Daimler AG will partner up with Volvo parent Geely to develop a new “highly efficient” hybrid powertrain that could be used by their various brands.
Both manufacturers have laid out plans to rapidly increase production of electrified vehicles, strategies driven by increasingly stringent government emissions and fuel economy mandates around the world.
The two companies said they will work together on the development of a hybrid powertrain to be produced both in Europe and China and, they said in a joint statement, “The export of the engine from China is considered to be an option.”
The move is the latest in a series of alliances that are reshaping the auto industry. Daimler, in particular, now has partnerships underway with competitors including BMW, the Renault-Nissan-Mitsubishi Alliance and Aston Martin. The German company last month announced it will help that British luxury brand develop its own electrification program.
Specific details of the Daimler-Geely deal were not announced but it could influence product programs for a number of different brands. The German automaker produces vehicles through its Mercedes-Benz, Mercedes-AMG and Mercedes-Maybach units, as well as the Smart brand, all of which are increasing their focus on battery-drive technologies.
“We are systematically converting our portfolio, so that by 2030 more than half of our passenger car sales will be comprised of plug-in hybrids or purely electric vehicles,” Markus Schäfer, member of the Board of Management of Daimler AG and Mercedes-Benz AG said in the statement.
The project, he noted, will be “spearheaded” by the new Mercedes-Benz Drive Systems unit.
The Chinese automaker, in turn, operates the Geely and Linc & Co brands in its home market, as well as Volvo Cars. The Swedish-based automaker plans to have all of its future products using some form of electric propulsion, with the emphasis on plug-in hybrids and pure battery-electric vehicles, or PHEVs and BEVs.
“Clean and highly efficient powertrains are integral to our core competitiveness,” An Conghui, president and CEO of Geely Auto Group, said in the joint statement. “This project reflects the need for economies of scale and targeted research and development investment in clean and highly efficient powertrains and hybrid drive systems and their applications.”
Among the questions unanswered: what type of hybrid system will the new partners focus on? While demand for conventional hybrid-electric drive technology far outstrips that of plug-based systems today, that is expected to change during the course of the coming decade. New government mandates are a key reason.
In China, for one thing, the government recently outlined its expectations to have 20% of the new vehicle market comprised of “New Energy Vehicles” by 2025, which include PHEVs and BEVs.
In Europe, tough new carbon dioxide emissions targets will make it increasingly difficult to sell vehicles that can’t run, at least part of the time, solely on electric power. And the regulatory environment is only getting more demanding. This past week, the UK announced plans to ban sales of new vehicles running solely on internal combustion engines by 2030. That’s 10 years early than the original plan. A number of other countries – along with numerous major European cities – are considering or enacting similar bans.
This is the latest partnership announced by Daimler and Geely. The Chinese company will play a lead role in salvaging Daimler’s struggling Smart brand. They also are working on a ride-sharing program for the Chinese market. Geely holds a more than 10% stake in Daimler.