Daimler Takes 10% Stake in Tesla; Strategic Partnership to Collaborate on Future Models
19 May 2009
Daimler AG has acquired an equity stake of nearly 10% in Tesla Motors Inc. The two companies have already been working closely to integrate Tesla’s lithium-ion battery packs and charging electronics into the first 1,000 units of Daimler’s electric smart car. (Earlier post.)
This investment deepens the relationship between the two, and enables the partners to collaborate even more closely on the development of battery systems, electric drive systems and in individual vehicle projects. Executives from both companies announced the arrangement this morning in a webcast press conference.
Tesla has demonstrated expertise with electric vehicles, but nowhere near the experience and capability of an organization like Daimler in terms of general automotive experience with safety, mass production, all those things. Tesla brings those new elements of electric powertrain, Daimler provides to Tesla the traditional elements which are extremely important if we are going to mass production.
Where I see the significant value, the mutually beneficial partnership, is that Tesla brings expertise on the battery electric front, Daimler brings expertise associated with everything else on the automobile.
—Elon Musk, Tesla CEO and Product Architect
As part of the collaboration, Prof. Herbert Kohler, Vice President E-Drive and Future Mobility at Daimler AG, will take a seat on Tesla’s board of directors.
| “Tesla’s R&D is on the pack not the cell. Tesla is agnostic as to...the cell. We are happy to use a Li-Tec cell, or Panasonic or [others].” —Elon Musk |
Daimler says that the long-term partnership with Tesla complements Daimler’s multi-facetted strategy to advance the electrification of the automobile. In March, Daimler founded the Deutsche Accumotive GmbH, a joint lithium-ion venture with Evonik Industries AG. (Earlier post.) Daimler also has a stockholding in Li-Tec, a subsidiary of Evonik.
Daimler has had 100 smart electric cars undergoing large-scale trials in London since 2007. These electric vehicles are being tested in day-to-day assignments by fleet operators and private customers. Later this year, the smart assembly plant in Hambach, France, will start production of up to 1,000 units of the second-generation smart fortwo with electric drive, which will initially be used for mobility projects such as e-mobility Berlin or e-mobility Italy.
This year Daimler is also starting small-series production of the Mercedes-Benz B-Class with a fuel cell drive system. In 2010 the company will introduce its first battery-powered Mercedes-Benz. As of 2012, Daimler plans to equip all smart and Mercedes-Benz electric vehicles with own produced lithium-ion batteries.
In 2004, Tesla began development of its first electric vehicle, the Roadster, and is the first US- and EU-certified lithium-ion battery electric vehicle. Tesla unveiled its second car, the Model S, and plans to produce it beginning in 2011. The base pack for the Model S, Musk noted in the question and answer session of the press conference, would use some 8,000 cells were it to use the same cells applied in the Roadster pack.
We also are looking at potentially using other cells for the Model S...We are in agreement with Daimler that in the long term fewer cells makes sense.
—Elon Musk
This Just In: Elon Musk discovers that building a car company is even more difficult than building a car.
I wish them every success. But Musk might do the world more good by concentrating on his launcher business Spacex. We will soon need thousands of low-cost launches to put Solar power stations in orbit.
Posted by: richard schumacher | 19 May 2009 at 07:18 AM
So they need Daimler's production experience. I imagine the money helps, too.
It's a very interesting move viewed from the other end, though. Perhaps Daimler is leaving the door open to an expansion into the again. That would be surprising since they got badly burned with Chrysler.
I have to say the roadster fits nicely with the Mercedes luxury line while the electric Smart might replace the whitestar project, or at least give it more time. They already have a US dealer network, and it's not overly large like GM and Chrysler have. Tesla, a small operation, are very lean and can be easily shaped. All the problems relating to an existing, hulking apparatus-- extra factories, UAW rules and contracts, vast oversaturation of dealerships-- are not an issue with Tesla. But Daimler have the benefit of experience and infrastructure.
I'd thought that Tesla might have waited till GM or Chrysler had shut down a bunch more plants, and then poached lots of competent, experienced people and plant space and infrastructure on the cheap, less union entanglement. Perhaps as the above poster notes, Musk was overly confident about the feasibility of making a car company from scratch. Or perhaps the economics of doing so aren't so favorable.
Posted by: J | 19 May 2009 at 08:03 AM
Tesla needs the money to expand. They also get instant credibility, manufacturing expertise and dealers, potentially. What Daimler gets out of this is not so clear to me. I don't see Tesla as having any significant assets that Daimler couldn't develop on its own. On the other hand, the amount of money is probably not that great from Daimler's point of view, so the risk is small and perhaps it gives them a halo car and some bit of a jump start on electrification.
Posted by: Nick Lyons | 19 May 2009 at 08:54 AM
Daimler bought time. Of course they could have invented everything on their own, but this way, they may have won a few years, whitch will have been worth billions within a decade.
Posted by: Alain | 19 May 2009 at 10:43 AM
Good points both. Assuming it's pretty short money for Daimler, and that in a few years all the major players' plans for electrics bear fruit, the timing and price are great. If not, no big loss.
Posted by: J | 19 May 2009 at 12:46 PM
From what I heard, most of the technology for Tesla comes from AC Propulsion, founded by a guy that worked on the the EV1 for GM. He had the where with all to start his own company and now reaps the benefits of his efforts. Most excellent :-)
Posted by: SJC | 20 May 2009 at 11:55 AM
I agree - Tesla gets credibility and money which means more credibility - and dealers.
Daimler gets an immediate high dollar halo car and a jump over its competition.
Posted by: ToppaTom | 21 May 2009 at 09:59 PM
additional background:
http://www.reuters.com/article/earth2Tech/idUS329112097920090525
Posted by: Jim Greene | 26 May 2009 at 10:57 AM