The announcement that Zhejiang Geely Holding Group Co. has acquired a 7.3-billion euro stake in Daimler AG may have stirred up controversy, but it is not an unsurprising move, says Jeff Osborne, Head of Gumtree Autos. "This may be the biggest investment in a global automobile manufacturer by a Chinese company to date, but it won't be the last."
Osborne says that the move is a mutually beneficial one. "By working closely together, Geely gains access to knowledge and expertise that will help them in the race to become a world leader in the production of commercial electric vehicles, while Daimler will gain access to the Chinese market, a country with close to 200 million cars on the road (and the first country ever to outsell the US in volume of cars sold)."
It is expected that within the next twenty years, more than 46% of cars in China will be electric. This plays perfectly into Daimler's plans to launch battery-powered models in 2022, and to have their hybrid/electric cars to make up a quarter of total deliveries by 2025.
Geely's influence on Volvo Cars AB, has been marked and largely positively received, although it is natural for German automakers and economists to be nervous. "China is seen by some as a threat to European Manufacturers, but the reality is that they also present opportunity. Alliances, mergers and partnerships will be necessary for all automakers to ward off the threat of emerging competitors, whether it is from foreign manufacturers or tech companies like Tesla and Google. We're entering a brand new era and all automotive companies will have to think differently in order to stay on top of the game."