Daimler-Geely JV moving Smart to China with all-electric product renewal makes sense for both

News has emerged today (28 March) that Daimler has struck a deal with Geely for a 50:50 joint venture based in China to develop and operate the Smart brand globally as an all-electric carmaker. Dave Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

“This deal makes a lot of sense for both carmakers, yielding benefits to both as electrification gathers pace in the global auto industry. China’s circa 30m unit annual market is shaping up to be at the epi-centre of this transformation over the next decade.

“For Daimler, it reinvents the Smart brand – a brand that has had limited success as an urban small car niche player – as an all-electric specialist. Moreover, it shifts the manufacturing base for the brand to China from 2022. That in itself would be a good move given the importance of the Chinese market for future sales of EVs, but it has also selected a well-established local partner for the venture, something that will be essential in securing a good manufacturing base and supply chain.

“Back in Europe, it also has the opportunity to repurpose the current Smart Hambach plant and dedicate it to the emerging Mercedes EQ electric sub-brand – which is about larger and more premium electrified vehicles than Smart.

“Geely gets the benefits of working closely with a German premium maker in the venture – both in joint design and development of future electric Smart models themselves and in the delivery of new mobility services to future customers via the Smart brand. This latest venture deepens the cooperation between the two – there is also a JV agreement to provide ride-hail mobility services in Chinese cities.

“However, I suspect the deepening relationship between Daimler and Geely will be attracting some scrutiny from BMW. Daimler and BMW have created a JV for future mobility services and lines could increasingly get blurred in the converging Connectivity Autonomous Shared Electric (CASE) megatrends space for future urban mobility. It’s certainly a very dynamic business space, as growing numbers of collaborations between companies indicate.”    

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