A Mercedes on display in China.
Daimler and Beijing Automotive Group Ltd,, also known as BAIC, have signed an additional Letter of Intent that emphasizes plans to expand their strategic partnership by developing new technology and new vehicles that run on alternative or new energy.
The Letter of Intent signed between the German and and Chinese automakers opens the door to direct investment by BAIC in Daimler for the first time.
“Both sides are going to evaluate additional initiatives at corporate level as well as to support each other with further investments,” the two companies said in a statement, announcing their plans.
“BAIC and Daimler will jointly analyze the possibilities of technological cooperation as well as cooperation in the field of research and development of new energy vehicles with the aim of further improving the competitiveness of both partners in China,” the statement added.
The two companies have already established a long term strategic partnership including significant investments in the Chinese automotive industry over the past few years. Formerly known as Beijing Jeep, the partnership was originally organized as a joint venture between Chrysler and the Beijing municipal government back in the 1980s – the first major American automotive investment in China — and the alliance was one of the things Daimler kept when it sold off Chrysler in 2007.
The new letter builds on a strategic framework agreement that was signed back in June of this year in the presence of Chinese premier Wen Jiabao and German Chancellor Angela Merkel in which both partners agreed to invest two billion euros in what is known as Beijing Benz Automotive Co, Ltd.
It also calls for the construction of a new R&D center at BBAC, which will focus mainly on vehicle testing and adaptation as well as research activities with suppliers
BBAC is currently producing Mercedes-Benz C-Class and E-Class sedans and will be expanded to include the GLK compact SUV as of 2011 — as well as three models of the new generation of Mercedes-Benz premium compact cars.
As one of China’s largest automakers, BAIC Group sold 1.5 million vehicles last year. Daimler AG is one of the world’s most successful automotive companies.
As of 2013, a new engine plant will produce 4-cylinder gasoline engines, which will be used in locally produced Mercedes-Benz passenger cars and vans.
Daimler isn’t the only maker partnering with the Chinese on the development of alternate power. General Motors announced a similar and more controversial venture earlier this year.