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

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • 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.

  • Tassos Jong-iL The Peninsula of One Korea.
  • Eric No, I just share my opinions. I have no use nor time for rhetoric from any side.
  • Redapple2 Jeez. This is simple. I 75 and 696 area. 1 nobody -NOBODY wants to work in downtown Detritus. 2 close to the tech ctr. Design and Engineering HQ. 20 miles closer to Milford.3 lower taxes for the employees. Lower taxes for Evil GM Vampire.4 2 major expressways give users more options to suburbs. Faster transport.Jeez.
  • Clark The Ring (Nürburgring) is the only race track I've driven on. That was 1985 or 1986 with my '73 Fiat Spider (and my not-so-happy girlfriend). So I made the Karussell (today: Caracciola Karussell, which I believe the author meant; there is another one: Kleines Karussell).
  • AZFelix This article takes me back to racing electric slot cars with friends on tracks laid out in the basement. Periodically your car would stop due to lost connections or from flying off the track and you would have to dash over to it and set it right. In the mean time your competitor would race ahead until faced with a similar problem. It seemed like you were struggling harder to keep from losing than trying to win. Fun times.“History never repeats itself, but it does often rhyme.” Mark Twain