Mercedes and China’s Nio are considering investment and tech partnerships. Two sources said Nio (9866. HK) has considered a technology-for-investment deal with Mercedes-Benz (MBGn.DE).
Early this year, Nio founder and CEO William Li asked Mercedes CEO Ola Kaellenius to invest in loss-making Nio and share its R&D knowledge. They said technology transfer and financial investment were not discussed.
Nio reportedly contacted Mercedes with the tie-up concept, but internal conversations in recent weeks revealed hesitation and rendered it doubtful.
It was unclear when the partnership would be decided. Nio called MMercedes’scollaboration “untrue” without explanation. Mercedes said, “Ola Kaellenius is in an ongoing regular dialogue with various industry leaders and peers, including William Li,” but would not work with Nio.
Because the matter is private, the sources declined to be named. Chinese EV businesses share technology with large automakers to prosper in a consolidating local sector despite financial restraints, as seen by the Nio-Mercedes discussions.
Partnerships may also help Chinese EV companies circumvent trade barriers. As global EV adoption grows, several incumbents are shifting to catch Tesla (TSLA.O) and Chinese enterprises.
Volkswagen (VOWG_p.DE) was the first to sign agreements in July to create new cars for China, the world’s largest auto market, utilizing Xpeng’s (9868. HK) EV platforms and SAIC Motor Corp.’s (600104. SS) Audi technology.
According to media reports, China’s Leapmotor (9863. HK) has approached JSW Group, VW’s Jetta brand, and Stellantis (STLAM.MI) to license its EV platforms, battery, and motor technologies. Leapmotor wouldn’t comment.
Modeling Tesla’s production ramp-up strategy, China’s EV startups seek automotive ties and investment. Musk claims a $50 million Mercedes investment rescued Tesla in 2009.
Nio investor Tencent Holdings (0700. HK) wants additional large automaker alliances. It lacks them.
The legacy brands are too successful to manufacture smart EVs rapidly. CEOs of firms with hundreds of thousands of employees confront this challenge, “Nio’s Li told reporters in September at an event showcasing its batteries, semiconductors, autonomous driving, and smart manufacturing technology.
“Rather than spending so much money and time on your own, isn’t it better to seek win-win via EV startups?”
FRICTION
Mercedes’ EV transition difficulty persists. Mercedes’ R&D and strategy teams resisted the tech tie-up, fearing brand harm. Mercedes’ two major shareholders, Chinese automakers, may disrupt shareholder unity.
Mercedes aims to invest more in R&D and push electrification and digitalization despite mixed sales in China. China’s ninth-largest electric and hybrid car producer, Nio, has spent more on-chip and battery technologies.
Investors worry that the automaker, which lost money in a fierce Chinese price war, is overcommitting by entering smartphone markets.
The three-month-end June net loss rose to 6.12 billion yuan ($839.51 million). On June 30, its cash and equivalents were 31.5 billion yuan, down from 42.3 billion in 2022.
