Chinese automotive group BAIC purchases 5% stake in Germany’s Daimler

The development is aimed at reducing the cost of developing affordable electric self-driving cars.

On Tuesday, in a development that marks Beijing Automotive Group Co Ltd (BAIC) further cementing its relationship with German carmaker Daimler, the Chinese company has purchased a 5% stake in the German carmaker after China’s Zhejiang Geely Holding emerged as a potential rival.

BAIC was Daimler’s main partner in China, operating Mercedes-Benz factories in Beijing through Beijing Benz Automotive, until 2018 when Geely chairman Li Shufu took a 9.69% Daimler stake with the aim of forging an alliance to develop electric and self-driving cars.

“This step reinforces our alignment with, and strong support for, Daimler’s management and strategy,” said BAIC’s chairman Heyi Xu.

In a statement, Daimler said it welcomed BAIC’s investment.

The high cost of electric car batteries along with the need to make affordable zero-emissions vehicles, has pushed carmakers towards alliances, with several big players choosing to strike deals with the Chinese.

In March, Daimler had said it has agreed to build its next generation Smart-branded city cars in alliance with China’s Geely.

Daimler has reassured BAIC that any new industrial alliances involving Mercedes and a Chinese partner would only happen after a consensus is found with BAIC.

Geely declined to comment.

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