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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. Daim...

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