What’s happening: Daimler AG announced plans to expand its strategic partnership with the Chinese battery cell manufacturer Farasis Energy (Ganzhou) Co., Ltd, by acquiring an equity stake in the company.
What happened: The maker of the Mercedes-Benz is taking another major step towards its “Ambition 2039” CO2-neutral mobility goal by acquiring a stake of about 3% in the Chinese company to manufacture highly advanced cell technologies for reducing charging time and increasing vehicle range.
The latest announcement comes on the heels of the German luxury carmaker’s CEO warning of painful cutbacks through the coronavirus-led economic crisis.
Why it matters: Daimler’s CEO Ola Kallenius said on Wednesday that the pandemic, which has forced various companies to close their manufacturing units and showrooms across the world, will require more restructuring than previously planned.
The German auto maker, along with its peers Volkswagen and BMW, are on course to reporting losses for the second quarter.
Although the German auto industry has improved slightly, with a rebound in demand in countries like China and France, various firms still consider the present situation as “very pessimistic,” according to the Munich-based economic research organisation Ifo Institute. The group also reported a decline of 4 points of its employment indicator to a reading of -54.4 in June.
As part of the partnership with Daimler, Farasis Energy will build a battery cells plant to meet the projected rise in demand for Mercedes-Benz vehicles, which will also create around 2,000 new jobs.
Daimler Greater China announced plans to invest millions of euros for the IPO of Farasis, which will give the German company an option of nominating its member for a seat on the Chinese firm’s supervisory board.
Board member of Daimler AG Markus Schäfer said, “We are very pleased to further expand our partnership with Farasis in taking a decisive step within the implementation of our electric strategy ‘Electric first’. By strategically expanding our business relationship, we are pushing the electrification of our model portfolio ahead.”
What to watch: By expanding its partnership with the Chinese company, Daimler expects to achieve its ambitious goal of CO2-neutral mobility in less than 20 years. While this may excite investors, there are concerns around the company’s near-term prospects amid the pandemic, and all eyes will be on the upcoming second-quarter results.