Mercedes-Benz: Turnaround achieved

For more than a decade, Mercedes-Benz, the world's oldest automaker, has experienced a steady decline in the value of its patent portfolio. This trend, characterized by a significant decline from nearly $2 billion in 2007 to approximately $580 million in 2020, raised concerns about the company's innovation trajectory. However, recent developments indicate a remarkable turnaround. The comparison with a comparatively young Far Eastern company is particularly interesting.

For more than a decade, the value of the patent portfolio of car manufacturer Mercedes-Benz has steadily declined, from nearly $2 billion in 2007 to about $580 million in 2020, when the portfolio reached its lowest value. This drastic decline can be attributed to slower adaptation to new technologies, inefficient R&D investments or more restrictive IP management, as the patent portfolio values of comparable market participants increased over the same period, e.g. BMW's from USD 312 million to USD 1.2 billion, which argues against external industry phenomena. In addition, a significant proportion of the company's own patents have been successively sold (orange area in the graph), but also continuously acquired, albeit less and less in recent years (green area in the graph).

However, recent trends indicate a remarkable turnaround: The value of the Mercedes-Benz patent portfolio has increased by 33% since 2020 and is now back at around $770 million. This upturn has been driven by targeted R&D investments, strategic partnerships and a greater emphasis on sustainable technologies. However, a comparison with industry "newcomers" such as Chinese automotive giant BYD, founded more than 100 years later, is remarkable: BYD has shown an impressive upward trend over the past 17 years. Its patent portfolio is currently estimated at US$2 billion.

Unlike many other Chinese companies, BYD does not (only) rely on mass patenting: the average value per patent family is also a remarkable 20% higher than that of Mercedes.

BYD's success is based on an aggressive go-to-market strategy, a fast innovation cycle, especially in electric vehicles, and offering affordable, good quality solutions to a broader customer base. Mercedes-Benz, on the other hand, focuses on high-margin, exclusive, highly customizable, high-quality automotive solutions and is known for technical excellence in its core competencies. However, this has resulted in a slower adoption of new technologies, whereas BYD's rapid adaptation and implementation of new features, combined with its high level of vertical integration, underscores its speed of innovation.

Sustainability

In terms of environmental, social and governance (ESG) impact, 14% of the value of Mercedes-Benz's patent portfolio is attributable to sustainable patents, with $88 million contributing to climate protection (Sustainable Development Goal (SDG) 13).

BYD's ESG value is twice as high at 28%, with $580 million in sustainable patent value, reflecting a stronger commitment to sustainability. This contrast underscores the importance of continued innovation and sustainable practices in maintaining a competitive advantage.

As the automotive industry evolves and changes rapidly, not only in terms of technology, companies with robust patent portfolios like BYD are likely to gain a stable foothold in the market. The turnaround in Mercedes-Benz's patent portfolio represents a positive change in the company's innovation strategy and perception, but it also highlights the fierce competition from up-and-coming companies like BYD, even though the companies are targeting fundamentally different audiences: While Mercedes-Benz continues to focus on luxury and exclusivity, BYD is positioning itself as a serious market player across the board with its aggressive market strategy and impressive sustainability profile.