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Daimler, BAIC to build US$700m factory

BBAC factory in Beijing, China. Source: Daimler

5 billion yuan BBAC factory and battery facility in China will be running by 2020

As EV manufacturing capacity explodes in China in particular, automakers will have to go big or go home from now on.

Germany’s Daimler and China’s BAIC Motor have evidently opted for the former. July 5 saw the two announce the construction of a new manufacturing plant and battery factory in Beijing, under the joint venture Beijing Benz Automotive Co. (BBAC).

Daimler and BAIC will jointly invest five billion yuan in a factory dedicated to producing battery EVs. Vehicles will be built under the Mercedes-Benz brand, with a “three-digit million” investment into on-site battery manufacturing capacity. Production is then scheduled to start by 2020.

To be clear however, the plant will be for battery assembly, using cells already produced in China. Last year, South Korea’s SK Innovation was confirmed as the supplier for electrified Mercedes-Benz models arriving in 2017. SK also has supply agreements with Kia Motors and BAIC Motor, and has a Chinese cell production plant, although it has been reportedly shuttered since January.

Given the existing relationships, ElecTrans would expect future cells to be supplied by SK Innovation, however disagreements over the Chinese facility and tensions between China and South Korea mean this could change.

“Building another premium eBattery factory is the next step in the implementation of our electric strategy. Thus, we have the first foreign location in our global battery production network. The local production of batteries is crucial in order to meet the demand for electric vehicles flexibly and efficiently,” Mercedes-Benz board member Markus Schäfer said in a statement.

Daimler board member and China-responsible Hubertus Troska added that: “By 2025, the Chinese market will have a substantial share in sales of Mercedes-Benz electric vehicles. Therefore, local production will be key to the success of our EV portfolio, and crucial to flexibly serving local demand for electric vehicles.”

The factory will be part of the global battery production network for Mercedes-Benz Cars, and adds to the existing in Kamenz, Saxony, at which a second battery factory is currently being built with an investment of around 500 million euros.

“By confirming our joint commitment to the development of electric drive in China, and undertaking preparations to produce BEVs at BBAC, we are giving full play to the respective strengths of both sides. Together, we are laying the groundwork for our joint venture facility BBAC to become a future BEV production hub in China,” BAIC Group chairman Xu Heyi added.

 

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