BERLIN: Daimler AG says it has signed a memorandum of understanding with China's BYD Co, the Chinese carmaker backed by billionaire Warren Buffett, to develop jointly electric vehicles for the fast-growing Chinese market.
BYD Motors Inc General Manager Fred Ni talks about the BYD e6 all-electric vehicle at the North American International Auto Show in Cobo Center in Detroit, Michigan Jan 12, 2010. [Agencies]
Daimler said Monday the two companies envision a "comprehensive technology partnership" that would result in a vehicle specific to the Chinese market's requirements.
It said the plan is for the car to be marketed under a new brand jointly created and owned by Daimler and BYD and for the companies to set up a common technology center in China to develop, design and test the vehicle.
Daimler didn't say when the planned vehicle might be ready.
Daimler's Mercedes-Benz plans to introduce an all-electric version of its A-Class car this year. BYD plans to launch its own electric e6 soon.
BYD rose the most in almost three weeks in Hong Kong trading after the announcement. The Shenzhen, China-based battery maker entered the automobile market in 2003 and may benefit from Daimler's experience in vehicle making, while Stuttgart, Germany-based Daimler plans to take advantage of BYD's battery technology to help boost Chinese sales.
"The alliance will benefit from BYD's expertise in batteries and Daimler's strengths in traditional vehicles," said Frank He, who rates BYD shares "buy" at BOC International in Hong Kong. Still, BYD's electric-powered vehicle division isn't expected to contribute significantly to company profits for at least two years, He said.
Daimler said last month it will focus on cleaner technologies to take global market share from rivals Bayerische Motoren Werke AG and Volkswagen AG's Audi brand.
BYD rose by 4.44 percent and closed at HK$65.90 ($8.49) in Hong Kong.
The company was China's sixth-biggest car manufacturer by sales last year. BYD, 10 percent owned by Buffett's Omaha, Nebraska-based Berkshire Hathaway Inc, introduced a plug-in hybrid car in December 2008 and said in January it will sell an electric car in the US this year.
China's auto market grew to 13.6 million units in 2009, surpassing the US for the first time. While overall passenger-car sales in the country grew 53 percent, BYD's deliveries jumped 160 percent to about 450,000 vehicles, Chairman Wang Chuanfu said in January.
"China has the potential to be among the world's largest markets for zero-emission vehicles," Daimler's Chief Executive Officer Dieter Zetsche and BYD's Wang said in the joint statement.
Daimler, founded in 1883, plans to introduce an all-electric version of its Mercedes Benz A-Class this year, according to today's statement.
BYD signed a separate electric-vehicle agreement in May with Volkswagen, Europe's largest automaker. Volkswagen and BYD will explore cooperation in areas including hybrid cars and lithium-battery powered electric vehicles, the Wolfsburg, Germany-based automaker said in a May 25 statement.
"It is a good strategy for BYD to have this rechargeable battery technology used by a full spectrum of car partners, from the low to high end, outside of China," said Scott Laprise, an analyst at CLSA Asia Pacific Markets in Beijing. Laprise rates BYD "buy."
AP, Bloomberg News