Daimler, BAIC Investing $735 Million Into Chinese EV Production Pretty Much Out of Necessity

Matt Posky
by Matt Posky
daimler baic investing 735 million into chinese ev production pretty much out of

Daimler AG is dumping half of a 5 billion yuan sum, or 735 million dollars, into China as part of a joint venture with BAIC Motor Corp. Together, the companies plan to establish the groundwork for competent EV production in the region — meaning a good ol’ fashioned battery factory.

The bill is split between the two firms, as China requires every foreign automaker to partner with a domestic one to do business within the country. The new factory will be a product of Beijing Benz Automotive, a blandly named limited liability company created to further Mercedes’ interest within the country and bolster its EV production capabilities globally.

However, China remains a primary focus.

“We are investing in the world’s largest market for Battery Electric Vehicles,” said Hubertus Troska, Daimler AG’s board member responsible for its goings-on in China. “By 2025, the Chinese market will have a substantial share in sales of Mercedes-Benz electric vehicles. Therefore, local production will be key to the success of our EV portfolio, and crucial to flexibly serving local demand for electric vehicles.”

Mercedes-Benz, and any other automaker wanting to sell cars in China after 2025, has little recourse since the country is cracking down on emissions harder than the Dalai Lama. The government wants to push dirty engines out to make room for electrification and has set a mandate for the number of EV models an automaker is legally required to sell. But the cash allocated for the Beijing battery factory will also serve the global production network of future MB vehicles.

“Building another premium eBattery factory is the next step in the implementation of our electric strategy. Thus, we have the first foreign location in our global battery production network. The local production of batteries is crucial in order to meet the demand for electric vehicles flexibly and efficiently,” explained Markus Schäfer, head of production planning for Mercedes-Benz.

Daimler already has a battery facility in Kamenz, Germany, that’s currently undergoing an expansion. Mercedes plans to launch 10 new EVs by 2022, with the first, based off the the Generation EQ concept, due in 2019. However, that vehicle may not use the EQ name due to a pending trademark dispute with Chinese automaker Chery — a brand infamous for stealing other manufacturers’ designs.

[Image: Daimler AG]

Join the conversation
  • Whitworth Whitworth on Jul 05, 2017

    Isn't it funny that China gets to demand that any foreign company partner with a domestic Chinese company, but in countries like the US, we have no such laws and that's considered a fair trade deal? I'd like to see the pendulum swing in the other direction, if for nothing else to just get the other side to agree to some concessions.

    • See 1 previous
    • FreedMike FreedMike on Jul 06, 2017

      They also take corporate executives who are guilty of fraud and execute them in delivery vans, you know... I have no problems with foreign companies setting up factories here. Lord knows we do the same thing all over the world.

  • Thx_zetec Thx_zetec on Jul 09, 2017

    One thing that is interesting about TTAC is how many comments different headlines get. I remember one of my favorite series of articles about technical aspects of suspension set-ups; spring rates, and shock absorbers. This has very low reader response, and this is why this series was terminated. It looks to me like in this case there is not much interest in the fairness of Chinese industrial policy, I am surprised by small number of replies.

  • 3SpeedAutomatic And this too shall pass.....Ford went thru this when the model T was introduced. It took the moving assembly line to make real money. As time progressed, it got refined, eventually moving to the Model A. Same kind of hiccups with fuel injection, 4 speed automatic, Firestone tires, dashboards with no radio knobs, etc, etc, etc. Same thing with EVs. Yep, a fire or two in the parking lot, espresso time at the charging stations, other issues yet to be encountered, just give it time. 🚗🚗🚗
  • Art Vandelay 2025 Camaro and Challenger
  • Mike Beranek Any car whose engine makes less than 300 ft-lbs of torque.
  • Malcolm Mini temporarily halted manual transmission production but brought it back as it was a surprisingly good seller. The downside is that they should have made awd standard with the manual instead of nixing it. Ford said recently that 4dr were 7% manual take rate and I think the two door was 15%.
  • Master Baiter It’s hard to make predictions, especially about the future. It will be interesting to see if demand for Ford’s EVs will match the production capacity they are putting on line.