Manufacturing News

Daimler, BAIC to invest 5 billion yuan for EV output

Daimler AG and partner BAIC Motor Corp. plan to invest 5 billion yuan ($755 million) in China to produce electric vehicles and batteries to meet the country’s EV production quotas.

Hubertus Troska, chief of Daimler’s greater China operations, said the investment was part of Daimler’s previously announced $11.8 billion global green car initiative.

Troska, speaking to reporters on the sidelines of the Guangzhou auto show, said Daimler and BAIC plan to localize production of EVs in China. The partners also will produce EV battery packs using locally produced battery cells.

“If there’s one country in the world (that could) grow demand for electrics, that’s China because no other countries have so many big cities,” Troska said.

Though the government will phase out subsidies for EV sales over the next few years, “there is a strong incentive (for Chinese consumers) to go for electrics,” Troska said.

That is in part because of the central government’s commitment to build sufficient charging infrastructure, Troska said.

Daimler said Friday that the company and BAIC will start producing EVs under the EQ brand in 2019. The first EQ model will be the EQC, a battery-powered crossover vehicle.

Globally, Daimler plans to invest $11.8 billion to expand its EV product lineup over the next few years. By 2022, Mercedes’ lineup will be “electrified,” a spokeswoman said, meaning Mercedes will offer an electrified version of every model.

China has set strict quotas for electric and plug-in hybrid vehicles that go into effect starting in 2019. It has targeted sales of 2 million all-electric and plug-in hybrid vehicles by 2020, and it has signaled long-term plans to phase out the sale of vehicles powered by fossil fuels.

The seismic shift toward EVs has prompted a flurry of alliances and product launches, as manufacturers race to comply with China’s EV quotas.

For example, Volkswagen plans to spend 10 billion euros by 2025 to develop and produce EVs.

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