Daimler-BYD Set For 2012 BEV China Prototype

By Danny King October 12, 2011

Smart BEV.jpg

Mercedes-Benz parent Daimler AG and its Chinese automaker partner BYD are on schedule to produce the prototype of their first battery-electric vehicles (BEV) as soon as next spring, despite recent layoffs and production delays by BYD, according to Daimler CEO Dieter Zetsche, Edmunds.com's Inside Line reported. Daimler, which formed the joint-venture with BYD last year, will supply the majority of the BEV's new technology and says the design of the car is "frozen," indicating that no further design changes are required.

Germany-based Daimler is pushing towards the BEV's development in order to cater to a China market expected to take the lead in BEV demand over the next few years. The Chinese government provides a $9,200 subsidy for domestically-produced BEVs, in addition to another $9,200 provided in five major cities. Largely because of such subsidies and the growing purchasing power among the Chinese middle class, China's annual BEV sales will surge to about 554,000 vehicles in 2015 from less than 33,000 last year, and the country will overtake Japan as the largest BEV maker in the Asia Pacific region, said Pike Research, a market research and consulting firm specializing in clean technology markets, in a recent report.

In May 2010, Daimler and BYD, which is 10 percent owned by billionaire investor Warren Buffett, agreed to create a 50-50 research and technology joint venture that would develop an electric vehicle for China. The contract to form Shenzhen BYD Daimler New Technology Co. followed the signing of a memorandum of understanding two months prior to establish the JV. The vehicle was to be marketed under a new brand jointly created and owned by Daimler and BYD.

Since then, BYD has seen its profits fall largely from its inability to launch its e6 battery-electric crossover vehicle in the U.S. The automaker, which purchased a site near downtown Los Angeles for assembly of the model, has publicly postponed launch plans by more than a year to 2012. It seems highly improbable that BYD will begin selling the model in America next year. The delay has been a major setback for the ambitions of the company, which wants to use electric-vehicle technology to close the distance with more-established global carmakers.

Still, Daimler continues to work with BYD as a way to push into electric-vehicle production in China to challenge luxury-segment leader BMW AG, while the tie-up gives Shenzhen-based BYD access to Daimler technologies. The two companies have said they will invest $90 million in the 50-50 partnership. Daimler's electric-vehicle strategy includes large-scale production of a battery-powered version of its Smart minicar, starting next year. Daimler this past July also established a 50-50 joint venture with major automotive parts supplier Robert Bosch GmbH to produce motors for BEVs and plug-in hybrid electric vehicles.

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