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

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]