The Unconvincing BYD-Daimler AllianceJune 1st, 2010 | Posted in BYD | Daimler | DENZA | Electric Car | Opinion
Daimler AG and BYD Co. Ltd. announced on 27 May that they were joining forces to develop electric cars. Details on the planned new venture, to be called Shenzhen BYD Daimler New Technology Company, are scant. There are quite a few signs, though, that the deal lacks substance as well as coherence, and should better be considered exploratory and symbolic. We will not be surprised if no EVs will ever come from the alliance or new brand ever be launched as promised.
The first thing to worry about, for the new company, is perhaps BAIC (Beijing Automotive Industry Holding Co.), Daimler’s primary Chinese partner at the present. When the news about the BYD-Daimler venture first broke out in March this year, BAIC expressed surprise and discontent–although in a reserved way–as acknowledged by Dieter Zetsche, Chairman of Daimler AG.
Daimler assured BAIC by pushing forward key projects with it, including launching the Mercedes-Benz E-Class sedan and building an engine plant, and by stressing that the BYD-Daimler venture will not produce any cars bearing the Benz name or market any cars in the same showroom with Benz cars.
BYD, on the other hand, seems uninterested in calming BAIC at all. On several occasions, it made clear that EV development was only part of the deal with Daimler. It also looks forward to building new conventional sedans, and even talks about filling the gap between BYD’s current entry- and mid-level and Daimler’s up-scale cars.
What exactly does Daimler want from teaming up with BYD? The answer seems naturally to be the latter’s EV battery technology. This answer, however, faces two serious challenges. First, while experienced in making batteries, BYD has yet to prove any real superiority in developing EVs over other automakers (except, perhaps, its superior ability to boost a company’s stock price through talking about EVs). The e6 remains elusive after being "released" several times. Its range, claimed at 330 km, may indeed exceed those of other e-cars, including the Nissan Leaf, but comes with over-weighing ( at 2.3 tons) and over-pricing (retail price at about 300,000 yuan, or 44,000 US dollars).
Second, BYD’s auto business took off through copying and imitating, and seems to have no real intention or ability to reform and innovate–judging by its development of the M6, which resembles Toyota Previa in a striking way. Is it really wise for Daimler to be tied with a company of such unprofessionalism–even if its strengths in EV technology are real?
In light of these two points, we believe Daimler is just exploring more opportunities. The 300 million yuan invested in the new alliance is a modest sum to spend on having a backup, and some leverage over BAIC. BYD, after all, is now a first-tier sedan maker in China, and shows tremendous momentum going forward. And who knows, the Chinese government one day may relax the restriction on the number of native partners a foreign automaker is allowed to have.