Daimler and BYD to build electric vehicles in China

Although the U.S. is still being promised a delayed BYD electric car, Daimler and BYD have announced plans to produce one next year in China.

According to Daimler chief Dieter Zetsche, the EV that will be built as a joint venture “is frozen, and the first prototype will appear next April.”

Zetsche was reported by Inside Line as saying earlier intentions to build an EV with another JV partner, BAIC, were scrapped because “they have no battery technology, so it was better to do this with BYD.”

This said, the German company that engineers Mercedes and Maybach will also do the lion’s share of development on the BYD car, lending its know how to the ambitious automaker that’s been plagued with issues including allegations of patent violations.

It was also once thought that BYD held advanced battery technology, but in response to whether this was true, Zetsche merely said, “no,” while confirming R&D would be largely done by Daimler.

BYD was given earlier fame when Warren Buffett bought a 10-percent share in it, but more recently has laid off thousands of employees and faced numerous “potholes” in its auto and mobile phone business as Zetsche characterized them.

Zetsche said BYD Chairman Wang Chuanfu has formerly appeared to be a man “who could walk on water — which he can’t.”

But Zetsche reaffirmed his confidence in Wang, denying allegations that he might be a bad manager, and said, “we’re very confident about this company.”

Another key motivator to get started, as has been previously reported, is domestically produced EVs are eligible for substantial government incentives.

A Daimler/BYD electric vehicle buyer would be able to qualify for $9,200 from the Chinese central government, and five Chinese cities offer an additional $9,200.

And beyond all this, the bottom line is Daimler has to partner with someone if it is to do business at all in China, so having done its diligence, it appears BYD is it.

The mutually symbiotic arrangement will help BYD as well, given that the Daimler name will be associated with its vehicles, and Daimler’s engineering apparently will be as well.

Zetsche confirmed Daimler has long-term aspirations, and said if it is going to go to the trouble of building cars in China, it is not solely focused in EV incentives and potential short-term gain.

These incentives could indeed turn out to be short term because rumors have also been stirring that the government may reduce or withdraw incentives, as EVs for some of China’s planners are looking less promising than initially thought.

“It’s short-sighted to go to China, make money and run,” Zetsche said. “There needs to be give and take. BYD was so positively rated that we wanted to co-develop alternative-energy vehicles with them — it’s better to be proactive.”

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