Daimler and BAIC investing $735M for BEVs and batteries at their JV BBAC; production by 2020

Daimler and BAIC investing $735M for BEVs and batteries at their JV BBAC; production by 2020

5 July 2017

Daimler and BAIC are deepening their cooperation on battery-electric vehicles at their Sino-German production joint venture Beijing Benz Automotive Co., Ltd. (BBAC). The two companies pledged jointly to invest a total of five billion RMB (about US$735 million) in the production of battery electric vehicles (BEVs) under the Mercedes-Benz brand at BBAC in Beijing.

As part of this new strategic framework agreement, Daimler and BAIC Motor are preparing to produce battery electric vehicles by 2020 at BBAC, and to provide the necessary infrastructure for battery localization using Chinese cells, as well as research and development capacities. This commitment includes a three-digit million investment (Euro) in battery production by the joint venture. The new BBAC battery factory will be part of the global battery production network of Mercedes-Benz Cars, in which Daimler is investing around €1 billion (US$1.13 billion).

The battery production network already includes the site in Kamenz, Germany, existing since 2010, at which a second battery factory is currently being built with an investment of around €500 million.

The partners announced the framework agreement in the presence of German Chancellor Dr. Angela Merkel and Chinese President Xi Jinping.

Daimler is taking a strategic step forward in the field of Battery Electric Vehicles in China. Together with our local partner BAIC, we are all in: We continue to invest in the world’s largest market for e-mobility. By 2025, the Chinese market will have a substantial share in global 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. With our planned localization of BEVs and batteries with Chinese cells, we are dedicated to strengthening the region as an innovation hub for the automotive industry.

—Hubertus Troska, Member of the Board of Management of Daimler AG, responsible for Greater China

By confirming our joint commitment to the development of electric drive in China, and undertaking preparations to produce BEVs at BBAC, we are giving full play to the respective strengths of both sides. Together, we are laying the groundwork for our joint venture facility BBAC to become a future BEV production hub in China.

—Xu Heyi, Chairman of the BAIC Group

Earlier in June of this year, both partners signed a framework agreement on further strengthening their strategic collaboration through investments for New Energy Vehicles (NEVs) in China. (Earlier post.) As part of the investment agreement, Daimler announced its intention to acquire a minority share in Beijing Electric Vehicle Co., Ltd. (BJEV), a subsidiary of the BAIC Group, with the purpose of strengthening strategic collaboration with BAIC in the NEV sector.

Globally, more than ten new Mercedes-Benz electric passenger cars are scheduled to be launched by 2022. The company will invest €10 billion (US$11.3 billion) in the expansion of the electric fleet over the next years, and the new electric vehicles will be produced within the global Mercedes-Benz Cars production network, with plants on four continents. Daimler estimates that by 2025 electric vehicles will account for between 15 and 25 percent of the total unit sales of Mercedes-Benz.

Beijing Benz Automotive Co., Ltd., a joint venture between Daimler and BAIC Motor, was established in 2005. In terms of land size, BBAC is the largest Mercedes-Benz passenger car production hub worldwide for Daimler, producing the C-Class, E-Class, GLA, and GLC vehicles, as well as Mercedes-Benz 4- and 6-cylinder engines.

In 2016, BBAC locally produced models accounted for more than two-thirds of Mercedes-Benz’s total sales in China. In November 2016, BBAC’s total local production output passed the 1,000,000-unit mark, and was furthermore recognized by the “Factory of the Year” jury in the “Excellent Large Series Assembly” category. As the primary local production base for Mercedes-Benz vehicles in China, BBAC plays a key role in Daimler’s overall global development strategy and production network.

Beijing Electric Vehicle Co., Ltd. (BJEV) was established in 2009 by the BAIC Group and other shareholders as a development platform for New Energy Vehicles. To date, the company’s product portfolio covers five major series of electric vehicles, the EC, EH, EU, EV and EX series, with more than ten electric vehicle passenger car models.

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