BERLIN (Bloomberg) -- Daimler AG's CEO is counting on a new partnership to make the German automaker a leader in China's nascent electric vehicle market.
“Our new joint venture is well positioned to make the most of the vast potential of electric mobility in China,” Daimler CEO Dieter Zetsche said in a statement Thursday.
Daimler, the world's second-largest manufacturer of luxury cars, and BYD Co. Ltd., the Chinese automaker backed by billionaire Warren Buffett, completed their deal Thursday to set up a 50-50 joint venture to develop electric cars in China. Daimler and BYD plan to invest 600 million yuan ($88 million) in the venture. The companies originally announced plans to form the partnership on March 1.
Daimler is pushing into electric-vehicle production as part of a challenge to BMW AG for leadership in the luxury segment. BMW will introduce an electric-powered city car by 2013 and is working with partner Brilliance China Automotive Holdings Ltd. on battery-powered models for the country, which became the world's biggest auto market last year.
China's government may announce subsidies in 2010 to encourage the use of cleaner vehicles. The country is likely to account for at least 25 percent of global demand for battery-powered models in 2015, according to a forecast by J.D. Power & Associates.
“China is seeking to make itself a global leader with this technology,” Ben Asher, an analyst with J.D. Power in Bangkok, said in a phone interview before Daimler and BYD's announcement. “Other countries don't have the ability to strong-arm volumes like China.”
Part-owned by Buffett's U.S.-based Berkshire Hathaway Inc., BYD began mass production of the world's first plug-in, gasoline-electric hybrid vehicle in 2008. The manufacturer, which has its headquarters in the southern Chinese city of Shenzhen, signed an agreement with Volkswagen AG in 2009 to explore cooperation in areas including hybrid cars and lithium-battery electric models.