Daimler, the major European automaker known for the Mercedes Benz, just got a foothold in China — the world’s largest and largely untapped car market — and that foothold will be green. The company just landed a plum deal with BYD Auto, a Chinese company that plans to take the electric car market by storm, with $250 million from U.S. magnate Warren Buffett.
Buffett doesn’t acquire a 10 percent stake in just any company. BYD, which stands for Build Your Dreams, has already churned out close to half a million gas-powered cars in China, but its real passion is making electric vehicles feasible for the mass (truly mass) market there. And now it looks like it has the capital and momentum to make that happen.
Daimler, distinguished only as the second-largest luxury automaker in the world, seems to have lucked out. Together, the two companies will launch a venture to jointly develop a consumer-focused, four-door electric sedan. BYD had been working on its own, similar vehicle, called the e6. But apparently this new model will take precedence.
Granted, the Daimler brand should give the forthcoming car the sheen of luxury — it has the reputation needed to give BYD, a relative newcomer in the space (it has been building batteries for 15 years), the boost it needs among discerning, prospective buyers. But the idea of partnering with a well-known luxury brand isn’t exactly new. As the New York Times points out, BMW has already been tapped by Chinese car company Brilliance for a similar effort.
Not that Daimler isn’t good at sniffing out the right deals on its own. There’s no better example of this than its stake in Tesla Motors, a company that not only has the first EV sport car on the road today, but is also poised to go public and steal thunder from General Motors’ Chevy Volt and Nissan’s Leaf. Daimler is also readying an all-electric version of its Mercedes Benz A-Class for market later this year.
While BYD’s e6 will be available by the end of the year as well, there’s no timeline for the EV(s) it is developing with Daimler. It will be interesting to see how the two companies make a green sedan affordable enough for middle-class Chinese consumers. One guess: BYD has expertise in battery packs — typically the most expensive component of electric vehicles — maybe there is some secret sauce in the works.