Geely acquires 50% stake in Smart from Mercedes-Benz parent Daimler

Chinese motoring giant Geely has acquired a 50% share in Smart from Mercedes-Benz parent firm Daimler, the companies have announced.

The 50/50 joint venture will move production of Smart cars to China, where it will be transformed into an electric-only brand by 2022, Autocar reports.

The companies have agreed to let Mercedes-Benz head up the design for the new EVs, while Geely will front the engineering aspect of the venture, the motoring magazine says.

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Dieter Zetsche, the outgoing chief executive of Daimler, has confirmed that the German car firm’s production plant in France will remain open, safeguarding around 800 jobs, although the new Chinese factory will take over as Smart’s main facility, the Financial Times reports.

The company instead plans to invest €500m (£427m) into the French site, which will become the “new home” of Mercedes’s all-electric EQ models, the FT adds.

According to Bloomberg, Daimler has been “racking up losses” from Smart since the brand’s launch in 1998. It’s hoping that “young, city-dwelling consumers” in China, the world’s biggest motoring market, can “rejuvenate the brand”.

Daimler began its collaboration with Geely last year when the Chinese carmaker’s founder, Li Shufu, acquired a $9bn (£6.84bn) stake in Smart, the news site says. The two firms have also partnered to start ride-hailing and car-sharing services in China.

While it seems peculiar that one of the largest carmakers in the world would partner with one of its rivals, the soaring costs of battery development for EVs has “made it hard for automakers to build affordable zero-emissions vehicles” and forced them to strike partnerships with other motoring giants, says Automotive News Europe.

For instance, Volkswagen formed an alliance with Ford in January to boost their development of electric and autonomous vehicles.

By “pooling resources”, the two companies hope to “slash research and development costs as the race to build electrical vehicles accelerates”, The Daily Telegraph says.