I think everybody is missing the point of how dangerous Tesla really is to traditional car makers.
Mercedes is still Mercedes, let's not try to fight that argument, they build anything that has 4 wheels, from F1 to sedans, trucks, vans, you name it, they have it.
Tesla is a disruptive technology, search for the book called innovator's dilemma, how a company which is always listening to it's customers, fails to risk anything new can go irrelevant very fast. Mercedes won't build electric cars for the simple fact it will cannibalize it's entire range once people realize they don't need it.
Let's take the big one, range: The truth is that 90% of S Class owners will rarely need more than 250 miles daily. Let's be honest, if you have an S Class, you would likely travel by plane/first class, not sit 10 hours in an S Class, as comfortable as it is, it's a matter of time lost.
And Mercedes knows that very well, BMW does too, and everybody in the high range. They basically offer something you will rarely use.
Second, servicing, yes, let's be honest, we can't compare 100 years worth of time constructing a dealer/service network worldwide, with Tesla which is 7 years old.
But Tesla can fight this by simply not having hardware failures. When you battery fails, you go in, they replace it, and you will have a 5 or 10 year old car which is still functional as it was in the first day. And Mercedes knows that too. Try buying a 2001 S Class and see how it works, and then try to find parts for it.
The problem for Mercedes is, that the complexity they need to do all that fancy night vision/pedestrian detecting/road holding/autopilot things is mostly software, and it's by far much easier to implement in an electric car where you have no gearbox, no liquid fuel to control, no camshaft, nothing, just basic electric software controlled controllers like in traditional robots. And let's be honest, the IT revolution did not come from Germany, it came from Silicon Valley, and if anyone has the power to do advanced software/hardware automated systems, it's them. Germans are far better at following and improving rather than innovating. They just like to be safe, stable and not risk anything.
Tesla has still a long way to go, but once the price go down, it would take the world by storm, because you simply rarely need more than 250 miles range daily, and the feeling of having a full tank each morning is simply unbeatable by the traditional dirty/smelly gas station experience.