Chinese EV startup Nio has reportedly approached German auto giant Mercedes to discuss an investment-for-tech tie-up between the two firms.
Nio’s founder and chief executive William Li is said to have discussed the potential collaboration with Mercedes CEO Ola Kaellenius earlier this year, seeking investment in exchange for loss-making Nio sharing its research and development capabilities with Mercedes, sources said.
But one of the sources also said Mercedes was facing resistance within the company to the proposed partnership and the odds were that it would not be approved.
Also on AF: China Vows Anti-Corruption Crackdown on Financial Sector
The rumoured Nio-Mercedes talks highlight the trend of closer collaboration between legacy automakers and new upstarts as cash-strapped Chinese EV companies seek to survive a consolidating domestic industry by touting innovations that they hope to sell to established automakers.
Chinese EV companies may also be able to navigate potential trade barriers better by forging such tie-ups.
For their part, many of the incumbents are scrambling to reposition themselves to catch up with Tesla and Chinese companies as EV adoption scales up rapidly in markets globally.
Volkswagen has been an early mover, striking deals in July that would enable it to jointly develop new models for China, the world’s biggest auto market, based on Xpeng’s EV platforms and leveraging SAIC Motor Corp’s technologies for Audi.
And China’s Leapmotor has approached foreign firms including India’s steel-to-energy JSW Group, VW’s Jetta brand and Stellantis, according to media reports and people familiar with the matter, after saying it would like to license out its EV platforms, battery and motor technology.
By seeking tie-ups and investment from established automakers, China’s EV startups are following a playbook from Tesla at a time when the EV industry leader is struggling to ramp up production.
Elon Musk has credited a $50 million investment from the Mercedes group with saving Tesla in 2009.
Tencent-Backed Nio Favours Partnerships
Nio, whose investors include Chinese tech giant Tencent Holdings, has publicly called for more such tie-ups with established automakers. It currently does not have any.
“They [the legacy brands] have been too successful so that they are not agile in smart EV development. This is a challenge for any CEO who runs a company with hundreds of thousands of employees,” Nio’s Li told reporters at an event in September showcasing its self-developed technologies from batteries and chips to autonomous driving and smart manufacturing.
“Rather than spending so much money and time on your own, isn’t it better to seek win-win via partnerships with EV startups?” he added.
The resistance being felt at Mercedes, however, reflects friction still at play in the adjustment to the EV shift.
The source said Mercedes’ R&D and strategy teams were largely against the proposals, citing concerns that such a tech tie-up could undermine Mercedes’ brand image.
Mercedes’ Patchy China Record
Another worry was that as Chinese auto sector entities were the two biggest single shareholders of Mercedes, it could upset shareholder harmony.
Mercedes has had a patchy sales record in China but is planning further investments in the market to expand its R&D team and accelerate innovations in electrification and digitalisation.
Nio, which ranks No9 among manufacturers of electric and hybrid cars in China, has, in turn, been doubling down on investment in self-developed technologies for key components such as chips and batteries.
But its foray into areas such as smartphones has fuelled concern among some investors that the automaker, which has seen its losses widen amid a fierce price war in China, is taking on too much.
Nio’s net loss more than doubled to 6.12 billion yuan ($839.51 million) in the three months ended June. It had cash and equivalents totalling 31.5 billion yuan as of June 30, declining from 42.3 billion at the end of 2022.
- Reuters with additional editing by Sean O’Meara
Read more:
Automaker Nio to Include Self-Developed Mobile Phone in EVs
Nio Cuts Prices, Ditches Free Battery Swapping as Sales Slump
Mercedes Teams Up with Tencent on Self-Drive Cars – Pandaily
Mercedes-Benz Opens China R&D Unit Focused on Mobility Tech
