Daimler’s 10pc stake in Tesla – good news for electric car rollout?

21 May 2009

Tuesday’s news that the young, electric vehicle technology company Tesla is to sell a 10pc stake of its company to the automotive giant Daimler for a sum rumoured to be in the region of US$50m is indicative of the increasing swerve towards spinning out electric cars from the research floor to the roads at a time when the automotive sector is striving to revolutionise itself.

Californian company Tesla, which has been struggling financially of late, had already been working with Daimler on the area of rolling out battery technology since last year.

Tuesday’s alliance has been viewed as a win-win situation for both parties – Tesla needs a major cash injection, while Daimler, which is on track to launch the electric Smart ForTwo  (pictured) later this year, needs Tesla’s niche expertise.

The 120-year-old German company, Daimler, which owns Mercedes Benz and makes the Smart car, said the deal is an “important step to accelerate the commercialisation of electric drives globally”.

“These guys are going completely unconventional ways. That’s what we need in the future,” said Thomas Weber, director of group research at Daimler.

“Tesla gained the know-how fast and efficiently, thanks to its lean and powerful organisation.”

Tesla, which is famous for its sport car, the Roadster, is run by former dotcom entrepreneur Elon Musk.

However, the firm has been struggling to raise more capital. Just last autumn, Musk removed chief executive Ze’ev Drori from his position, instead taking over the role himself. Musk also cut down his staff base by about a quarter at that time, indicating that the development of Tesla’s vehicle, the Model S, would be delayed.

On Tuesday, however, Musk said deal with Daimler would improve the prospects for the Model S, whose prototypes were rolled out in March.

Commenting on the 10pc stake, Musk said: “We are looking forward to a strategic co-operation in a number of areas, including leveraging Daimler’s engineering, production and supply chain expertise.

“This will accelerate bringing our Tesla Model S to production and ensure that it is a superlative vehicle on all levels.”

 “We are about to combine the best of old and new school,” added Weber.

“We are both deeply convinced that electric powertrains will play a major role in sustainability mobility.”

Herbert Kohler, vice-president of E-Drive and Future Mobility at Daimler, will also take a seat on Tesla’s board of directors.

In January 2009, Tesla signed a deal with Daimler to provide it with battery packs and chargers in order to power 1,000 electric Smart city cars, 900 of which could be on the road by the end of 2009. Since 2007, 100 Smart EVs have been undergoing field tests in London. These cars are expected to undergo mass production in 2012.

Daimler also holds a 49.1pc share in Li-Tek, a battery subsidiary of the German firm, Evonik.

By Carmel Doyle

Pictured: the Smart ForTwo Coupé

Carmel Doyle was a long-time reporter with Silicon Republic

editorial@siliconrepublic.com