Daimler AG Chief Executive Officer Dieter Zetsche says the German company will become a leading manufacturer of electric-car batteries. Trouble is, his new business partner Renault SA CEO Carlos Ghosn has the same idea.
Both chiefs have vowed to produce the best power pack as they begin working together to jointly develop electric cars, creating a potential conflict in their budding cooperation before it even starts.
Daimler and Renault, which swapped 3.1 percent stakes last week to seal a joint vehicle and engine development agreement, left batteries out of the deal. Each side will instead vie for the right to install their power packs in electric-powered Smart and Twingo cars they will jointly develop by 2013.
“Daimler has been a company that has traditionally been reluctant to give up its own technology path,” said Anil Valsan, the London-based director of automotive research at Frost & Sullivan. “While Daimler’s battery may have a technical edge, Renault-Nissan’s solution may end up being more cost competitive.”
Daimler, the world’s second-largest maker of luxury cars, and Renault, France’s second-biggest carmaker, both regard the technology for storing and managing electricity as critical in the shift to pollution-free driving. Batteries, rather than engines, will be the “heart” of future vehicles, Thomas Weber, Daimler’s development chief, said in a March interview.
Along with Renault, Stuttgart, Germany-based Daimler plans to work with BYD Co., the Chinese carmaker backed by billionaire Warren Buffett, to build an electric vehicle for China and team up with Evonik Industries AG to develop electric power packs.
‘Pioneer’
“Daimler aims to be, and will be, a pioneer in the field of electric mobility,” Zetsche told shareholders yesterday. “When alternative drive systems go into mass production in a few years, we will be ahead of the competition.”
Ghosn meanwhile plans to make Renault, along with Japanese partner Nissan Motor Co., the global leader in zero-emission vehicles. The effort is due to begin in December with the Nissan Leaf, a battery-powered, five-person car that can travel 100 miles (161 kilometers) before recharging.
Potential conflicts in the new alliance bring to mind Daimler’s failed merger with Chrysler Group LLC as well its effort to absorb Mitsubishi Motors Corp., investors said at yesterday’s annual meeting in Berlin. Working with Renault and Nissan may not bring the benefits Daimler expects, they said.
“We have grave doubts that the new partnership will be a success,” Ingo Speich, a Frankfurt-based fund manager with Union Investment, said at the meeting. “The traces of missteps run like a red thread through Daimler’s cooperation history.”
Sparring Partners
The competition between Daimler and Renault, based in the Paris suburb of Boulogne-Billancourt, to supply batteries for the two- and four-seat versions of the Smart and Twingo was already evident in an exchange between Zetsche and Ghosn at the alliance’s announcement April 7.
“We are obviously going to do everything in order for our battery to be considered as the best,” Ghosn said. While Daimler is “not obliged” to accept batteries from the Renault- Nissan alliance, Ghosn said he “doubts” Daimler would find better components elsewhere.
‘Inside’ Technology Sought
Zetsche responded that while he may not be able to find a better battery on the market, he may find one “inside” Daimler. “We have the production knowhow and the financial muscle to secure a long-term competitive position,” Zetsche said yesterday in reemphasizing Daimler’s battery ambitions.
Daimler aims to spend 2 billion euros ($2.72 billion) to develop batteries and fuel-saving engines in the next two years, up from an average of 567 million euros a year in the past three years, after losing ground to competitors, Weber said.
Ghosn’s Renault-Nissan alliance plans investments in electric cars and batteries exceeding 4 billion euros from 2007 through 2011 — an amount roughly equal to the two carmakers’ combined annual research and development budgets.
Part of Daimler’s spending will be funneled into a battery venture with Evonik for a factory in Kamenz, Germany, to produce lithium-ion power packs for an electric-powered Smart as well as Mercedes-Benz vehicles by 2012. Daimler is setting up a partnership with Shenzhen-based BYD to develop electric vehicles for China, the world’s largest car market.
NEC Venture
Renault-Nissan plans to manufacture batteries through a joint venture with NEC Corp., Japan’s biggest personal-computer maker. The alliance is building five battery plants in Japan, the U.K., France, Portugal and the U.S., with a total production capacity of 500,000 units annually.
Carmakers are teaming up to develop electric batteries out of necessity because of the cost. Lithium-ion batteries, which are lighter and more powerful than the nickel-hydride batteries now in use, currently cost $700 to $750 per kilowatt hour, about twice as much as the cost projected to make electric vehicles competitive with fuel-burning cars, according to Frost & Sullivan estimates.
General Motors Co. plans to introduce the Chevrolet Volt in November. The vehicle will have an all-electric range of at least 40 miles and will be powered by batteries from Seoul-based LG Chem Ltd. Bayerische Motoren Werke AG, the world’s biggest luxury-vehicle manufacturer, has partnered with Robert Bosch GmbH and Samsung SDI Co. to make batteries for an upcoming line of electric-powered city cars.
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Source: bloomberg.com
Daimler’s involvement in the production of longer-lasting batteries for electric cars is a very good decision and investment. The popularity of electric cars nowadays cannot be anymore neglected and providing the main accessories like electric-car batteries is stepping into the right direction. I won’t hesitate to trade in my Calgary Dodge for a high-performance electric car. I wonder what was the current development of Daimler’s investment?
It’s great news indeed that giant car manufacturers like Daimler and Renault are at the helm of developing more efficient batteries for electric cars. I won’t be surprised at all if they will be launching a new generation of electric cars with batteries that will allow for higher mileage and faster charging time.