While Tesla Motors Inc (NASDAQ:TSLA) is the headline grabber in Silicon Valley when it comes to all-electric car design, they are not alone. Ford Motor Company (NYSE:F), Volkswagen AG (ADR) (OTCMKTS:VLKAY) (ETR:VOW), and Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY) (TYO:7201), all have physical R&D facilities in the region along with Mercedes who moved in over 20 years ago.

Mercedes tesla

Many forget that Mercedes’ parent company Daimler AG (OTCMKTS:DDAIF) (ETR:DAI) still has a small ownership stake in Tesla Motors Inc (NASDAQ:TSLA). Tesla, for its part, knows that it needs to produce batteries for other manufacturers in order to enjoy long-term success. It’s for this reason that it intends to build a $5 billion “Gigafactory” that can produce as many as 500,000 battery packs per year once it is opened. The Gigafactory once operational would double the world’s output of batteries for electric automobiles.

Mercedes chief questions Tesla

It’s presumably for this reason that Mercedes-Benz USA chief Steve Cannon recently questioned Tesla Motors Inc (NASDAQ:TSLA)’s future.

“Good job, Tesla,” Forbes quoted Cannon saying, “but will they be able to maintain that with the others of us out in the market? That remains to be seen.” Arrogance aside, Mr. Cannon makes a prescient point.

Johann Jungwirth, the Silicon Valley-based president and CEO of Mercedes-Benz Research & Development North America, recently told Lauren Hepler of Silicon Valley Business Journal that Silicon Valley remains important for Mercedes as it continues to cement agreements with tech providers like Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), Tesla Motors Inc (NASDAQ:TSLA), and Apple Inc (NASDAQ:AAPL).

Predictive analytics for the car

There are roughly 160 Mercedes employees working in Silicon Valley on a wide array of projects including in-car entertainment, and data analytics. He sees more and more integration of the car and the Internet where smart watches keep an eye on your car, and your car can control your home thermostat.

“It needs to be beautiful. It needs to be useful. It needs to be useable,” Jungwirth said. “That’s our job here in Silicon Valley.”

Predictive analytics would allow cars to learn driver’s habits through a series of in-car sensors that could determine who is in the car with the driver and where they might wish to go. This could ultimately lead to Mercedes drivers to build a data profile that could then be transferred to another Mercedes.

“If you change (car) brands, you start from scratch,” Jungwirth said, underscoring the business implications of personalized tech tools. “We are very committed to bringing this to market.” The tech tools were recently demoed to a number of industry experts.

“The biggest challenge is data privacy,” he said. “We envision this as an opt-in model.”