Manufacturers snap up stakes in Chinese battery makers

Daimler acquires 3 percent of Farasis Energy to support electric models

International carmakers are buying stakes in Chinese power battery companies to ensure supplies as they rev up production of electric vehicles not only in the country but on a global scale.

On Friday, German car group Daimler said it is spending "multimillion" euros to acquire a stake of around 3 percent in Chinese battery cell maker Farasis Energy.

Hubertus Troska, Daimler's board member responsible for its China business, said taking a stake in a Chinese battery cell maker will further leverage the potential of advanced technology partners to pursue its global electrification strategy.

Its Mercedes-Benz brand expects over 50 percent of its passenger car sales to be electric cars or plug-in hybrids by 2030.

"China is the world's largest electric car market with tremendous potential for further development. We are already working with strong and trusted partners in China, not only to enhance our local footprint but also to strengthen our competitiveness worldwide," Troska said.

Daimler said the two companies will also work on developing and producing highly advanced battery cells to extend ranges while cutting charging times for the carmaker's ambitious electrification goal.

According to the deal, Farasis can join projects involving Mercedes-Benz next-generation electric vehicles at an early stage. In order to be able to meet increasing demand from Mercedes' German plants in the future, Farasis is building a plant for battery cells in Bitterfeld-Wolfen, Germany.

In this year alone, Mercedes-Benz expects to offer five electric models and 20 plug-in hybrids in the market globally. Late last year, it launched the China-made EQC SUV, which uses batteries from China's CATL.

Daimler said a balanced supplier set is the basis for access to the best possible technology and a prerequisite for competitiveness, but Farasis is a "fixed cornerstone" in the existing set of its battery cell suppliers.

"In the future, we will continue to strengthen our activities in research and development, production and purchasing in China," Troska said.

Daimler started working with Farasis in 2019 in a project producing battery cells using electricity from renewable energies such as hydropower, wind and solar energy.

Daimler is not the first international carmaker to buy part of a Chinese battery maker.

In late May, Volkswagen said it will acquire a 26 percent stake in battery manufacturer Gotion High-Tech Co for around 1 billion euros, which will make it the company's largest shareholder.

Herbert Diess, CEO of Volkswagen AG, said the partnership is an opportunity for Volkswagen to achieve deeper know-how in the field of batteries. Gotion has a number of projects over the entire battery value chain from sourcing, development and production to recycling.

Volkswagen said Gotion, which is China's third largest battery maker after CATL and BYD, will supply batteries to its three joint ventures in the country, two of which are making vehicles on Volkswagen's electric MEB platform.

The MEB is a new modular electric vehicle platform of Volkswagen Group, and the first model based on the platform is scheduled to hit the Chinese market later this year.

Volkswagen Group China CEO Stephan Woellestein said the first batch of MEB models will use CATL batteries, adding that the deal with Gotion will not affect ongoing contracts with other battery suppliers including CATL.

The German car group has set a goal of selling 1.5 million new energy vehicles a year in China by 2025, which means it will need another 100 gigawatt hours from now to then, which is beyond the capacity of any supplier, Woellenstein said.

Last month, Automotive News Europe reported that Chinese new energy vehicle and battery maker BYD is in talks with carmaker Jaguar Land Rover to supply automotive batteries from a plant in the United Kingdom.

The UK would be BYD's first European battery cell factory, but the company is also looking at other European sites, said the report citing a source familiar with the situation.

The International Energy Agency predicts there will be 125 million electric vehicles on the road worldwide with annual sales reaching 21.5 million by 2030.

China sold 1.2 million new energy vehicles in 2019 and this is expected to hit 15 million units by 2030.

lifusheng@chinadaily.com.cn