FRANKFURT -- China's Beijing Automotive Group Co. (BAIC) has bought a 5 percent stake in Daimler, cementing its relationship with the German automaker after China's Zhejiang Geely Holding emerged as a potential rival.
BAIC was Daimler's main partner in China until 2018 when Geely chairman Li Shufu took a 9.69 percent Daimler stake with the aim of forging an alliance to develop electric and self-driving cars.
About half of the stake being taken by BAIC, which is backed by Beijing’s municipal government, is via rights to acquire shares. The 5 percent holding has a market value of about 2.5 billion euros ($2.8 billion) as of Monday close.
The high cost of electric car batteries has made it hard for automakers to build affordable zero-emissions vehicles, leading several of them to strike alliances with Chinese partners. Daimler in March agreed to build the next generation of Smart cars as EVs in China for global markets in a joint venture with Geely.
Daimler has reassured BAIC that any new industrial alliances involving Mercedes and a Chinese partner would only happen after a consensus is found with BAIC.
Daimler operates Mercedes-Benz factories in Beijing through Beijing Benz Automotive,
Daimler welcomed the BAIC investment. "We are very pleased that our long-standing partner BAIC is now a long-term investor in Daimler," CEO Ola Kallenius said in a statement.
In May, Reuters reported that BAIC was seeking to buy a stake of up to 5 percent in Daimler as a way to secure its investment in Chinese Mercedes-Benz manufacturing company Beijing Benz Automotive.
Daimler has been shareholder of BAIC Group subsidiary BAIC Motor since 2013.
Geely declined to comment on the BAIC-Daimler deal but referred to past statements which said it was committed to long-term investment and healthy collaboration with Daimler.
Daimler shares have lost about 30 percent of their value since Li Shufu disclosed his stake, hit by a string of profit warnings linked to a slowing auto market and diesel-emissions costs.