Mercedes-Benz has established a joint venture with China’s biggest private automaker Geely to produce all-electric vehicles under the Smart brand, with plans to sell cars domestically and on the global market beginning in 2022.

Why it matters: The move is the latest example of global automakers making inroads into the Chinese market while leveraging its capabilities as a manufacturing and export hub for the world.

  • Daimler-owned Smart has been struggling over the past few years, reporting a 4.6% annual decrease with only 129,000 vehicles sold worldwide in 2018.
  • Low-cost manufacturing in China, along with its dominance in the electric vehicle (EV) supply chain, is seen as an advantage for the brand seeking to revive itself and sell in the Chinese market.

Details: Chinese auto giant Geely and Daimler’s Mercedes-Benz on Wednesday announced a 50:50 joint venture in which they will build “premium and intelligent electrified vehicles” under the Smart brand name.

  • The joint venture “Smart Automobile Co., Ltd” has been established with registered capital of RMB 5.4 billion ($780 million) after approval from Chinese regulators.
  • Mercedes-Benz will be responsible for the design of the Smart-branded all-electric vehicles while Geely will lead in vehicle engineering. The two companies plan to produce the new Smart EVs at a new plant in China.
  • Each company has three representatives on the JV’s board of directors, though Tong Xiangbei, an assistant to president of Geely Holding Group, will be its CEO.
  • The new JV has based its global headquarters in the eastern Chinese city of Ningbo, where Geely’s in-house research institute is located, with sales operation centers in China and Germany.
  • Geely has long been seeking an alliance with Daimler to leverage its automobile technologies such as autonomous driving. The Zhejiang-based automaker is Daimler’s  biggest shareholder with a 9.69% stake.
  • China’s BAIC, Daimler’s long-standing partner, took a 5% stake of the German automaker in mid-2019 and is reportedly planning to unseat Geely by raise its stake to 10%.

Context: Daimler stopped selling gas-powered Smart cars in North America in 2017 and continued to make the brand all-electric in Europe a year later, as the traditional auto industry takes on Tesla.

  • BMW forged an alliance with China’s Great Wall Motor in July 2018 with plans to launch its first electric Mini car model in China in the first half of 2021. The Chinese automaker gained domestic regulatory approval to build a joint plant with BMW in November.
  • Tesla on Tuesday began delivering its China-made Model 3 to customers and has reached weekly production of 3,000 units in its Shanghai gigafactory. Chinese brokerage Citic Securities forecasted sales of 150,000 units in 2020, a four-fold increase compared with last year.

Geely, Daimler partner on ride-hailing service, Staride

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen

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