Daimler seeks a new way for smart through a JV with Geely

Daimler and Geely Holding announced an intention to form a 50:50 joint venture, which will develop and operate the smart brand globally.

The deal announced in the middle of the huge transformation to electric only cars, seems like sales of half of the smart brand to Geely, with an idea to try the business together. Sales of smart cars decreased, while the brand remains unprofitable with several billions in losses accumulated in the past 20 years.

With Geely, Daimler could get broader access to the Chinese market, share the costs and take advantage of production in China.

According to the press release, the JV will be based in China, where from 2022 on, the partners will start production of the next-generation smart electric cars, assembled at a new purpose-built electric car factory.

The new models are to be designed by the worldwide Mercedes-Benz Design network, while the engineering will be carried by the Geely global engineering centers.

Currently smart offers two models:

  • smart EQ fortwo, produced in Hambach plant France
  • smart EQ forfour, produced in at Novo Mesto in Slovenia
In the future, the portfolio is planned to expand into the fast-growing B-segment.

However, with the launch of next generation smart, it seems that the production in Europe will be ceased. At least in Hambach, Daimler intends to maintain employment through investment of €500 million to produce the new Mercedes-Benz EQ compact model.

"Prior to the launch of new models from 2022 onwards, Daimler will continue to produce the current generation of smart vehicles in its Hambach plant France (smart EQ fortwo) and at Novo Mesto (Slovenia, smart EQ forfour).

In parallel, the Hambach plant will assume an additional new role in the Mercedes-Benz Cars production network and will produce a compact electric vehicle by Mercedes-Benz under the new product and technology brand EQ in the future. Mercedes-Benz is investing €500 million on the Hambach plant and will use the expertise of its experienced and motivated smart workforce."

Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, said:

“For more than 2.2 million customers, smart represents a pioneer in urban mobility. Based on this success story, we look forward to further enhancing the brand with Geely Holding, a strong partner in the electric vehicle segment. We will jointly design and develop the next generation of smart electric cars that combine high-quality production and known safety standards for sale both in China and globally. In the future, we are looking forward to working with all partners to sustain our success in China and worldwide. Separately, Mercedes-Benz will produce a compact electric vehicle at the Hambach plant, sustaining employment with further investment in the facility.”

Li Shufu, Geely Holding Chairman, added:

“We fully respect the value of smart. This brand has a unique appeal and strong commercial value. Geely Holding and Daimler look forward to this challenging and exciting new project, through which we will further push the introduction of premium electric products to give a better mobility experience to our customers. As equal partners, we are dedicated to promoting the smart brand globally; we will leverage our experience and global competencies in brand management, R&D, manufacturing, supply chain management and other areas. The synergies from this cooperation will lead to mutual benefits, at the same time we will further develop technologies for smart including connectivity, to continue to lead in the industry as it undergoes a wider transformation.”