A Smart Fortwo Cabrio Electic Drive car is plugged at a recharging station during the 87th International Motor Show at Palexpo in Geneva, Switzerland, on March 8 2017. Picture: REUTERS/ARND WIEGMANN
A Smart Fortwo Cabrio Electic Drive car is plugged at a recharging station during the 87th International Motor Show at Palexpo in Geneva, Switzerland, on March 8 2017. Picture: REUTERS/ARND WIEGMANN

Frankfurt/Beijing — Daimler will build its next generation of Smart electric cars in China through a joint venture with Geely, as a way to increase economies of scale in a market segment that is struggling to turn a profit.

China’s Geely built a stake of almost 10% in Daimler last year, saying it wanted to forge an alliance to develop electric and self-driving cars to better compete with new companies such as Uber and Google.

Daimler said on Thursday that it would build the next generation of Smart-branded city cars at a purpose-built factory in China, and planned to share its expertise in manufacturing, engineering and design with Geely.

The high cost of electric-car batteries has made it hard for car makers to build affordable zero-emissions vehicles, leading several of them to strike alliances with Chinese partners.

Daimler’s German rival BMW recently unveiled plans to build electric Minis in China, where production costs are low and demand for small electric cars is rising.

Daimler and Geely did not disclose the financial terms of their deal. The details of the joint venture will be finalised by the end of 2019, they said in a joint press release.

Daimler currently develops and builds Smart cars with Renault, and constructs the small vehicles at factories in France and Slovenia. The Daimler factory in Hambach, France, will be retooled to build Mercedes-Benz cars, it said.

Geely has been expanding rapidly through mergers and acquisitions since 2010, when it acquired Swedish car maker Volvo from Ford Motor. Last year, Daimler and Geely set up a ride-hailing joint venture in China.

Daimler’s CEO Dieter Zetsche said last month the German car maker was in talks to deepen its alliance with Geely after the Chinese’s groups chair Li Shufu bought a 9.69% stake in Daimler in 2018. 

Reuters