Steve Cannon is the CEO of Mercedes-Benz USA (MBUSA), which this week launches the B-Class Electric Drive, the company’s first fully electric vehicle. It’s already gleaning favorable reviews. We caught up with Cannon to check in on how this former Army Ranger (and West Point pushup champ) is handling the swiftly changing automotive landscape.

advertisement

advertisement

FAST COMPANY: One of the first things you set out to do at MBUSA was improve customer service. How’d you do that? STEVE CANNON: We started inside our own organization to create a group responsible for customer experience. There was no one place where we had put everything together. Steve Cannon Photo by James Ferrara, Courtesy of Mercedes-Benz USA One symptom of our siloed approach: We looked at how many customer surveys had gone out there, and there was something on the order of 5 million. One of the most important driving elements has been to re-architect our system of how we reward and pay our dealers.

advertisement

The difference between what we charge dealers and what we charge consumers is 13.5 percentage points. Of those, now 2.5 percentage points are dependent on customer experience: if dealers do all the things we want, they make the full amount of money; if they don’t, then they won’t. Your new electric vehicle hits the market, in part, to comply with regulations in California and other states. The ZEV mandate says that over the coming years, an increasing percentage of the cars you sell in that state need to be zero-emissions vehicles. We’re now fully in the game, and what we’re excited about is that we’re in the game with a true Mercedes-Benz with zero emissions and an 85-mile range. For the 1.5 million Mercedes-Benz owners, the B-Class is a very compelling proposition. You might have an S-Class in the garage already. For the day-in, day-out, running to the grocery store, back-and-forth–you’ll do that with your zero-emissions vehicle. But when you need to go on a 200-mile trip and have that range anxiety, you get in your other Mercedes-Benz.

advertisement

Millennials are famously uninterested in buying cars. How are you tackling the millennial puzzle? First and foremost you need a vehicle package at a price point that’s relevant. If you want to build bridges to this generation, you have to build a product they can afford. So we launched the CLA [which can retail as low as $29,900] last year. 75% of people that bought the CLA are new to the Mercedes-Benz brand, and 20% of the people that bought the CLA are millennials. So there are millennials out there making money and buying cars. How is Mercedes-Benz preparing for a world of autonomous vehicles?

advertisement

Our brand is attracted to something called “intelligent drive.” We already have an intelligent S-Class that can steer itself around curves. It monitors the blind spot, and it nudges you back into traffic. So all the building blocks are there, it’s just a question of time, legislation, and cost. Now “intelligent drive” is going to be available on our C-Class, which is priced between $30,000 and $40,000. So we’re seeing very rapid movement from the high end of the market to the low end of the market. How will roads–and cars–look different in 10 years? As you push out toward 2025, that’s when the ZEV mandate says 15% of the cars on the road need to be zero-emissions. There will be a gradual downsizing of vehicles, and combustion engines will still remain the dominant power train. The good news is that we’re getting better and better at making the combustion engine more efficient. We are reducing CO2 emissions dramatically by increasing fuel efficiency. I still think that fuel cells will be significant over time. Fuel cells are refilled not with a three-hour recharge, but in three minutes. But there’s just no infrastructure to deliver hydrogen to gas stations, so that will take longer.

advertisement

As for autonomous vehicles, by 2025 I believe the technology and cost will be commercially viable. The only unknown is: How is it going to be regulated? The legislative hurdles are as serious as the technological hurdles. This interview has been condensed and edited.