Daimler and Geely to Develop and Produce Hybrid Powertrains in China

Daimler AG and Geely Holding Group, the parent companies of Mercedes-Benz and Volvo Cars, respectively, have announced a new partnership in which the two automakers will jointly develop the next generation of hybrid powertrains for use in their future model lines. The endeavor eyes China as its primary manufacturing and export hub. Production facilities in Europe may also serve manufacturing efforts.

The Daimler-Geely collaboration promises to harness the power of their combined global presence to create efficiencies in the areas of research, engineering, material sourcing, and industrialization. Such synergies could result in significant cost savings for both partners. The two companies plan to begin producing the "highly efficient modular engines" in 2024. Daimler will lead engine development responsibilities, which are in early stages, while Geely will head production plans.

"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," said An Conghui, president of Geely Holding Group.

China-based Geely is that country's most prolific and well-known automaker. Aside from its ownership of Volvo Cars and Lotus, Geely owns close to half of Malaysia-based Proton and has a nearly 10% stake in Daimler AG. Under the Volvo banner, it builds the Polestar 1 plug-in hybrid and the Polestar 2 electric vehicle in its Chengdu and Taizhou production facilities, respectively. A new Polestar manufacturing plant with an annual capacity of 30,000 electric vehicles is also in the works in western China. With Polestar, Geely has established a proven track record in manufacturing hybrid and electric powertrains.

The partnership supports Daimler AG's broader focus to apply carbon-neutrality to all aspects of its business operations and products. To that end, the company's goal is to offer a totally carbon-neutral passenger car fleet by 2039. To accomplish this, Daimler sees hybridization and electrification as essential components of the automaker's powertrain strategy moving forward. The company has been actively shifting in this direction in recent years by converting its product line so that at least half of its passenger vehicle sales will be from PHEVs and BEVs by 2030.

"We are looking forward to the future; when, together with Volvo's ICE unit and Geely, we will further extend our synergies in the field of highly efficient drivetrain systems in China and the world," said Markus Schäfer, Daimler Group Research and Mercedes-Benz Cars COO. "At Mercedes-Benz, the newly established unit Mercedes-Benz Drive Systems will spearhead the project and create cost efficiencies."

The partnership comes as automakers, including BMW and Tesla, expand EV production in China. The world's largest automotive market accounted for approximately 40 percent of EV manufacturing worldwide in the first half of 2020. Think tank Carbon Tracker recently published a report forecasting that China’s rapid shift to EVs will account for a 70% drop in global oil demand by 2030.

Daimler and Geely are also currently working together to transform the co-owned Smart brand into a provider of premium EV offerings in China and beyond.