have anxiety around running out of fuel with electric cars. Tesla is building out 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.

Q.

How do you sell luxury cars now?

A.

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. That is getting a lot harder to do, because word gets around.

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.