The Mercedes Iceberg Explained

[00:00:00]You know the surface. Mercedes makes expensive German sedans with a three-pointed star on the hood and a price tag that makes your accountant nervous. But underneath that surface, the Mercedes iceberg goes down further than almost anyone realizes. Six levels from what every person on the street knows, all the way down to things the company would rather you never connect to the badge on your steering wheel.

[00:00:22]By the time we reach the bottom of this iceberg, you will not look at that three-pointed star the same way again.

[00:00:28]Let us start at the top. Level one, the surface.

[00:00:32]Mercedes-Benz did not just build cars, it invented them, and that is not a marketing line.

[00:00:38]In 1886, Karl Benz built and patented the first true automobile in Mannheim, a three-wheeled machine with a single-cylinder engine. A few months later, his wife Bertha took that fragile contraption on a 60-mi drive to visit her mother without telling her husband, fixing it with a hairpin and a garter along the way, proving the thing actually worked and more or less inventing the road trip in the process.

[00:01:00][music] So, the company that sells you leather and ambient lighting today began with a woman quietly stealing her husband's invention to go see her mother.

[00:01:09]The car most historians actually point to as the first modern automobile, the low, fast, lightweight Mercedes 35 [music] PS, did not arrive until 1901, and it was not designed in a boardroom.

[00:01:21]It was built to satisfy one obsessive customer who simply wanted something quicker than anything else on the road.

[00:01:28]The three-pointed star is one of the most recognized symbols on the planet.

[00:01:32]Most people assume it is just a luxury logo, a nice shape that looks good on a grill. It is not. Gottlieb Daimler once drew that star on a postcard to his wife and wrote that one day it would shine over his factories. The three points stand for his ambition to put his engines everywhere, on land, on the water, and in the air. The badge on your hood is quite literally an old symbol of world domination. [music] The company motto is the best or nothing. In German, das Beste oder nichts. A line that traces back to the founders themselves. And the name Mercedes. Almost everyone on Earth can say it. Almost nobody knows it belongs to a little girl who has been dead for nearly a century. Level [music] two.

[00:02:12]Enthusiast knowledge. That little girl was named Mercedes Jellinek, and her father, Emil Jellinek, spelled Yellinek, was a wealthy salesman on the French Riviera who sold Daimler cars to aristocrats and royalty. [music] He was obsessed with the name Mercedes because he believed it brought him luck.

[00:02:30]So, he raced under it, calling himself Monsieur Mercedes, and named his houses and his businesses after his daughter, too. When he pushed Daimler to build him a faster, lighter, lower car and it dominated everything in sight, the name on that car, Mercedes, became the name of the whole brand. [music] Jellinek then went a step further and legally changed his own name to Jellinek Mercedes, joking that this was probably the first time in history a father had taken his daughter's name.

[00:02:58]So, the most prestigious badge in motoring was chosen by a superstitious car dealer and named after a 10-year-old. Here is the part most people miss entirely. Mercedes is two companies that spent decades as bitter rivals. Karl Benz built the first car in Mannheim. Gottlieb Daimler and his brilliant engineer Wilhelm Maybach built the first modern car about 60 mi away in Cannstatt. Said Cannstatt.

[00:03:22]These two operations competed against each other for years, and the founders, the two men who independently invented the automobile in the same country at the same time, never actually met. It was not until 1926, with Germany's economy in ruins after the First World War, that the rivals finally surrendered and merged into Daimler [music] Benz.

[00:03:40]The most seamless luxury brand in the world started as a shotgun marriage between two enemies who could not afford to keep fighting.

[00:03:47]Then there is AMG, the performance division behind every snarling, fire-breathing Mercedes you have ever lusted after. To most people, AMG is just a trim package, a badge you pay extra for.

[00:04:00]It started in 1967 as two Daimler engineers, Hans-Werner Aufrecht, said "Off-rekt", and Erhard Melcher, said "Melk-er", >> [music] >> working on racing engines in their spare time, and then quitting to go out on their own.

[00:04:14]They set up shop in a converted old mill in a tiny village.

[00:04:18]Four years later, in 1971, they took a big Mercedes sedan nicknamed >> [music] >> "The Red Sow" to a 24-hour race in Belgium and stunned the entire motorsport world by finishing second overall. A heavy luxury barge humiliating purpose-built race cars. The name AMG is not a word. It is their two surnames plus the first letter of Großaspach, said "Gross-as-back", the town where Aufrecht was born.

[00:04:43]For decades, AMG was an independent outsider that modified and tuned Mercedes cars. And the company that now stamps its name on its hottest models did not actually buy AMG outright until 2005.

[00:04:56]>> [music] >> Their breakout legend was a 1980s monster called The Hammer. A regular-looking sedan with a massive hand-built V8 that could embarrass Ferraris.

[00:05:06]And to this day, every full AMG engine is assembled by a single person, start to finish. One man, one engine, and that builder signs it with a small plaque carrying their actual signature. There are only around 50 of these engine builders in the entire world. Level three, the rabbit hole. You know Pagani, said "Pag-an-i", the Italian company that builds the most beautiful and most expensive hypercars on the planet. The ones that cost more than a house and sell out before the public ever sees them. The engine in every single Pagani ever made is a Mercedes.

[00:05:41]AMG hand builds a monstrous V12 exclusively for Pagani and has done so since the very first Zonda back in 1999.

[00:05:49]A car whose shape was inspired by the old Silver Arrows racing legends. No other manufacturer on Earth has ever had AMG build an engine just for them. Even Lewis Hamilton owned a custom one. And here is the strange twist. The most powerful Mercedes 12-cylinder engine ever built does not live in a Mercedes at all. It lives in the back of an Italian car named after a South American wind god. AMG does sell V8 [music] engines to Aston Martin off the shelf, but Pagani is the only company on Earth it has ever built a complete bespoke engine for and absolutely no one else.

[00:06:26]Assembled by a tiny handful of its most trusted master builders.

[00:06:30]Now for the moment Mercedes spent years quietly trying to bury. In 1999 the company returned to the famous 24-hour endurance race at Le Mans with a sleek car called the CLR and it was considered one of the favorites to win. There was just one problem. The car flew.

[00:06:48]Literally flew. During practice Mark Webber's CLR lifted off the ground at high speed and backflipped through the air like something out of a broken video game. It happened as he tucked in behind another car. The disturbed air slipping under his nose and lifting the whole machine until it simply took flight.

[00:07:07]>> [music] >> They rebuilt it.

[00:07:08]The very next morning during warm-up it happened to him a second time.

[00:07:12]Astonishingly Mercedes decided to race anyway. The team was so shaken it reportedly phoned Adrian Newey, the most respected aerodynamicist in motorsport for advice, then bolted on small front winglets and sent the remaining cars out onto the track regardless. About 4 hours into the event Peter Dumbreck's CLR hit a rise at roughly 190 mph, took off like an airplane, somersaulted clean over the safety barriers, and vanished into the trees beyond the circuit. By some miracle every driver survived. Mercedes withdrew on the spot, canceled the entire program, and to this day has never returned to that race again. And then, there is the deal that very nearly broke the company. In 1998, Daimler Benz merged with the American car maker Chrysler in a $36 billion union they proudly marketed as a merger of equals.

[00:08:04]It was a slow-motion catastrophe. The two cultures never fit, the promised savings never materialized, and after almost a decade of hemorrhaging money, Mercedes sold Chrysler off in 2007 for around $7 billion, a fraction of what it had paid.

[00:08:20]That deal is now taught in business schools around the world as one of the worst corporate mergers in history. As we are about to see, it quietly poisoned something [music] the brand thought was untouchable. We are halfway down the iceberg, and from here the water gets a lot colder. If you've made it this far, you are clearly not a casual viewer.

[00:08:37]Subscribe. We go this deep on Mercedes every single week. Here are levels four, five, and six. Level four, deep knowledge. Almost everything that keeps you alive inside a modern car was either invented or made famous by Mercedes. The crumple zone, the entire idea that a car should be designed to crush in a crash so it absorbs the energy instead of passing it into the people inside was patented by a Mercedes engineer named Bela Barenyi. Said Bela Barenyi back in the 1950s, when most of the industry still believed a safe car simply meant a rigid one.

[00:09:11]Mercedes pioneered anti-lock brakes in production cars. It helped develop the electronic stability systems that now stop ordinary drivers from spinning off the road every day. It brought the airbag to Europe. The legendary 300SL Gullwing of the 1950s with its dramatic upward-swinging doors was also the first production car in the world to use direct fuel injection, a piece of technology lifted almost straight off a wartime fighter plane and in several cases Mercedes chose not to aggressively enforce these safety patterns, effectively handing the technology that saves lives to the entire car industry. For a long stretch of history, a Mercedes was genuinely the most over-engineered bank vault solid machine you could buy. People kept them for decades and passed them down, which is exactly what makes the next part sting.

[00:10:01]During those Chrysler years with constant pressure to cut costs and chase higher volume, the legendary Mercedes quality [music] cracked. The W210 generation E-Class became infamous for the one flaw the brand was never ever supposed to have, rust.

[00:10:16]Cars only a few years old were bubbling, corroding, and rotting around the wheel arches and panels. Electronic gremlins began haunting models that were supposed to be flawless.

[00:10:26]Mercedes slid down the reliability rankings and the unshakeable reputation for building an indestructible tank took a hit that the company spent the better part of a decade trying to repair.

[00:10:36]The brand that taught the world how to build a car that lasts forgot how to do it for a few painful years.

[00:10:43]There is also a secret hiding in your dashboard.

[00:10:46]Most modern Mercedes models contain a concealed engineering and service menu that the vast majority of owners will never discover. Accessible through a specific button sequence on the instrument cluster showing raw vehicle data the normal display will never hand you. The technicians who service your car use it constantly during diagnostics. Mercedes simply never saw any reason to mention to you that it was sitting in there the whole time. Level five, the dark water.

[00:11:12]This is where the engineering stops and the [music] cold business model begins.

[00:11:16]In 2022, Mercedes did something that should bother every single person who has ever bought a car.

[00:11:21]On its electric EQ models, the company started charging a subscription, $1,200 every year to unlock acceleration the car already physically had.

[00:11:31]The electric motors were capable of the extra power the entire time.

[00:11:35]Mercedes simply locked it behind a recurring annual fee. Pay the subscription and your EQE or EQS suddenly drops nearly a full second off its 0 to 60 time. Stop paying and your own car gets slower. The hardware ships with the vehicle, the speed ships with an invoice. And it did not stop at acceleration. Remote start, certain comfort and convenience features, more and more of the car drifted toward a monthly bill for things that were already built into the metal in your driveway. The reaction online was savage. Owners pointed out that they had already paid for the motor, paid for the battery, paid for the entire car, and were now being asked to rent their own horsepower back from the company that had just sold it to them. Then, there is the quiet magic of the word lifetime.

[00:12:22]When Mercedes tells you a transmission is filled with lifetime fluid, the average owner hears the word lifetime and naturally assumes it means forever.

[00:12:30]Never touch it, you are covered. It does not mean that.

[00:12:34]The internal definition of lifetime is the expected service life of the vehicle, a figure conveniently calculated to land right around the point where your warranty has already expired. Independent specialists who actually open up and rebuild these gearboxes for a living will tell you to change that fluid regardless. The word lifetime is doing an enormous amount of silent financial work in that sentence and none of it is working in your favor.

[00:13:00]And the electric future Mercedes bet the entire company on has been stumbling badly. The flagship EQS, the car that was meant to be the S-Class of the electric age, the technological showpiece for the whole brand, sold so poorly that Mercedes own executives publicly admitted its radical futuristic styling was, in their words, roughly 10 years too early. The design that was supposed to define the next 100 years of the company instead sat unsold [music] on dealer lots while buyers walked straight past it towards something that looked like a normal car. The brand also spent years tangled in diesel emissions investigations and settlements alongside the rest of the German industry. Another reminder that the badge and the boardroom do not always tell the same story. Before we go all the way to the bottom, understand that this channel covers Mercedes ownership, history, and engineering every single week.

[00:13:51]Most of the people watching this right now are not subscribed, which means you are standing at the very edge of the deepest, darkest part of the iceberg with no reason for the algorithm to ever pull you down into it. Subscribe now.

[00:14:03]Here is level six. Level [music] six, the abyss.

[00:14:07]During the Second World War, Daimler-Benz was one of the most important armaments producers in Nazi Germany. The company built aircraft engines, tanks, and military trucks for the war machine. And it built a great deal of it using forced labor.

[00:14:21]By the end of 1944, almost half of the more than 63,000 people working in Daimler-Benz production were forced laborers, prisoners of war, or concentration camp inmates. The conditions were brutal and many of them did not survive.

[00:14:34]Adolf Hitler himself was driven in Mercedes cars. To the company's genuine credit, Daimler-Benz was one of the first German firms to open its own archives, commission an honest and unflinching historical study in 1986, and pay reparations to the surviving victims. And there is a memorial to those forced laborers inside the Mercedes Museum in Stuttgart to this day.

[00:14:56]But the sheer scale of what happened is simply not something most buyers think about while admiring the star on the hood. It is documented, it is confirmed, and it sits in a part of the company's story that most people would rather not look at.

[00:15:09]At one point, campaigners pushing for compensation ran a full-page newspaper advertisement showing the Mercedes badge beside three cold words: design, performance, slave labor.

[00:15:21]The point was that this history was never a hidden secret. It was simply something the world preferred not to think about. Now, look at who actually owns the most German luxury brand in the world today. The answer is not Germany.

[00:15:34][music] The single largest shareholder in Mercedes-Benz is a Chinese state-owned automaker called BAIC, holding just under 10%. The second largest is Li Shufu, said Li Shufu, the Chinese billionaire behind Geely, quietly bought up almost 10% more. Put together, Chinese investors now control close to a fifth of Mercedes-Benz.

[00:15:57]The third major stakeholder is the Kuwait Investment Authority, the sovereign wealth fund of Kuwait, which has held its position since 1974.

[00:16:05]There is no founding family steering the ship. There is no German block holding the wheel. The most German car on Earth is owned, in large part, out of Beijing, out of the offices of a Chinese billionaire, and out of Kuwait City. And the company sitting at the bottom of this iceberg is under very real pressure right now. In early 2026, Mercedes profit fell 17% in a single quarter. Its core operating margin collapsed from over 7% down to just above four. Global sales dropped. And in China, the enormous market that funded [music] a decade of Mercedes growth, sales fell 27% in just three months as homegrown brands like BYD and Nio swallowed up the premium buyers Mercedes always assumed would stay loyal forever. The company has since announced plans to pull its total output back toward 2.2 million vehicles, a cut of more than 10%, while its German factories, which build close to half of everything it makes, are shielded from layoffs by union agreements that run all the way to 2035, leaving it very little room to simply cut its way out of trouble. [music] The company is betting its survival on a fleet of new electric cars launching into a market that is suddenly no longer sure it even wants electric.

[00:17:20]Which brings us to the number that sits at the very bottom of the iceberg, below the history, below the engineering, below the ownership. The true cost of owning a roughly $60,000 Mercedes over 5 years before you have spent a single dollar on fuel is not $60,000.

[00:17:37]Between the brutal luxury depreciation that can erase half the car's value while you sleep, the maintenance and repair bills that run well above the industry average for an aging German luxury car, and the insurance premiums on a premium badge, the real 5-year cost lands somewhere frighteningly close to the price of buying the entire car a second time. The monthly payment is not the cost of the car. It is merely the deposit on the cost. The rest arrives slowly, quietly, spread across years in amounts that are each survivable on their own, but together genuinely staggering. And if you finance the car the way most buyers do, you can add several thousand dollars more in interest on top of all of it. Six levels, from a little girl's name at the surface all the way down to a wartime ledger, a Chinese and Kuwaiti ownership structure, and a true cost of ownership most buyers never bother to calculate until it is far too late. Mercedes is at the very same time the company that invented the automobile and one of the most coldly calculated luxury businesses on the planet.

[00:18:39]Those two facts are not a contradiction.

[00:18:42]They are the same company simply operating on different floors of the same building in Stuttgart. The cars are extraordinary, the history is heavy, the business is ruthless, and every single owner is parked somewhere on this iceberg, usually at whatever comfortable level still lets them enjoy the drive without ever looking too far down. If this changed how deep your understanding of Mercedes really goes, subscribe. We go all the way to the bottom of the iceberg every single week. See you in the next one.