Daimler agrees to construct NEVs in China
German car manufacturer Daimler has signed an agreement with Chinese joint venture partner BAIC Motor to upgrade the Mercedes-Benz factory in Beijing, ready for the production of new energy vehicles (NEVs). The deal involves Daimler taking a minority share in Beijing Electric Vehicle, a subsidiary of BAIC, and comes after Germany persuaded China to cut back on proposed quotas for NEVs. In September, the Chinese government issued a draft policy stipulating that 8% of new car sales must be NEVs by 2018, rising to 10% in 2019 and 12% in 2020.
If there’s a place where established automakers are not shy about making electric vehicle investments, it’s in China.

After recent investments from GM and VW, now Daimler is increasing its electric vehicle investments in the country.

The German automaker already has a joint venture with BAIC, but the company has now signed a new framework agreement for the production of electric vehicles in China.

German Chancellor Dr. Angela Merkel and Chinese Premier Li Keqiang were both present for the important deal, which will set up production capacity for EVs under their Beijing Benz Automotive Co., Ltd. (BBAC) joint venture.

The deal also includes plans for Daimler to acquire a minority share in Beijing Electric Vehicle Co., Ltd. (BJEV), a subsidiary of the BAIC Group that produces electric vehicles.

Hubertus Troska, Member of the Board of Management responsible for Greater China for Daimler AG, commented on the announcement:

“Localization is the key to Daimler’s sustainable growth and future success here in China. We have been intensifying local research and development, as well as local production, to highlight the preferences of our Chinese customers. They have made this the largest market worldwide for Mercedes-Benz, and this is especially thanks to the strength of our Sino-German cooperation with local partners. This year marks the 12th year of our close partnership with BAIC, and we have deepened our Sino-German collaboration by continuously expanding into new business areas. The framework agreement signed today marks a new chapter of our cooperation in terms of New Energy Vehicles. China today is already the world’s largest market for NEVs, and Daimler is committed to contributing to the further development of electric mobility in this country.”

Of course, Daimler’s interest in deploying electric vehicles in China is also linked to the country’s ZEV mandate.

Automakers need zero-emission vehicles (ZEVs) to represent 8% of new car sales as soon as 2018 and quickly ramp up to 12% by 2020.

That’s motivating a lot of automakers to invest in electric vehicles in China and Daimler is the latest example.

To be fair, Daimler is also investing in electric vehicles outside of China. We recently reported on Mercedes-Benz securing manufacturing capacity to produce compact electric vehicles in Germany.

Featured Image: Daimler Annual Shareholder‘s Meeting 2017, held on March 29, 2017 at the City Cube in Berlin, Germany. Corporate presentation at the Annual Shareholder’s Meeting 2017;