Cooperation between automotive brands is hardly new, but on the face of it the latest joint automotive project between the owner of luxury car maker Mercedes-Benz and an upstart Chinese battery firm best known for missing its own deadlines isn't that obvious.
Peel back the layers however and it becomes clear: without mutual cooperation neither firm stands a chance of cracking the Chinese electric car market.
The joint venture, named Daimler New technology Co Ltd, has just been given a business licence by Chinese authorities nine months after the firms publicly announced their intent to work together.
Let's be honest though. BYD’s reputation in the electric car industry isn't exactly the kind of reputation you'd expect Daimler to want to associate with. Not only has BYD had to defend itself in a panoply of court battles on everything from alleged patent infringement to illegal factory zoning but it has also continually missed its own self-set deadlines to bring its e6 electric car to market in the U.S.
Initially promised to come to market in 2010, the five-seat BYD e6 is now promised to select fleet customers by the end of 2011 with a range of 200 miles, an upgraded interior on the original Chinese version and an unbelievably low price-tag of $35,000 before incentives.
CEOs of Renault-Nissan and Daimler
So why would Daimler, an automaker known for its luxury high-end Mercedes-Benz and Mybach divisions want to associate with an automaker whose sales of plug-in vehicles has been less than stellar, especially when it has an active 3.1 per cent stake in the electric-car friendly Renault-Nissan under a joint electric car venture?
The answer may be simpler than it seems. Reputation.
Despite protests of the contrary, we’ve heard from many ex-pats that BYD isn’t a popular car brand in China. Given a choice, the growing middle classes in China prefer to buy prestige brands from Europe or America, using top-specification Mercedes-Benz, Audi or Chrysler vehicles.
These upper middle-class status-symbol cars embody the drive towards externally capitalist lifestyles in what is still a communist country, while those without the means are left to drive Chinese brands. China now even has its own version of the gear-jamming, consumerist Top Gear show, increasing desirability of non-chinese brands.
Top Gear China pilot
But it gets more complicated. Technically, a firm wishing to enter into the Chinese market must offer the Chinese government a majority shareholding - a risk for any large company wishing to enter the market.
The solution for Daimler? A partnership with BYD.
It’s a symbiotic relationship.
Not only does Daimler get to benefit from BYD’s extensive battery knowledge and manufacturing facilities, but also a chance to reach into a market crying out for its products without risking the company’s future.
In exchange, BYD receives extra credibility and upper-class appeal by associating itself with a brand known for luxury, reliability and exclusivity.
While fortune cookies and common sense may predict all kinds of success for Shenzhen BYD Daimler New technology Co Ltd, we’d like to offer BYD and Daimler a little advice of our own.
While you’re firm buddies in China, you’re still competitors elsewhere. And while a fortune cookie you once ate may have advised to “keep in close touch with what your competition is doing” we’re not sure it meant THAT close.