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Daimler's China chief, Hubertus Troska, will oversee the new deal with BAIC to increase EV production in China.

Daimler AG and its principal Chinese partner BAIC Group inked a deal to invest in the Mercedes-Benz plant in China to increase production of electric vehicles there.

Hubertus Troska, member of the Board of Management of Daimler AG, responsible for Greater China, and Xu Heyi, chairman of the BAIC Group attended the signing ceremony held in Berlin, as did German Chancellor Angela Merkel and Chinese Premier Li Keqiang.

The agreement focuses on two significant actions. First, Daimler will acquire a minority share in Beijing Electric Vehicle Co., Ltd. (BJEV), a subsidiary of the BAIC Group or collaborate with BAIC in the NEV sector.

The second part calls for an upgrade of the current production facilities at their joint venture Beijing Benz Automotive Co., Ltd. (BBAC), paving the way for the introduction of New Energy Vehicle production, Troska said. New Energy Vehicles are China’s classification for low-emission vehicles, such as hybrids and EVs.

(China approves VW deal with JAC to build EVs. Click Here for the story.)

“Localization is the key to Daimler’s sustainable growth and future success here in China,” Troska said. 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 Chinese government and provincial officials, who control the direction of the country’s sprawling auto industry, are eager to jump-start electric vehicle production as part of the effort to address the nation’s serious air quality problems that choke the countries major cities.

(Click Here to see more about GM’s efforts to get EVs on the road in China.)

General Motors, Volkswagen and BMW also have promised to make large investments in electric vehicles to satisfy the demands of the Chinese partners. Other companies such as Ford, Hyundai, Toyota and Nissan also are investing in EVs to satisfy China’s push for EVs.

China’s national and provincial government also have underwritten investments in literally hundreds of EV startup in the past couple of years, according to experts on the Chinse auto industry. Beijing Electric Vehicle Co. Ltd., one of the pioneers of the Chinese EV industry, was established in 2009 by the BAIC Group and other shareholders as a development platform for New Energy Vehicles.

As one of China’s leading pure electric vehicle manufacturers, BJEV’s primary business scope covers research and development, production, and sales and services for New Energy Vehicles and core NEV components.

(To see more about when Ford will build EVs, plug-ins in China, Click Here.)

Beijing Benz Automotive Co. Ltd., a joint venture between Daimler and BAIC Motor, was established in 2005 as a successor to the original Beijing Jeep company, created in the early 1980s by the Chrysler Corp. BBAC is the largest Mercedes-Benz passenger car production site anywhere in the world.

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