Daimler Joins With Geely to Recast Smart as China-Based EV Brand
(Bloomberg) -- Daimler AG is deepening ties with Zhejiang Geely Holding Group, its largest shareholder, by forming a joint venture to transform its small-car division Smart into an all-electric brand based in China.
The German luxury-car maker and Geely, owned by billionaire Li Shufu, will build a new China factory to assemble electric cars and start worldwide sales in 2022, according to a joint statement. Mercedes-Benz designers will style future Smart vehicles and Geely will engineer them.
Enlisting Geely’s help in steering Smart forward is the most significant step Daimler has taken to collaborate with the Chinese company since it disclosed Li had taken a $9 billion stake in the German carmaker last year. The two have also joined forces to start ride-hailing and car-sharing services in China and take on market leader Didi Chuxing.
After racking up losses from Smart since its launch in 1998, Daimler is betting young, city-dwelling consumers in the world’s largest auto market will rejuvenate the brand. Smart will also stray from its roots by bringing out models for bigger car segments. It was in the midst of a strategy shift already, with Stuttgart-based Daimler announcing last year it would reboot the division with new management and shift to all-electric starting in 2020.
Daimler has been importing Smart cars into China and doesn’t disclose volumes for the division in the mainland.
As worldwide sales of the brand have sputtered, Smart’s main contribution to Daimler has been to help offset the emissions of high-margin gas guzzlers like Mercedes S-Class sedans and AMG GT sports cars. Evercore ISI estimates Smart loses as much as 700 million euros ($787 million) annually.
Daimler previously was in talks with a unit of Chinese partner Beijing Automotive Group Co. to make an electric version of its two-seater model, people familiar with the matter said in August. Daimler has been building Mercedes-Benz cars for the mainland with the state-owned group since 2005.
©2019 Bloomberg L.P.