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Daimler to Build Smart EVs in China, According to Report

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【Summary】German automaker Daimler is in talks to build electric Smart cars in China with a local partner, according to people with direct knowledge of the matter, which was first reported by Automotive News Europe. Daimler is looking to boost sales of the compact-car brand in China—the world's largest EV market.

FutureCar Staff    Aug 06, 2018 6:29 PM PT
Daimler to Build Smart EVs in China, According to Report
author: FutureCar Staff    

BEIJING — German automaker Daimler is in talks to build electric Smart cars in China with a local partner, according to people with direct knowledge of the matter, which was first reported by Automotive News Europe. Daimler is looking to boost sales of the compact-car brand in China—the world's largest EV market.

The Smart brand is a division of Daimler AG, based in Böblingen, Germany. The company specializes in microcars and subcompacts which includes the Fortwo and Forfour models. The tiny cars are built in assembly plants in Hambach, France and Novo Mesto, Slovenia.

According to the report, the automaker is in talks to set up a new joint venture with Beijing Electric Vehicle, a unit of its long-time Chinese partner Beijing Automotive Group, to make Smart EVs, said the people, who asked not to be identified because the deliberations are private. Daimler has been making Mercedes-Benz cars in China with the state-owned group since 2005.

A spokeswoman for Daimler in China and a representative for Beijing Electric Vehicle, locally known as BJEV, declined to comment. The German automaker bought close to a 4 percent stake in BJEV in March, a cooperation it says will allow it to "further deepen its understanding of Chinese consumers' needs."

Daimler is turning Smart, which sells the ForTwo globally and the ForFour in Europe, into an electric-only, urban-mobility brand. In May, the automaker announced changes to Smart's top management in a strategy shift toward electrification.

Smart, never really found its way toward profitability and has racked up significant losses since its launch in 1998. Daimler hopes to attract Smart buyers in China. The automaker is seeking to lure young, urban consumers in China who would potentially buy it for parking convenience.

Daimler, which has been importing Smart cars into China, has not disclosed sales of the brand in the mainland. Deliveries of the brand globally slumped almost 7 percent last year to 135,025 vehicles, according to the company.

It isn't immediately clear how big a stake Daimler would want in the joint venture. China requires foreign manufacturers to partner with local firms, with a 50 percent cap on ownership in the venture. Recently, policy makers have moved to relax the ownership limits. Foreign electric vehicle will be permitted to set up their own units starting this year, while the restrictions on passenger vehicles will end in 2022.

China is emerging as the world's No. 1 market for electric vehicles and is determined to lead the trend in electrification. The country has set up a target to increase sales of less polluting new-energy vehicles (NEVs) to 7 million units annually by 2025. NEVs include plug-in hybrids, full-electric and fuel-cell vehicles.

While rival companies such as BMW are bolstering their presence in China to escape a tariff war between the U.S. and China, Daimler's JV is primarily meant to cater to the local market and stem the decline in sales of the Smart brand.

Daimler is joining Tesla in looking to break into the burgeoning EV market in China and avoid import tariffs.

California-based Tesla secured a preliminary deal to build a factory near Shanghai last month just days after China's retaliation against President Donald Trump's tariff hikes made imports more expensive.

In addition to the BAIC Group, Daimler has also teamed up with Warren Buffett-backed BYD in China to make battery-powered cars under the nameplate Denza. Daimler said in March that it will continue to invest in Denza product development.


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