Q&A: Torsten Müller-Otvös Rolls-Royce CEO | Rolls-Royce will never make a hybrid car: CEO

This week, Rolls- Royce unleashed its USD325,000 Cullinan on the back roads and double-diamond ski runs of Wyoming’s Grand Teton mountain range.

The press launch was the first time the 6,000-pound SUV had been driven publicly in North America, timed to get out word of the vehicle’s off-road skills right before November’s chill—and January’s first deliveries.

Torsten Müller-Otvös was there, too. Rolls-Royce’s longtime chief executive officer has shepherded the brand to a 13.5 percent sales increase this year to date, and this month the company announced it added 200 jobs in an effort to meet Cullinan demand. (That gain means Rolls-
Royce will expand its workforce to more than 2,000 people for the first time, a six fold increase since the British automaker’s headquarters and manufacturing facility in Goodwood, West Sussex, opened in 2003.)

Müller-Otvös, an accomplished fly fisherman who prefers the Cullinan in magma red, sat down with Bloomberg to discuss why it’s so important for it to go off-road, its prospects for getting an electric drivetrain, and what he says to the Cullinan’s critics.

– The emphasis for this launch has seemed to emphasize the off-road capability of Cullinan above all else. Is that true? Did you feel the need to make a statement in this way with this launch?

Torsten Müller-Otvös (TMO) – It is. First of all, you don’t need to be convinced that our cars drive perfect on roads, flat on land. That’s given. That’s the Rolls-Royce brand promise. And Cullinan delivers that in perfection. But of course we wanted to showcase to you what the car is capable of. We sent all the test cars all over the world, into the desert, into the mountains, just to showcase what the car is capable of and what it can deliver, so that customers also understand the car is a true SUV. But it’s also a Rolls-Royce SUV: You can drive up in style in front of the opera building, you can go out for dinner with all your friends. This car brings you up to your chalet. It can carry lots of loads, it can carry the whole family, load your dogs into the car, go down to the harbor. So it is for all purposes in life.

– After Bentley’s Bentayga and Lamborghini’s Urus, this is just about the last of the large and very expensive luxury SUVs to hit the market.

TMO – We took our time. After we announced that we would bring such a type of car into the market, we took our time to make it—we know that. But we wanted to engineer it in a way that it would deliver practicality and functionality. When people are asking for that type of car, of course it still needs to have that type of serenity when you go up into the mountains. That’s the importance of the 4×4.

– Rolls-Royce is so closely associated with cosmopolitan refinement. What percentage of your buyers do you believe will actually use it off-road on any regular basis?

TMO – It’s early days now, and for that reason I would not be able to tell you the truth [about the specific percentage]. So far, I think that’s the whole psychological expectation embedded in the SUV proposition—that you can go wherever you want to go, even if you don’t do it very often in life. But almost all of our clients, be it in the Middle East or Asia or North America, want to use the cars off-road going to certain remote parts in the road. Going to their chalet in the Swiss Alps, to their weekend retreat in the desert in the Middle East. And so for that reason, the car needs to deliver the capability to do so. Our clients enjoy these kind of freedoms to use their cars in these situations, particularly on weekends.

– That has certainly been what I’ve seen in my reporting—that modern luxury is heavily related to the idea of freedom. To the wealthiest people in the world, freedom is very important.

TMO – Very much.

– This car weighs more than 6,000 pounds and gets less than 20 miles per gallon. It looks like an elegant tank, if I can put it like that. Call it unapologetic. Polarizing, even. In an era of hybrids and electric cars, and as environmental concerns continue to rise, will you have trouble selling it?

TMO – No. Rolls-Royce needs presence. Our customers love that. It’s the same when very impressive people enter a room. Suddenly, silence. That’s exactly what happens when a Rolls-Royce turns up. Yes, you might see people who are saying, “The car is too big, I don’t like it, it carries too much presence.” But I think if you want to please everybody, you don’t please anybody.

– What percentage of Cullinan buyers will be new to the Rolls-Royce brand?

TMO – [There will be] quite some conquest [buyers crossing over from other brands]. We see that already today in our order books. And I’m also positively surprised by our loyal clients who are adding Cullinan into their existing garage today just for the pure sake that this car is convincing, size-wise.

– We’ve talked about the surprisingly young average age of Rolls-Royce owners. Where will Cullinan buyers fit into the mix, age-wise?  

TMO – Cullinan [buyers] will be younger customers, that’s for sure. Our youngest car in the portfolio is Wraith, particularly in the Black Badge edition, followed by Dawn. I think Cullinan will sit in that league of average age, around 40. We also foresee still the ongoing trend that ultrahigh net worth individuals are getting younger. That will stay on for a number of years.

– Where are most of the preorders for Cullinan coming from?

TMO – North America is the No. 1 market by far. It’s really quite impressive to see that. Followed by Asia. Quite strong is also Europe. And then the Middle East, of course, following behind.

– Talk to me about electric. Is there an electric future for Cullinan?

TMO – There is an electric future for Rolls-Royce. We have not made our plan about what comes first, and what comes when, but we know that we will go full electric. We will not do hybrids or whatever. Our proposition is full electric. It will come in the next decade, step by step by step. But I can also tell you we will stick with our beloved 12-cylinder as long as we can.

– How closely do you watch what [parent company] BMW as a group does and announces? For instance, the news surrounding the BMW Vision iNext SUV that just debuted.

TMO – It’s a great advantage to be part of the BMW Group. We are a small manufacturer—we are selling 4,000 cars and some more with Cullinan—so for that reason I am superglad we are part of the BMW Group. BMW Group is educated and well-understanding enough to say Rolls-Royce needs to sit on a different architecture. They understand we are super-exclusive and able to give our customers true luxury, which is not an X7 camouflaged as a Rolls-Royce. We wouldn’t do that.

No. 2, it’s great that BMW Group is so forward-looking and -thinking on iNext and so on. I’m glad that I’m part of the bigger group, because we profit from that. Our engineers are embedded enough in the overall organization to grab into the shelf and say, “That’s great, we’ll use that for Rolls-Royce.” And the BMW Group is more than happy to help. Otherwise we would not be capable to get our brand electrified. If we would need to do that on our own, completely alone, that’s quite a task.

– Will we ever see a V-8 engine in a Cullinan?

TMO – No. That is for the pure sake of volume, Hannah, and that is what we are not doing. We are not launching lower engines with lower price points. This is volume-chasing. That’s not the game of Rolls-Royce. We stay highly exclusive.

– It must be so refreshing to be able to be so clear-minded and focused in that way.

TMO – I think you need to be clear-minded. When you do real luxury, you need to be clear-minded. If you mess this around, you can be dead in the water within moments. And for that reason, Hannah, I think you need to have a really sharp mind on that. Customers will tell you the same thing that I am telling you, that they expect from us limitation. Limitation in volume. They don’t want to see their own cars all over the place. And they are more than happy to pay our prices, make no error. They are clear: “Don’t go volume, please.” And I tell them, “We aren’t going to, ever.” Hannah Elliott, Bloomberg