Daimler and BAIC Forging Partnership for China’s Huge New Energy Vehicle Market

Daimler will be making headway into China’s electrified “new energy vehicle” market through a collaboration with longtime partner BAIC Group.

The German automaker will be investing in an electric vehicle subsidiary and both companies will be upgrading a current plant to jointly manufacture plug-in electrified vehicles. During a signing event held today in Berlin, German Chancellor Angela Merkel and Chinese Premier Li Keqiang watched company executives forge an agreement to strengthen their strategic collaboration.

The German automaker will be taking a minority share in Beijing Electric Vehicle Co., Ltd. (BJEV), a subsidiary of the BAIC Group. The agreement also includes investments being make in their joint venture division, Beijing Benz Automotive Co., Ltd.

Both companies see it as a way to strengthen their position as manufacturers and marketers in China’s fast-growing NEV market. The two automakers have been in partnership for the past dozen years and expanding into the world’s largest PEV market makes sense.

“Localization is the key to Daimler’s sustainable growth and future success here in China. We have been intensifying local research and development, as well as local production, to highlight the preferences of our Chinese customers. They have made this the largest market worldwide for Mercedes-Benz, and this is especially thanks to the strength of our Sino-German cooperation with local partners,” said Hubertus Troska, a member of Daimler’s board of management responsible for China.

Troska has been making comments on expanding into China’s NEV market since last fall. Part of that plan has been to manufacture electric cars and batteries locally in China, he said.

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The new JV announcement, and past comments from Troska, have kept quiet on the question of whether any of these PEVs will be built on the EQ platform. Daimler launched that subbrand last year at the Paris auto show. The Mercedes subbrand plans to launch more than 10 all-electric vehicles as part of EQ by 2025, with the intention of starting production of the Generation EQ SUV by 2020.

The Beijing Benz Automotive Co. (BBAC) joint venture was started in 2005 as several global automakers were forging their own JVs with other Chinese automakers.

BBAC is the largest Mercedes-Benz passenger car production center worldwide for Daimler in terms of land size. That Chinese facility produces the C-Class, E-Class, GLA, and GLC, as well as Mercedes-Benz 4- and 6-cylinder engines.

The NEV move follows Volkswagen and Jianghuai Automobile Group (JAC Motors) last month being granted approval to jointly build plug-in vehicles in China. The joint venture’s approval is to locally manufacture 100,000 battery electric vehicles.

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