That’s the thinking behind the luxury car company’s effort to bring conversational artificial intelligence (AI) into its vehicles via a partnership with MIT spinout Liquid AI, the Wall Street Journal (WSJ) reported Thursday (Nov. 5).
The goal here is not to have AI do the actual driving, but to adjust features such as heating and infotainment to attract customers in a difficult market, Mercedes said.
“With more product launches ahead and AI changing the way we work, we are focused on building a faster, more efficient and even more competitive Mercedes-Benz,” CEO Ola Källenius said on the company’s earnings call last month.
This came as Mercedes cut its expectations for the year as it warned of a cooling market in China and higher costs for the closing quarter of 2026. The carmaker has said it will deploy AI throughout the business as part of an efficiency program, the WSJ added.
The report noted that while Mercedes’ U.S. division has used conversational AI in its cars since 2026, the Liquid AI partnership is designed to be a faster and more intuitive experience.
Founded in 2023, Liquid AI makes AI models designed to run directly on a device rather than on the cloud for greater privacy and lower latency.
“An AI-based system that allows more free conversation interaction is something that we believe is absolutely a priority for customers,” said Jason Hoff, CEO of Mercedes-Benz North America.
The WSJ cited projections from research and advisory firm Gartner showing that by 2029, on-device AI models will take care of 30% of all user-initiated AI tasks in enterprise applications, compared to almost zero in 2026.
PYMNTS wrote about the partnership in May as part of a larger exploration into AI efforts at other European car companies, including BMW and Audi.
The architecture of the Liquid AI offering, that report said, “matters beyond the in-car experience,” with on-device AI processing “data locally without sending it to a server.”
That design principle is also applicable upstream. AI running within production systems doesn’t need a nightly report, but can rather read the order queue, monitor supplier lead times and assembly progress and flag the gap before it turns into a delay, PYMNTS wrote.
“AI is not a feature added to an existing process,” the report added. “It is the coordination layer replacing manual oversight across the full order-to-delivery chain. For European automakers competing with software-native rivals from the United States and China, the window to build that infrastructure is not open indefinitely. BMW, Mercedes-Benz and Audi are treating that deadline as vital.”
