"In a bad car he is the best driver in the world because he is unbelievably quick and he makes no compromise," Lauda told the BBC.
"Lewis joining is high motivation. They have realised their weaknesses.
"I was impressed with his approach to things, very pragmatic, no emotions whatsoever."
Lauda, who is joining Mercedes as a board member, won the world title in 1975, 1977 and 1984.